I confess to being blindsided by this capital raising. I had...

I confess to being blindsided by this capital raising. I had thought the one we had just digested was intended to carry the company through to first gold pour - and now this. I would be interested to hear other holders' thoughts on the details of today's announcement.

The "fold" option:
*My initial reaction was to sell on open as I anticipate a repeat of what happened last time the heavy discount to market was offered to 'sophisticated investors': the SP fell steadily till it was below the issue price. That has already started to happen again, with the SP at .022 as I write.
*Compounding the drag effect is the significant dilution of existing holders' share value. The question is how long the SP will languish at these levels before anticipation of first pour dampens the pain and brings in fresh investors, unencumbered by recent history.
*What if the SP does fall below the issue price, and the company not only decimates the SP (again) but fails to raise the funds needed? I note that 'the company has secured firm commitments from subscribers to participate in a placement' but that is not the same as being underwritten, as the 2nd tranche is.

The "hold" option:
*PRU and other up and coming West African gold companies have trodden a similar path in the past and their share prices have multiplied many times over despite initial setbacks when capital raisings were announced
*For the first time, a concrete date for first pour has been announced and January is a mere 4 months away.
*The 1 for 8 sweetener to existing holders at .02 cents, might temper their pique somewhat
*The funds raised will make it much easier to expand production significantly, as flagged in earlier announcements, bringing the company closer to the 100,00 oz / annum target much more quickly.
*Even reaching 50,000 oz gold production in the next couple of years would generate earnings of $50m when the post-raising market cap will be around $40m (assuming a very conservative US$1,000 / oz gold price and costs of $500 / oz). Factor in even a conservative P/E ratio and I reckon we could be well north of 20 cents.

All in all, the above probably amounts to little more than "short term pain, long term gain". My biggest concern is that the broader market may tank before they bed this down.

I feel as though I've been hit by a truck... but it may just turn out to be an express train to production and riches. Hmmm....

DYOR and caveat emptor. These are just opinions.

Gupper