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The Financing Clouds are rolling in
Wingman
December 05, 2023
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
If ever compensated for an article, it will be mentioned here.
Gold performed exceptionally well last week, reaching notable heights, and on Sunday it really moved. However, the positive momentum took a turn as it underwent a healthy retracement on Monday morning.
Meanwhile, Bitcoin took center stage, maintaining its strength throughout the day.
What caused the run? Well besides all the other sh*t going on in the world, the Sunday run-up could’ve been attributed to this news:
Regardless, Gold has been making moves and there is a lot of turmoil in the world.
Exploration ventures require a significant amount of capital and the payoff is wealth creation through discovery. You do not invest in these companies for a 3% return year-over-year.
Unless operating as a prospect generator, collaborating with partners who cover option payments and exploration expenses, most exploration firms depend on market funding for ongoing drilling activities.
While there are alternative financing avenues, such as selling non-core metal royalties (a strategy that makes more sense in the later stages), the primary recourse often involves issuing additional shares.
Investors and speculators observe the horizon for signs of an impending financial storm as the clouds of financing gather. However, predicting the market's reaction remains difficult until the specific dollar amount and financing terms are disclosed.
These financial clouds materialize intermittently, and their size is unpredictable. Striking the right balance is crucial because going too big with financing can lead to devasting dilution, making the company less attractive to investors and limiting future financing options. It's a delicate dance where securing the necessary funds must align with maintaining the company's appeal in the eyes of investors.
There were a few stories regarding equity financing that caught our eye.
That’s quite a headline given that $PNPN closed Monday at C$0.26.
The financing was completed with investors secured for Power Nickel by Wealth Creation Preservation & Donation Inc. ("Wealth" or "WCPD"). To ensure this process was done in the least dilutive way possible, Power Nickel arranged to have WCPD Group organize a consortium of Quebec-based investors who made an initial investment of $2.75 million representing 3,055,556 flow-through shares at $0.90 per flow-through share. As part of the process, CVMR Inc acquired these shares from the front-end purchasers for $0.45 per share. All shares issued bear a hold period of four months and one day from the closing date. The private placement is subject to the Company's completion of its filing requirements with the TSX Venture Exchange (TSXV) and TSXV approval.
This is interesting and we want to direct you to the August 15 $PNPN Press Release. CVMR is being paid to work for $PNPN, and while they may believe in the project, theoretically, they could still be sellers.
Power Nickel signed the contract with CVMR on August 2 and CVMR will commence work on the project immediately and look to produce a various reports and deliverables over a nine-month period. The Company will pay an initial deposit of $2,250,000 to CVMR to commence work.
If anyone can point to an interview or write-up that mentions in more detail the contract with CVMR, please paste in the comments below.
But, define acquired? Does that mean they paid for the shares or were they given in exchange for their service?
Because even though they have an average of C$0.45, does it matter if they sell above or below C$0.45 if it is in exchange for their service?
Regardless, it is notable that with a price of C$0.90, the outstanding shares are significantly less than acquiring C$2.75 million at C$0.26.
"It's been a creative collaboration working with CVMR on structuring this deal. Given their access to internal facilities and staff that is far less expensive than how we could expect to acquire this analysis from traditional suppliers.”
No position, but not every day you see a headline like that.
Now $FNI is in our portfolio and we were waiting to hear what the damage was going to be.
Make sure to subscribe to get our weekly maintenance checks on our portfolio and if we are buying or selling something.
Fathom Nickel Inc. (CSE: FNI) (FSE: 6Q5) (OTCQB: FNICF) (the "Company" or "Fathom") is pleased to announce a non-brokered private placement financing for aggregate gross proceeds of up to C$4,500,000 (the "Offering"). The Offering will consist of a combination of: (i) charity flow-through units (the "Charity FT Units") at C$0.17 per Charity FT Unit; (ii) flow-through units (the "FT Units") at C$0.13 per FT Unit; and (iii) hard dollar units (the "HD Units") at C$0.11 per HD Unit of the Company.
Each Charity FT Unit shall consist of one charity flow-through Common Share (a "Charity FT Share") and one transferable Common Share purchase warrant (a "Warrant") that shall be exercisable into one Common Share (a "Warrant Share") for a period of 24 months from issuance at an exercise price of C$0.20.
So, this is the announcement, not the closing of the private placement. It could be more or less.
The good news is that they are planning for a substantial raise, so metres will be drilled next year.
The bad news is that they are opting for a substantial raise, so dilution will likely occur next year.
What matters is whether they can add substantial value through the drill bit, and we believe they have a good shot at doing just that.
You’re bound to get a response when a company with a market cap of ~C$345 million announces an C$80 million bought deal.
We have no position here, so no opinion on the matter, but the $AR chat board on ceo.ca had quite a few.
However, the shares outstanding after closing this bought deal will be north of a billion. A lot of value will need to be added to move the stock two cents.
At least, that’s our two cents.
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