Explainer
Every share and warrant issued reduces the ownership percentage of existing holders. Calculate both immediate dilution from new shares and potential future dilution from warrants.
Immediate dilution = new shares issued ÷ (existing shares + new shares). Warrants create potential future dilution when exercised. Bought deals and private placements both dilute. Flow-through shares often carry a premium but still dilute.
How many new shares are being issued? 2. What is the current share count? 3. How many warrants are attached and at what strike? 4. What is the use of proceeds? 5. Are insiders participating? 6. How frequently does the company raise?
100 million shares outstanding. Raise C$10 million at C$0.50 = 20 million new shares. Immediate dilution ≈ 16.7%. Half warrant on each unit adds up to 10 million potential future shares. Fully diluted share count becomes 130 million if all warrants are exercised.
Count new shares and warrants. Check use of proceeds and insider participation. Dilution is certain; geological success is not.
Commodity Ape is information and commentary, not investment advice. Junior resource stocks are high risk and can lose most or all of their value. Do your own work.