The 4c raise, page-3

The consideration share price is completely irrelevant, it is only used to justify the valuation of the vend.


In other words they could have issued 200 million shares at 8c and 200m perf shares at 8c.


The price is completely irrelevant, the only important number is the number of shares.


They used 2.5c to make it look like a $12mil vend. If they had typed the number 8 instead of 2.5c it would have been a $38.4 mil vend. Completely irrelevant for on market buyers, since there is 761 mil shares on issue after the deal goes through irrespective of what price the shares were issued at.


But in terms of the price for the Cap raise, this is the crucial point. Guys like Rezos and the Hartleys will receive 761 mil shares if the deal is voted through (which i think it will be). Now, if you were Gavin Rezos, you would want the price higher not lower. If the raise is done at 4c, there will be a 5 for 1 consolidation, meaning the 761 mil becomes 152.2. They then issue 20 mil shares at 20c under prospectus and there is 172 on issue at 20c (the old 4c remember). Capped at $34 mil and very cheap for what they have, but crucially prospectus investors own 11.6% of the post consol stock.


If, however they do the cap raise at 10c, then it is only a 2 for 1 consol, meaning 380 mil on issue, and then of course your 20mil at 20c prospectus shares. So 400 mil on issue post consol and prospectus investors own 5% of the stock. Rezos’s % ownership is higher, the higher the price is.


Also, the stock issued at 2.5c is not yet tradeable. The con note stock which converts at 2.5c is not tradeable. So why would these guys want to see the price at 5c and then raise at 4c. It totally erodes their ground floor entry, and allows the prospectus investors almost the same entry level. Im all for equality, but the investment world doesn’t work like this. simple, and you are dreaming if you think it does.


Look at AZK. It was 3c when announcement came through and they have just wrapped up a successful prospectus raise at 15c. Nowhere near the 3c where the stock started. And if u read the very first AZK announcement, u will see that they paid 303 mil shares plus 4 X 49.5 mil performance shares (so 500 mil in all). Now AZK didn’t actually include a price, which highlights that a price is irrelevant and used purely for valuation purposes. It only matters what shares are out there, not the “deemed” price of the shares.


So, you can allow the naysayers and down rampers to convince you that this thing is going back to 4c, but you will be disappointed. It wont, and the raise will be done higher than 4c in my opinion. Also, the 2.5c stock isn’t the stock on the offer right now. Its just nervous traders who keep reading the rubbish about 4c CR.


My philosophy is that this is easily the most interesting acquisition on the market this year, with G Rezos behind it, US DOD contracts in place, and exciting newsflow. The investment approach is to buy at current levels, and if it does go lower (and obviously no one really knows its daily price moves from here – volatility is natural with this type of stock) you average down. 1 thing i am confident in, having backed AJX, is that Rezos doesn’t back too many losers. He was also involved in YOW, and don’t forget pSivida which went from a few cents to $5. In short he is a gun, and you will make money by backing him.