How will the issuance of 6.8 million units and 7.15 million flow‑through shares at C$0.05 affect the current share count and dilution risk?

Impact on the share base

The first tranche adds two distinct components to the capital structure:

Net immediate increase: 13.95 million shares.

Maximum possible increase (including warrant exercise): ≈ 17.35 million shares.

Rocky Shore’s most recent proxy disclosed roughly 20 million shares outstanding (pre‑offering). Using that baseline:

• Immediate dilution = 13.95 M ÷ (20 M + 13.95 M) ≈ 41 %.
  
• Full‑dilution (warrants exercised) = 17.35 M ÷ (20 M + 17.35 M) ≈ 46 %.

Thus the financing adds a sizeable new pool of shares, pushing the ownership stake of existing shareholders down by roughly one‑third to one‑half, depending on warrant conversion.

Trading implications

• Short‑term price pressure – The market will price‑in the ~C$0.05 per‑share dilution, which is modest cash relative to the share base. Expect a downward bias on the stock over the next few sessions as the new supply hits the order book, especially if liquidity is thin. Look for the price to test the recent low‑volume support zone (≈ C$0.12‑C$0.14) before any rebound.
• Fundamental offset – The CAD $0.70 m gross proceeds are insufficient to materially fund large‑scale exploration, but the FT component is tax‑advantaged for investors. If the capital is deployed into a high‑grade target that quickly shows resource growth, the dilution could be justified and the stock may recover on the back‑of‑the‑envelope EPS uplift once the cash is turned into mineral reserves.
• Actionable view –
  
  • If you are already long: be prepared for a 5‑10 % pull‑back as the new shares settle. Use the dip to add to positions only if the company’s drill‑results pipeline remains strong and the market continues to value the FT tax shield.
    
  • If you are short or neutral: the dilution creates a near‑term bearish catalyst; consider a short‑term sell‑stop or a credit spread (e.g., sell a put at the current price and buy a lower‑strike put) to capture the anticipated dip while limiting risk.
    
  • Watch the warrant timeline: warrants typically expire 18‑24 months after issuance. If the price stays well above the C$0.05 strike as expiry approaches, the additional ~3.4 M shares could be forced into the market, adding another layer of upside‑side risk for shorts.

In sum, the 6.8 M units + 7.15 M FT shares raise the share count by roughly 14 M shares today, creating ~40 % immediate dilution (up to ~46 % with warrant exercise). The modest cash infusion means the dilution risk outweighs the immediate funding benefit, so the stock is likely to face short‑term downward pressure unless a clear, value‑creating use of proceeds materialises.