GREY:MAAFF - Post by User
Comment by
canadianpilgrimon Jun 13, 2009 10:12am
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Post# 16068120
RE: dilution
RE: dilution"400 million shares @ $.70 for a net gain of $280 million. But that will increase the number of outstanding shares from 288 million to 688 million. A nice jump in share price to $.70. But that's quite the dilution for current shareholders too. The market cap on this play just jumped from $161 million to $481 million. It will be hard to push this stock back upto $3.50 dollars now. That would give it a market cap of $2.4 BILLION at $3.50. Though $2 dollars might still be in the cards if the momentum holds up......which is still a damn good return when you are starting from $.70 GLTA!!!!!!! "
Couple things...you're forgetting to include the shares from the PP @ $.42. We won't know for sure until Tuesday depending on the overallotment, but I think it's going to add close to 80 million shares for a grand total near 768 million shares. So it's even more diluted than you realize. This company is definitely going to a market cap of $1 billion, but last year's predictions north of $15/share in a 4 year time horizon aren't in the cards anymore. The credit collapse ended the prospects of cheap fianancing and the MAGPotash IPO. This equity financing is the official confirmation of that.
Keep in mind the nature of this recent dilution. These stocks will "never" trade on the market. If they do so, the investing company would giving up controlling interest in this venture. If everything goes well, it's more likely they will buy out existing shareholders/spin off the potash business. The long term share price potential has definitely been diluted, but in Monday's market there is no dilution.