Well I have been thinking since my last contribution, Im not...

Well I have been thinking since my last contribution, Im not sure there is light on the horizon for minor shareholders of WDR. You know the ever declining share price, despite the reasonable news that continues to come from the company continues to baffle. I can’t help but wonder at what the major players are thinking and hoping to achieve? I spend many hours trying to climb into their shoes, and think what I’d be doing if I was them… Please feel free to block me if you find me annoying! But if any of my thoughts strike a chord with, you, I’d appreciate your input, as there is considerable investing expertise amongst HotCopper WDR followers and I’m sure we would all benefit from shared thoughts on this investment?

Ok here goes… the mine is under-capitalized and although a good prospect, will need, say, about another $100m cash injection sooner than later. Instead of borrowing it, which means it has to get paid back with interest from earnings, (but we all still own the same slice of the pie which will ultimately come good and pay us good dividends), the major share holders rather choose to let the minor shareholders realize slowly that the project needs more capital to survive and sell off as disillusionment results in “an ever falling share price”. My guess is that the share price will drop to around 30 cents before company announces the next capital raising? One could speculate further that the major shareholders may trickle shares onto the market strategically to fuel continued price fall, all legitimate market play im sure, as this could play into their hands in getting to own a much huger portion of the company for relatively small sum and without a formal take over bid?

Another $100m would effectively double the amount of shares (im not sure what the sum total of cash is already injected into this project, but must be close?). This is unlikely to be taken up by the ewes and mehes (you and me – minor share holders, my attempt at word play ?). After offering us our entitlements, which of course we won’t take up, the major shareholders (underwriters) buy all the shares, effectively giving them +70% of the shares for very little money. So when the mine does turn a coin, we will get about nothing due to heavily diluted share price, and the major shareholders will get most of the profits as they will own such a large percentage of the pie, half of which they got at around 30c a share? What do you think?

My conclusion? Bail out now (35c) and lick your wounds, or buy heavily into the next capital raising, I guess it will be at 25 -30c. Or if you are a real gambler, sell at 37c and buy back in at 30c. What am I going to do? I don’t know! Not sure my scenario above is very credible ? What do you think??