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An honest appraisal Tiger. I predicted a 40% to 100% dilution to get to production. Initially this is 29% dilution but it is no way near enough to get to production as you say. (Note this placing rns says it is raising money for almost the same things that the last placing raised money for - I digress.) Good point about the warrants raising extra money which according to the rns is to get to a licence stage and allow for exploration at kash. If the sp gets to .6p then the dilution becomes 58% to 60% with Schard's cut. I personally think that more cash will be needed to get to production so maybe another placing but it is all about time taken and cash burn. Difficult to judge. Was going to buy after a placing but going to take the weekend to think it over. Initially my thoughts are the damage is done to the sp - well almost as .4p should be visited. A danger is that the sp won't get to .6p and a further expensive placing will need to take place. The rewards are potentially high as the new investors clearly see .6p as viable. As Tiger says - it's difficult to get the timing right. leaning towards a relatively small punt on Colin coming good for once, preferably below .4p. As I say going to mull it over at the weekend.
Even if the economy goes pear shaped, I really can’t see this share going much lower than 0.4p, so have just taken £5k of shares. Not easy to buy - NT for just £1000
Pretty much agree TBTT, the placing itself is not quite enough IMO but the placing plus the warrants is sufficient giving about 683m shares in issue. IMO that is the reason it was structured on a 1:1 basis, once CB has the license and the deal with JLP the SP will be sufficiently higher than the 0.6p for the warrants to be cashed in.
I wouldn't beat yourself up on the timing, it was anytime between Aug and Feb, we never know when suppliers require to be paid, we only know from the balance sheet that it is due.
The future is looking bright from here, just a case of moving ahead with the plan now. With the warrants, a SP of just over 2p gives a mCAP of £15m - an achievable goal.
My take on it is that Galileo will now get to production from Star Zinc with about 700m shares in issue - as a result of today's placing and the future mass exercise of the warrants at 0.6p. Put together, the equity raise and the warrants will bring in about 1.25m pounds for the company, which IMO is comfortably enough. It probably even leaves a little money for exploration work at Kashi'tu.
To be honest, this isn't what I was hoping for - I was hoping that Galileo could get to production with around 550m shares in issue.
BUT, it is good enough, and IMO makes the shares a raving buy at this price. Now the uncertainty of finance has been removed, I think the share price will move back up to about 0.7p (i.e. warrant exercise price + @15% incentive margin) quite soon. It will probably take news of the mining licence grant and the Jubilee offtake to drive the share price through this barrier and up towards 2p, which is really where it belongs.
I got my timing a bit wrong here, and I'm irritated with myself about that. But this is still an acceptable result.
Well I was right about needing another £500k. My post on Sunday said we will probably issue 100m shares at 0.5p. Turns out I was a tenth of a penny out... Not the best price, but we should be fully funded now.
Why raise before the licence and off-take were in place? Maybe just to let others in at mates rates... Or maybe we need the cash now to prove we can fund the project.
There no cheap as chips with any stocks that colin .bird is with .
Hi TBTT,
I have a financial model built of the Zinc supply to GLR and the break even number is about $1,900/Tonne. I would expect this to increase because Sterling is likely to get stronger but it is still a good buffer. I personally think we will see an increase before a decrease - the stocks are still pretty low. But you are right, as with all miners the largest risk / reward is metal prices. The difference in $2,700 & $2,400 to GLR is about $3m so every movement in the price is of importance.
min 6x increase here in my imo
top up for me too , cheap as chips
Have topped up this morning - to get a placing away at a 8% discount is pretty good in current markets, no doubt some of it was forward sold - it is worth noting that quite a few juniors have doubled/trebled after funding, take EUZ or PREM as an examples
Depends on how bad the crash is, but this is not a marginal mining venture that is rendered unviable in a downturn. The Zinc percentages are astonishingly high
Unless we are expecting economic collapse when people dont have any use for zinc ;-)
Hi Total Trader!
Looking at the big picture, you're right, of course. The warrants should be good for raising another 750K in due course, as long as Colin Bird can get the share price back over 0.6p, and that would probably mean the company had enough money to get Star Zinc into production. So this MIGHT be the end of all placings for Galileo.
In your post you hit on what I believe to be the biggest risk this project now faces. Yes, Galileo will almost certainly be awarded a small scale mining licence for Star Zinc after all they have filled out all the paperwork. And yes, the offtake deal with Jubilee will be completed, and Jubilee will get Sable into production. And, indeed, yes the Ka****u mining licence (which runs out at the end of next year) will be extended as long as Galileo demonstrate they are making progress towards production there as well.
But what if there is a serious economic crash in the next few months, and the price of zinc falls through the floor (along with those of all other industrial commodities)? That, in my opinion, is where the biggest risk to this venture now lies.
yep. Thought that would happen as CB's news didn't exactly set the world alight. He would have preferred a rising SP but didn't get it. However no arguing with the fundamentals here and a good chance to average down imo
Well there we go - at least it is done now. It does not exactly come as surprise. We could have maybe hoped that it would happen a little later but there was always a risk depending upon when suppliers needed to be paid (see balance sheet).
The timing is not perfect with the SP trading at below where it has in the last few months. I thought the last RNS was to try and increase the SP before a placing but in reality the placing was already in motion.
Large warrants issued which shows that it was not easy to raise the funds and that the money from the warrants will be required, which should not be a problem at the 0.6p price. I see that CB's direct share holding has been diluted so it will be interesting to see if one of his stock purchasing vehicles have "topped up".
So there is the bad news. The good news is that funding was inevitable, most likely through a placing for working capital and at least now the "Gorilla in the room" has gone and we can concentrate on moving forward to the almost as inevitable agreement with Jubilee. On that front a recent RNS from Jubilee pulled the Zinc line forward from the pushed out Q3/Q4 2020 to H1 2020 - only small numbers to begin with, but then again GLR only need small numbers to cover their outgoings and move to cash flow positive.
I still see a £15m market cap within 12 months and then a steadily increasing one as Zinc shipments increase - providing Zinc can stay above $2,350 / Tonne.
And there's the placing.
Disappointed - bigger than I'd expected, and at a lower price, and with warrants attached. All in all, far more dilutive than I'd hoped.
The only good news is that Colin Bird makes it clear that the placings proceeds will be used to advance Star Zinc and Ka****u.
You can now buy shares for 0.42p, and I know I should be thinking about doing so, as the company is way undervalued at this market cap. But right now feeling like I've been kicked in the testicles.