Australia's largest stock trading and investment forum Australia's #1 stock forum

GMC

Click for more information

0.00%

0.6¢ gulf manganese corporation limited

Cheers mate - glad my posts aren't completely a waste of time. I...

First 30 Last

Share
Profile

Follow
tt2000

2,345 Posts.

539

20/02/18

02:36

Post #: 31174471
Share

Originally posted by ConcerndCitizen ↑

I've always appreciated your research and your willingness to speak to the unpopular truth, but it's important to remain objective. It seems presumptuous to assume that Acuity Capital would wilfully contribute to the destruction of GMC to make a profit. They don't strike me as a vulture fund.

First we need to know is what the floor price is. If it's as simple as $5mil / 125m shares = 0.4c floor, then that would worry me. It doesn't project much short-term confidence from either party - or at least the one doing the lending. The deal was struck in Dec 2017 when GMC traded between 1.4 and 1.9c, so hopefully it isn't that simple.

That said, GMC did trade as low as 0.5c two months prior, so perhaps 0.4c is an acceptable floor price. It's more symbolic than anything at this stage, seeing as any shares are to be issued at the greater of the floor price, or a 10% discount to the VWAP of GMC's choosing (inclusive of fees).

But if you're going to give the worst case scenario, I'll give a better case scenario. The LIT Case Study shows what can happen when the facility is turned on during a stream of positive announcements. GMC have some major milestones to come. They may not hit them, but it they do, we could see a similar result:

June 2017 - CPA established when SP was 13c
17 Oct '17 - $1.4m raised @ 14c (10% discount to 15-day VWAP, inclusive of all fees)
31 Oct '17 - $2.5m raised @ 16.5c (9% discount to 15-day VWAP, inclusive of all fees)
14 Nov '17 - $3m raised @ 20c (5% discount to 15-day VWAP, inclusive of all fees)

To anyone who would like a better understanding of the Controlled Placement Agreement (CPA) with Acuity Capital, there's some great information on their website. Particularly the CPA White Paper released in Nov 2017. It include links to all CPA announcements on the ASX, if anyone feels like tracking the performance of these companies since their involvement with Acuity. From the White Paper:

Key Benefits of a CPA and ATM

• Reduced cost of capital – more access to capital and less dilution for shareholders
• Opportunistically raise capital – when prices or volumes are attractive and
monetise positive news or liquidity events
• Complementary – supplement or use in combination with other forms of capital
management and raising
• Working capital – Raise large or lesser amounts as required, manage cash levels &
ensure adequate liquidity
• Control & flexibility – companies control all aspects of the CPA, including when the
CPA is used (or even if the CPA used at all)
• Risk management – access cash during stress, pay creditors or to reduce debt levels
• Manage through the cycle - delay larger raises to more favourable time, keep cash
balances at acceptable levels, keep the dividend steady and stable
• Stakeholders – comfort to ratings agencies, creditors & banks
• Reduce costs – fees and discounts required can be significantly lower

Expand

Cheers mate - glad my posts aren't completely a waste of time.

I agree that Acuity aren't going to try and destroy GMC to make a profit (and I dont believe I ever insinuated that). Acuity need GMC, (though not as much as GMC need Acuity) so that Acuity get their fee from raising the full $5m.

But what I did say was that Acuity will never be long GMC, as their job is to just sell GMC shares (above the floor price) remaining fully hedged. Therefore to Acuity, it is of no relevance what the share price does so long as they are able to sell their shares.

The minimum floor price (theoretical) is the $5m over 2 years divided by the Listing Rule 7.1 limit over 2 years of about 380m x 2 = 760m
5m / 760m = $0.007

Im keen to see how stocks perform post CPA, as demand/supply economics would suggest increased supply leads to depressed prices (in the absence of value acretive projects or investments).

I guess it all comes down to what a stock does with the money it has raised. GMC has raised $12M already, and what has been achieved or created?

Will another $5M make a difference to offset the dilutionary impact.

Only time will tell

GMC Price at posting: 1.1¢ Sentiment: Sell Disclosure: Not Held
Upvote

0 Great analysis

Reply

Top Stories

TVL

C29 Metals wins Kazakhstani uranium drill run green tick, Kazatomprom talks mature

The ASX can overlook its Telecomm small-caps. Here’s one diversified brand with an international footprint

QGL

Aerospace smallcap Quickstep Holdings jumps nearly 100% after 40cps takeover offer

PGO

Pantera begins drilling of maiden test well at Smackover

Palladium's the newest geopolitical hot commodity. But ASX exposure is limited

There are more pages in this discussion • 188 more messages in this thread...

First 30 Last

Add GMC (ASX) to my watchlist