unclear re: rights issue, page-3

Hi copydog,
You are one of the optimists I see. Perhaps in the very long term and if the company can sort itself out you are correct - but it is far from certain. There are a lot of factors in play including the lack of capital that the company has, expensive loans, shareholder dilution, cost of mining, the price of gold and the Aus dollar. The plus is basically that it has a good resource base which is why I guess that people stick with it.

The company has a lot of debt which will be paid out by the very substantial dilution for current holders. They've just announced a facility for more debt. This is something to be very wary of being negotiated before the results of the cap raising and effect on the sp are known. For companies in this situation, it can be a long slippery slide into massive further dilution - despite the fact that they have a valuable resource. No doubt the management are hedging their bets a bit by obtaining this credit facility - because they think they will probably need it - and maybe more. Let's hope not! Prospects for a further capital raising, if needed, are dire and would not be responded to well and would cause much worse further dilution than is even the case with the current issue. If things do not go well with mining and they don't make profits fairly soon they may have no choice. This is the risk that holders take, the burdensome debt spiral of destruction.

Imo, it is much more likely than not that the sp is headed below 20 cents. As mentioned previously, more often than not in these kinds of issues the sp goes down below the issue price. Exceptions are where there is a very positive sentiment about the prospects of and good financial condition of the company - not the case here I think, where announcement of further loan facilities does nothing to increase positive perceptions of the financial health of the company.

Towards the end of the acceptance period the price of TAMR shares will almost certianly slip substantially. Currently, it is being bouyed by holders who have sold at .25 or more and are buying back rights so they can get their shares back having made some profit. These will run out eventually and you will be left with those who can't or don't want to take up their entitlements but have left it too late to find good buyers. On the last day or two these people will sell for whatever they can get. The sp of TAM will react accordingly.

Subsequently, it will depend on what other news is coming out. Any hiccup will depress the price. If the underwriters have taken up a large percentage of the issue, they may be looking of dispose of many of them, even at under .20. They've earned substantial fees anyway so can afford to let some go at a lower price.

Lots of risk. Better to sell and get what you can and buy in again later I think. Only my opinion.