How it works
Dilution, in one cycle. Nothing here is a prediction: every step is a public filing, and every number on the site links to the one it came from.
Most small companies on the ASX are building something before it pays for itself, so they fund the work by selling new shares. That is normal, and it is how exploration and early-stage businesses get built. Each step leaves a public filing, and each filing changes how much of the company one share represents. DilutionLens reads those filings so you can see where a company is in the cycle, and what that means for a holding.
Cash burns
Every three months a company reports how much cash it has and how much it spent. Divide one by the other and you get runway: how many quarters the work is funded for. For an explorer or an early-stage business, spending ahead of revenue is the plan, and the cash report says how far the plan is funded.
Where to see it: the runway on every company page, and the cash-cover band on the screener
Trading halt
Before a raise, the company asks the ASX to pause its shares for a day or two, citing a capital raising. The halt is the first public sign that new shares are on the way, and the terms usually follow inside it.
Where to see it: the Halts page, live and recent, with the reason each company gave
The raise
New shares are sold, to big investors in a placement, to existing holders in an entitlement offer or share purchase plan, or both. The announcement states the price and the amount. Holders who take part keep their share of the company; holders who do not end up with a smaller one.
Where to see it: the Raises page for the last 30 days; each company page keeps its history
The filing, and the 15%
Every new issue is lodged on a form called an Appendix 3B. It states how many shares are to be issued and under which rule. A listed company may issue up to 15% of its shares in any 12 months without asking holders. Add up the 3Bs and you know how much of that room has been used, and when the next raise needs a vote.
Where to see it: the capacity line on every company page, and the Capacity page for companies past 75%
Options and rights
Raises often come with options or performance rights: shares that do not exist yet but can be created later, when a holder exercises them or the company meets a milestone. They sit over the register until then, or lapse. The total is the overhang. The part that can be exercised at a profit today is in the money.
Where to see it: the register and the overhang on every company page
The share count grows
Placement shares, exercised options, converted notes: each one adds to the count. The company is the same size, there are more shares in it, so each share is a smaller piece. Whether that mattered depends on what the money bought, and the next cash report starts the cycle again.
Where to see it: the share-count chart at the top of every company page, and the 24-month growth figure
What the risk level is
One word per company that sums the cycle up: how much runway is left, how fast the share count has grown, how often the company has raised, how large the overhang is and how much of it is in the money, and whether a new issue is already pending. It says where a company sits in the cycle today. It does not say whether a raise was a good one, or what the company does next. Methodology has the scoring and every definition.
Go deeper
The six steps above are the story. This is the arithmetic underneath it, worked on one ordinary placement from the public record, for anyone studying finance or checking our work. It illustrates the mechanics; it is not a view on the company.
Two things called dilution
Ownership dilution is arithmetic: your shares over a larger count. It happens on every issue, whatever the price. Value dilution depends on the price. Shares sold below the market price move value from holders who did not take part to those who did; shares sold above it do the opposite. A raise can dilute your ownership and still add value to your share, or take from both. The two are worked out separately below.
A worked example
Gateway Mining placed 562,500,000 shares at 8 cents on 9 September 2026, a 16.7% discount to the last close of 9.6 cents. Every input is in the company's own announcement and its Appendix 3B; the share count is the ASX register on 9 September 2026.
| Gateway Mining (GML), placement of 9 September 2026 | Figure | Where it comes from |
|---|---|---|
| Shares on issue before | 2,322,814,859 | ASX share count, 9 September 2026 |
| New shares placed | 562,500,000 | the announcement and the Appendix 3B |
| Issue price | 8.0c | the announcement |
| Last close before the raise | 9.6c | the announcement: a 16.7% discount |
| Proceeds | A$45.0M | 562,500,000 × 8.0c |
| Shares on issue after | 2,885,314,859 | before + new |
| A 1% holding becomes | 0.805% | 1% × 2,322,814,859 ÷ 2,885,314,859 |
| Existing holders diluted by | 19.5% | new ÷ after: the share of the enlarged company that is new |
| Blended value per share | 9.29c | (2,322,814,859 × 9.6c + 562,500,000 × 8.0c) ÷ 2,885,314,859 |
| Existing share, value change | -3.2% | 9.6c to 9.29c: the value effect of the discount on a share that did not take part |
| Placement share, value change | +16.1% | 8.0c to 9.29c: the value effect on a share issued in the placement |
The ownership line follows from the share count alone; the value line follows from the discount. At a 16.7% discount, the arithmetic moves about 3.2% of the value of an existing share to the new shares, which are issued at about 14% below the blended figure. Discounts of this size are ordinary for a placement. What the money is spent on is what decides whether the raise served holders, and no formula answers that.
Entitlement offers: the same idea, with a formula
When every holder is offered new shares in proportion, the value transfer is between holders who take up and those who do not, and the reference price is the theoretical ex-rights price: (shares before × market price + new shares × offer price) ÷ shares after. It is the blended figure in the table, applied to an offer where the participants are the existing holders.
Where the 15% comes from, and why we say estimate
Listing Rule 7.1 lets a company issue 15% of its ordinary shares in any 12 months without a holder vote. Rule 7.1A lets a smaller company vote itself a further 10% at its annual meeting, valid for a year. Rule 7.4 lets holders ratify a placement after the fact, which adds those shares back to the base the 15% is measured from.
The same placement shows all three rules working together. Fifteen percent of the share count a year before the issue, 1,908,820,295 shares, is 286,323,044. The form states 330,218,514 shares under rule 7.1 and 232,281,486 under 7.1A, more than that base alone would allow, and the explanation is in the public record: at the annual meeting on 24 November 2025 holders approved the 10% capacity and ratified the October 2025 placement. Ratified shares join the base, so the company measures its 15% and 10% from the current count of 2,322,814,859, of which 10% is exactly 232,281,486. Everything reconciles once the meeting is read. The votes are on the record; they are not on the 3B. That is why the capacity line on every company page is labelled an estimate before ratification, and why its rows link to the filings so the base can be checked.
Options are a dilution-adjusted share count
Options and performance rights are shares that may be created later at a set price or on a set condition. The fully diluted count adds them all; the in-the-money count adds only those whose exercise price is below today's. On this company the overhang is about 7% of the register, so the two counts sit close together. On companies where the overhang is a third of the register, the difference between the two is the difference between two valuations.
References: ASX Listing Rules, Chapter 7 (rules 7.1, 7.1A, 7.4); ASX Guidance Note 21, The restrictions on issuing equity securities in Chapter 7 of the Listing Rules. Figures in the example are from Gateway Mining's announcement and Appendix 3B of 9 September 2026 and its results of meeting of 24 November 2025.
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General information only, not financial advice. DilutionLens reads ASX announcements as lodged: Appendix filings, quarterly cash reports and raise notices. Which companies are covered, and how well, is under Coverage in Methodology.