testy tuesday, page-4

JH, I’ve been following your posts closely and find them of great interest, thanks! It seems to me that GDN have a bit of a problem on their hands. Let’s take as a start point the fact that they will need additional funds for ops before the ex-date of the earliest expiry oppies, and definitely before any prospect of payout on the Weatherford lawsuit.

Ideally, longer term funding solution would be to get the sp to increase to get the options in the money at 30 June. This would be best achieved by: a) no further dilution and: b) great drilling results (something they’re not really in control of!). Also, even if they could get the sp above 20c soon - and keep it there – some holders would no doubt convert their oppies sooner than 30 June (I saw this happen with NZO last year) bringing some early cash into the coffers and maybe negating the need for a raising. Big question here is how much cash?

On the other hand, if they do a raising on similar terms to recent, say 12c + free 30 June oppie, they get certainty of some cash now but also certainty of greater dilution when the piper needs to get paid, which will beat the sp into the canvas. And they risk the oppies being out of the money at 30 June, so goose their chances of big cash injection as well as leaving minimal chance of further raising through small placements, unless at piddling price.

So which tactic do they choose? I don’t know if even they know yet but I’d bet they’re doing a bit of head-scratching atm.