Not looking good for GMC, page-29

I've always appreciated your research and your willingness to speak to the unpopular truth, but it's important to remain objective. It seems presumptuous to assume that Acuity Capital would wilfully contribute to the destruction of GMC to make a profit. They don't strike me as a vulture fund.

First we need to know is what the floor price is. If it's as simple as $5mil / 125m shares = 0.4c floor, then that would worry me. It doesn't project much short-term confidence from either party - or at least the one doing the lending. The deal was struck in Dec 2017 when GMC traded between 1.4 and 1.9c, so hopefully it isn't that simple.

That said, GMC did trade as low as 0.5c two months prior, so perhaps 0.4c is an acceptable floor price. It's more symbolic than anything at this stage, seeing as any shares are to be issued at the greater of the floor price, or a 10% discount to the VWAP of GMC's choosing (inclusive of fees).

But if you're going to give the worst case scenario, I'll give a better case scenario. The LIT Case Study shows what can happen when the facility is turned on during a stream of positive announcements. GMC have some major milestones to come. They may not hit them, but it they do, we could see a similar result:

June 2017 - CPA established when SP was 13c
17 Oct '17 - $1.4m raised @ 14c (10% discount to 15-day VWAP, inclusive of all fees)
31 Oct '17 - $2.5m raised @ 16.5c (9% discount to 15-day VWAP, inclusive of all fees)
14 Nov '17 - $3m raised @ 20c (5% discount to 15-day VWAP, inclusive of all fees)

To anyone who would like a better understanding of the Controlled Placement Agreement (CPA) with Acuity Capital, there's some great information on their website. Particularly the CPA White Paper released in Nov 2017. It include links to all CPA announcements on the ASX, if anyone feels like tracking the performance of these companies since their involvement with Acuity. From the White Paper:

Key Benefits of a CPA and ATM

• Reduced cost of capital – more access to capital and less dilution for shareholders
• Opportunistically raise capital – when prices or volumes are attractive and
monetise positive news or liquidity events
• Complementary – supplement or use in combination with other forms of capital
management and raising
• Working capital – Raise large or lesser amounts as required, manage cash levels &
ensure adequate liquidity
• Control & flexibility – companies control all aspects of the CPA, including when the
CPA is used (or even if the CPA used at all)
• Risk management – access cash during stress, pay creditors or to reduce debt levels
• Manage through the cycle - delay larger raises to more favourable time, keep cash
balances at acceptable levels, keep the dividend steady and stable
• Stakeholders – comfort to ratings agencies, creditors & banks
• Reduce costs – fees and discounts required can be significantly lower