recapitalisation

On first reading today's announcement looks good, but on second and third reading, it raises questions. Am I missing something?

1. They are raising $405 k from Chasen Holdings.
The company is paying creditor $ 500k in August.
= cash result - -ve 95k

2. They already have an ANZ facility, I guess is nearly fully drawn, and will keep that facility for another year - cash result = neutral.

3. They plan to re-instate the plant in 5 to 6 weeks.

4. They plan to re-instate underground operations in a "relatively short time".

Given items 1 and 2 appear to generate no net cash, how are they paying for 3 and 4?

5. Is the answer by seeking shareholder approval to:

5a. - issue 150 million shares (over and above the current 97 million) to institutional investors to raise $4 to 5 million, at the best price they can get.

5b. - a 1 for 1 issue at 3 cents on the existing 97 million shares at 3 cents, to raise 3 million.

When I first got into this, I studies and learnt the (then - in "normal economic times) rules of thumb for valuing gold companies was based on ratio of JORC gold resource to Market Cap, then improved or discounted according to a number of factors:

for explorers - take 5-10% of JORC resource times the (gold price of the day less the mines production cost.
for developers - it was 15 to 25%
for producers - it was 20% to 40%

with discounts or premiums then taken off or put on for company size, management background, location risk, capital availability and finance risk etc.

GBM is a junior early producer, with 154,000 oz of JORC, so on the old Basic rule of thumb, at 20%, the company value should have been $ 23.1 million - and it was for a while.

(Based on Gold price is $ A 1,200 and their last estimate of production costs was $ A450 per oz.)

Of course this value is currently discounted down to now $ 3.5 million mainly on the back of clear lack of capital availability and the financial risk.

But in March they announce 600,000 oz of "Target", on which, according to the documents, fairly minimal work is required to bring much of this into JORC.

My issues are as follows:
Issue 1: why issue:-
- 20 million shares to Chasen Holdings; plus
- 150 million shares to institutions; plus
- 97 million shares to existing share holders
being a total dilution of 267/97 2.75 times?

Issue 2: is the cash from the proposed shareholder and institutional issues required to start production and mining?

Issue 3: How long will it take to convene a meeting and get the approvals ... 60 days?

Issues 4: Does the company need to raise $ 9 million or so at 3 cents per share? Is in not better to break this down into baby steps, and so minimise our dilution? Given the compnay was supposedly there (ie production and mining) how much is really needed to get going on a small scale?

SO - I suspect that this is a cop out, or to put it another way, un-necessarily dilutive, on so maybe a rip-off of existing small shareholders.

At least I would like the board to explain the proposed applications of cash better.

Sincerely