How to Raise Equity Capital without Diluting Shareholders I will take the example of our Point Rousse assets and associated projects .
Point Rousse is spun out to shareholders in the form of a new public listing.
We get 75% and Signal retains 25%.
Point Rousse still has two years of production left in our economic reserves and perhaps another several more years converting out Indicated and Inferred ounces (about 30,000 ounces to Reserves.
These represent potential gross revenues close to $100 million at a time when the POG is very strong.
The other options are to sell which just converts the assets to cash and cash is significantly discounted by the market, as it has a habit of being frittered away as WC.....we won't see much if any sustained increase in share price as there has been no net asset gain.
Another option is to shut Point Rousse down and place the mill on care and maintenance .
There will be a cost involved and if no new source of revenue is proffered, our share price will take a hit, as we have a non producing asset which is draining our Treasury.
The other downside, since management is considering this option as it wants to focus entirely on Goldboro.....which also means that we won't have any funds to explore and develop our two advanced projects including Tilt cover .
The spin out is the only option that would unlock the full value of Point Rousse and especially monetizing the remaining reserves , while totally focussed on our advanced gold projects.
So we need to raise , say, $10 million in capital.
We do this by a rights issue to shareholders at a price of, say $0.15 per share.
Each common share that we own is given three rights valued at $0.05 per right and 3 rights enable you to buy a common share of NewCo for $0.15
The rights are publicly listed, so you can choose to sell them, convert them or buy more and increase your net position .
The rights issue means that each shareholder who converts the rights suffers no net dilution .
Signal gets to retain 25% so we have that asset in our Signal common shares.
Its a win win situation for everyone ...we will can produce the remaining Gold at Point Rouse while also following up on our recent prospective IP survey .
I see no reason why NewCo could not sustain a price of $0.35 or so, more if we can find more gold for the Baie Verte Mill, including toll processing or in situ.
To do so will require a united shareholder base and a management team conducive to rewarding shareholders after being ignored for years ..