there’ll be severe dilution...

I read this today. Some good points, good summary for me, as there is a lot of information out there. (taken from the caesars report blog)

Global Metals Exploration (ASX:GXN) will hold its Annual General Meeting on October 31st at the company headquarters in Sydney.

The most important points on the agenda are the acquisition of Messina Resources (to acquire the Leonora Gold Project in Australia) and Hatua Resources (to obtain 100% of a graphite project in Tanzania, Africa).

Although there’ll be severe dilution, we think both acquisitions (and the Hatua Resources acquisition in particular) have the merit to create shareholder value.

Negative side of both acquisitions:

There’ll be severe dilution. Approximately 360 million new shares will be issued, and 123 million options, so the total share count after both transactions will be approximately 924 million common shares and 426 million options.
The Leonora project is quite small as there only is a resource estimate of approximately 30,000 ounces.
More shares will be issued to raise enough capital to fund exploration in Tanzania and Australia, which could lead to a fully diluted share count of 2.7 billion shares.

Positive side of both acquisitions:

As the Mt. Venn and Jutson Rocks exploration programs haven’t hit the mother lode yet, we feel the company could be able to surf on the waves of the graphite-hype by starting exploration on their Hatua project. Let’s bear in mind Syrah Resources’ (ASX:SYR) graphite project is just down the road, so they might be willing to consolidate the region and acquire Global Metals or its property in a more advanced exploration stage.
As there already is a resource estimate on the Leonora Project, it might be relatively easy to add more ounces in a short timeframe through exploration on the tenements in close proximity to the current resource estimate.
More shares will be issued to raise enough capital to fund exploration in Tanzania and Australia, which could lead to a fully diluted share count of 2.7 billion shares.

We acknowledge both transactions are massively diluting the current shareholders, but we do feel both acquisitions may create more shareholder value down the road instead of relying on Jutson Rocks only. We therefore recommend to vote in favor of Resolutions 2 and 3, and approve the acquisition of Messina Minerals and Hatua Resources at the AGM on October 31st.