What would happen?
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This is another financing.... about 5 or so since I first mentioned this back in March/April
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Equity partner.... NOT jv partner... there is a huge difference, we would have had less dilution as we may have got one in at .50 with wts at 75 and for only 10 million shares for the same initial cash into the company ....
Wts at .75 would have put another $7.5 million in, thus a $12.5 million dollar cash infusion and we would have had 100+ holes drilled by now....JMHO
Sure we still have 100% of our 80% but we also have more shares out, another financing underway, and very little money in the till. We certainly would have been better off to approach a Teck / BHP/ Debeers/ Shore gold back then... stuffed our cash position and ramped up the whole play.... The opportunity to ramp it up has passed us by..... and one has to deal with the situation at the time..... I try to find solutions to maintain investor % of play..... doing financing after financing is death by a thousand cuts.
I brought this up well before this date and figured I should put it in writing ....This wasn't just a off the market comment... I was very serious about the funding/ float/ exploration rate/ etc etc etc
FYI:
May 6th/07
Hello Bob.
Hope everything is going well. I have been doing some thinking in regard to the plans Allan and yourself have mentioned to me in the past few months.. That being to ramp up the soil sampling etc on the large unexplored portion of the properties... primarily in the indicator minerals and potential drilling targets.
Perception is a very fundamental behavior which sets market capitalization of any company... and thus any financing and share dilution are therefore tied to that perception.
The Debeers offer to process the bulk sample aids immensely to the perception that we are on to something very worth while at mud Lake.
My concern is that as the time ticks by that we will not be able to capitalize on this years summer season... I , like you would not want to see a joint venture but a sugar daddy is an option... such as BHP or Teck or Debeers.
I would prefer to see BHP, Teck or one of the other majors other than Debeers involved in an equity financing... I am suggesting this for the following reasons.
1) they would likely come in at a premium to market... IE .50 with a full wt @ .75 to $1.00 A 10 million share placement at $.50 would provide sufficient funds to do a bang up job over the next 12 months... thus eliminating any further funding in the next year.
2) The exposure of a major as an equity partner would substantiate the validity of the project in the eyes of the individual investor... these are the guys that maintain the market valuation on a day to day basis...
3) Eliminating the perception of ongoing financing will aid in advancing the price, as investors are not wary of more paper hitting the market...
4) in order to maximize their percentage of ownership the major will exercise his warrants with new money and not adversely impact the market.
5) all of the above will slow the dilution even if the major does not exercise his wts ( Suggest escalator clause, on price and work performance) Market financing would be a substantially higher price.
6) Funding now will enable a major program this year.... waiting much longer and this year will be a miss or reduced program.
7) A major involved now as an equity partner maintains ownership and control of the project in your hands and leaves the door open for other offers....Debeers as second kissing cousin.
This is about strategy down the line and how to optimize our eventual takeout price.... Having a minority sugar daddy almost ensures that we will have 2 bids to any takeover opportunity... the major now having a slight advantage of existing share position... I suggest 10 million with 10 Mm wts would net a 20% position, if the wts are exercised. This is in my opinion the just right amount... This would fund the company for several years with the existing wt and option positions.
I suggested this to Allan but he seams to think we can fund a major program this year... My concern is that however this is done via the open market it substantially increases the float.
Just thought I would pass on my suggestion.
Have a great weekend
Dave
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