I tend to agree with this, I was certainly a little bewildered...

I tend to agree with this, I was certainly a little bewildered and initially hoping for a different outcome when NZC went into a trading halt on Monday morning.

But in saying that, raising capital to then go and explore more aggressively and/or progress into production quicker is a good thing for those not thinking short term (a month or 2 IMO), there is virtually 0 chance of having to raise capital for the foreseeable future, so all positive developments will be less likely to be sold off in anticipation of a cap raise potentially following.


However, this is a raise that allows all (eligible) holders to take part and likely benefits the smaller shareholders more as a % through the SPP (if you can afford and are willing to participate in the SPP).

Usually SPP's have an upper limit that all applicants will be cut back on if it is breached, as there is no mention of it in this ann, I'm assuming that eligible applicant will simply get what they apply for. With so much of the company belonging in the top 2o, there is obviously not that many individual holders here so it may be impossible to breach the highest limit they can set.

Because I am bored at the moment, I have run a few numbers that should apply to most holders here...
If what I assume above is correct (the finer details will be confirmed in about a week, from this ann), all eligible holders (usually all Aus/NZ holders holding 1 or more share on the record date) may get the full allocation of $15k of shares at 25.5c (58,284 shares, rounded up) if applied for.
Fully diluted there is a little under 281mil shares on issue currently, plus the $6mil at 25.5c (23,529,412) as part of the placement raise.

So after this main raise NZC will likely end up having around 304 mil shares on issue fully diluted, or a little under 8.4% dilution to holders taking no part.

Assuming you can take the full $15k (58284) from the SPP, if this increases your holding by 8.4% or more, you have effectively increased your stake in the company as a larger % at the same price as the insto's and larger holders. This opportunity doesn't come along to retail holders often.

When I look at the latest top 20, number 20 has 700k shares. If they took a full allocation in the SPP, they would only increase there holding conveniently by 8.3%, so they would theoretically still be worse off from the SPP (assuming they didn't take part in the placement), by less than 0.1%. Holders with more than this are effectively diluted more by us people that hold less!

Anyone who holds less than this and is willing to take up an allocation greater than 8.4% of there current holding will actually own more of the company than they did before this raise (not allowing for the added dilution in the SPP) .

From the annual report, there were 1318 holders as of 26 Sep 17, 95% of these had less than 100,000 shares. Assuming no further dilution from this raise (as I don't know how much will be raised as part of the SPP, but I would guess roughly $2-5mil, so not that impactful on my numbers anyway) and the same amount of holders/holding distribution from the annual report, 95% of holders could hold a higher % of the company than they did by purchasing $2142 worth in the SPP, some of these would have a personal much higher % gain. As these usually have set round number blocks, potentially 95% of holders will hold a larger portion of the company by purchasing $2500 worth of shares under the SPP.

Assuming the same amount of holders and distribution of there holdings from the annual report, 74% of holders hold less than 10,000 shares, with most of these under 5000 shares (I assume many of these are holders from a couple of years ago from when the company undertook large dilutions and these holders probably didn't do well out of it). If you hold 10,000 shares, applying for the minimum of $1500 worth will give you around 5882 shares, a minimum increase to their holding (at this lowered price the same as the bigger fish got) of a minimum of 58.82%. Remember Huayou and Tembo will be maintaining there % share of the company as part of the placement. I believe they would effectively lose out a little in the SPP.


Please feel free to point out anything above that is incorrect or misleading, it is based on a few assumptions and we should know more in a week when the finer details of the SPP are confirmed. But based on this and some simple numbers, this raise on the whole looks like it will benefit everyone outside the top 20 and not those in it, especially those who may have gotten screwed over under the previous company, Regal Resources


The shorter term may not be pretty at all as we get through the selling from this raise, but if you are an eligible holder for the SPP, are able to take part in it and believe in the company, management has just given you a great opportunity IMO.