Re:Ann:Gulf Funding Update, page-12

Just caught up on the past 2 weeks of posts. To clarify/counter a few points:

1. The land lease has been signed, otherwise the site wouldn't have been cleared or construction commenced. Tanah Capital pulled out of the CR on a technicality relating to the offtake agreement - a condition that was never disclosed to market - not the land lease agreement. Perhaps they pulled a fast one over GMC to acquire a T1 position @ 0.5c, or perhaps all parties knew what was happening from the start.

It's important to remember that Tanah were the ones who kept GMC afloat during suspension and according to the October 2017 investor presentation and there being no change in substantial holders notice, Tanah still holds at least 110m of their 175m shares. They may not have wanted to invest more at effectively 0.9c, but they also haven't sold out with the SP being above 0.9c for the past 4 months. There was also a note in the FY17 report that "a major shareholder has signed a letter of comfort to provide financial support to the Company for the next 12 months". Seems an obvious conclusion who that shareholder is.

2. The CPA is a maximum 125m shares for a maximum $5m cash. They have allocated 125m of their remaining 380m capacity for this purpose. As I understand it, Acuity Capital only receive the shares if and when GMC turn on the funding. I have seen nothing to suggest that the full 380m shares are available to Acuity. That was not part of the agreement both parties signed.

Unless I'm mistaken, this means GMC only have the capacity to tap shareholders for a little under $2.5m of funding after placement costs, assuming a 20% discount and 265m share placement @ 0.1c. There is no additional capacity under rule 7.1A. So funding to complete construction is expected to come from either DSO or selling a % of PT Gulf Mangan Grup to an Asian investor.

3. From the April 2017 funding requirements, GMC needed A$13.3m to construct the smelters, $1.5m for commissioning and initial supplies & materials, and $7m for corporate & company costs during construction. From memory, a $1m deposit was placed on the smelters prior to the $12m CR. DSO is expected to generating positive cashflow of A$4-6m/qtr towards construction, if it ever arrives.

My view of the operational silence from GMC is that they've finally learned their lesson to stop over promising in announcements. It would be a welcome change to actually receive a material announcement instead of more "imminent" good news. A lot of things still need to go right, but this company is far from dead. I've been very critical of GMC in the past, but I've always tried to remain objective. It's still very high risk, but the reward is much higher in my opinion.