Ann: Change in substantial holding, page-46

Nijiman,

1.) I never say T/O will be successful. What I was saying back in November, if SBM launched a T/O they can pick up some shares but not a full T/O. They might get to 40-50% of PEX shares cheap (20c, 40c and 50c subscriptions and 65c T/O to get whatever they can get; average price probably around 45c). Than deal with large holders, if $1.2 offer still fail at least SBM can get to 40% minimum to may be 50% on 65c low-ball offer.

2.) Dilution effects. When PEX runs out of money and need to raise $10m-$20m to drill, SBM can participate 100% and take up any small holders don't have the money to participate their entitlements or small holders need to sell their shares to participate in capital raising. This means other large holders including directors will need to put millions of cash to participate or get diluted. If the Associates own 30%, raising $20m at 75c than they need to come up with $6m cash just to avoid dilution, while SBM can take up other holders don't have the cash to participate to increase their %.

SBM did that with CYL, many small holders did not participate in 50c capital raising and SBM took up everything.

Alternatively (instead of capital raising), PEX might do JV on Southern Nights like they did with MB and Wirlong. Than SBM can offer big money for 50% of JV partner of Southern Nights, ie. own 50% of shares and 50% of Southern NIghts/Wagga.

Country Road (battled out between Solomon Lew and South Africa's Woolworth for many years). At one stage 2 holders (Solomon Lew and SA's Woolworth) own 96% of shares and they waited for many years.