Ann: Trading Halt, page-14

The mechanics of a capital raising are simple. Whatever price the raising is at, the share price will drift back to that price or slightly below. Holders who don't want to increase their holdings will sell part of their current holding to participate in the raising at a lower price.

The CR price will be below the VWAP of the last week so they can announce a 'discount', which is why share prices are often ramped up before capital raisings.

Capital raisings can have both positive and negative effects.

The negative are that the share price usually falls, shareholders are diluted, and upward momentum (if any) can be lost.

The positive effects are that the share price is often ramped up a bit beforehand, so it falls from a higher level than it would have been at without the raising, sometimes it is an opportunity to get more equity in a good company at a good price without brokerage, and very rarely the money is actually put to good use and adds more value to the company than the face value of the cash.

The other potential positive is that there are always some people who know about any impending CR and this can act as a drag on the share price. With the CR out of the way the price is free to appreciate without that braking effect.

Of course all capital raisings are not the same. A 1 for 1 raising that massively dilutes holders can be very disruptive, whereas a small raising at only a small discount to market can be absorbed easily and can actually have a mildly bullish effect. The best capital raise of all is a private placement to sophisticated investors at slightly above the market price, but this rarely happens.

Until we know the details, we can't know whether this CR will be positive or negative for us. Hopefully the generally bullish feeling surrounding this company will be enough to turn a potential negative into just another easily jumped hurdle on the way up.