I asked Dave Webb to comment on Hubert’s Blog (see below) regarding Tyhee’s finacining. Here are Dave’s comments which I have paraphrased and are written using italicized emboldened letters.

Dave said, the many way financing proceeds can make it difficult to explain. This often leads to comments that financing was mismanaged.

For example, there are prospectus financings. Although varied they basically all allow the company to sell to all (or qualified) investors through brokers. These securities, offered through a prospectus filing, may be immediately traded. Prospectus financings cost approximately $100,000 to prepare and always involve extra costs and fees to brokers which take several months to complete.

Non-prospectus financings are usually Private Placements. These can be brokered or non-brokered. Sometimes non-brokered PP are offered through brokers. Securities offered through a non-prospectus financing are held a minimum of 4 months. Non-prospectus financings can cost less than $5,000 to prepare, and may involve additional costs and fees to brokers, and take a week or two to complete.

Financings for juniors are priced through negotiation. Buyers want a low price and warrants, while brokers want a low price (easier to sell), fees and commissions are based on totals, not pricing. As such, it is basically impossible for word not to leak out. For a well managed financing the price does not drop prior to its public announcement.

Once a financing is announced, and the public is aware, they stock is either sold down, or there’s reduction in buying (often in anticipation of a drop in share price). In any event, it becomes a self fulfilling prophesy.

Tyhee’s last financing was an offer to warrant holders of a ½ warrant at an above market price with the same expiry date as their existing $0.15 warrant if they exercised today. This type of transaction is prohibited by the Venture Exchange, nevertheless this could be accomplished by an identical transaction if it was called a PP.

That said, I’ve typed in Dave’s paraphrased comments on Hubert’s blog using italicized emboldened letters.

http://tyheeinvestors.blogspot.com/

Friday, February 26, 2010

Where do we stand?

The last private placement has not been a success. The financing was 100% successful. The financing, by regulation, was offered to each and every holder of the warrants even though Tyheefinancing knew that not all would participate. Nevertheless, Tyhee got 100% participation in those that said they intended to participate and they raised the funds Tyhee wanted to get at the price that was agreed upon.

It is partly because a mistake from Tyhee but also because some market participants are trying to short Tyhee and doing anything to put it down. As Dave said, 100% success doesn’t have any mistakes.
On top on this bad situation, the credit crisis is as alive as before despite the propaganda. It is very difficult to raise money for exploration companies, including many of the Canadian ones ready to start production in the near future and this situation has been used by the sharks to make easy money OR possibly to make the small gold players easy targets for future takeovers.

The mistake from Tyhee:
I understand that many times in the past, Tyhee has tried to raise money for expenses not covered by flow-through financing. Flow-through money can be used only for specific expenses. Anything else, has to be financed through a "regular" financing. In July 2009 Tyhee decided to raise cash: $4 millions flow-through shares and $2 millions non flow-through. They got a little bit more than the $2 millions non flow-through and a lot less flow-through. They covered the missing flow-through in December.

At the time, I thought that they would have enough cash in the bank to continue both exploration and general expenses until at least drilling results and possibly the results of the PFS scheduled for the end of June. Tyhee indeed had enough funds to last until the very last drill results this Spring and the likely Pre-feasibility is delivered. So, by this coming June Tyhee would likely have had a cash balance of zero. Since it seemed like a good idea to get more cash before its treasury hit zero, a financing was needed to be completed before June. It seemed wise to plan this financing to 1) take advantage in any uptick in the market, 2) have enough time to complete it before going broke, and 3) without the need to tell investors that it is looking for cash to continue when it’s well was dry. Not a good position to be in when raising cash.

Tyhee's share price, following the December' financing, was going up -from 16cts to 28cts. It was, in my opinion, after breaking the 26cts level, going to go above 30cts on route to the next technical level: 36cts. I did mention this hope in my post titled: "ALERT!!!! Tyhee is leaving the train station " dated January 7, 2010,
Suddenly, out of nowhere, the share price starts to go down, from 28 to 19ts. Since almost all juniors were going down too, I thought "it is a general gold juniors market action...Tyhee is just part of it" NO in fact it was mainly a Tyhee' story. Did the board decide to take advantage of the higher share price to get cash with less dilution? This would probably have occurred to management. Maybe. However the fact is the share price started to be manipulated and went down. Dave didn’t think it was manipulated in January.

SO: Mistake from the board for not waiting a little bit longer? In my opinion YES. Questionable in hind sight?
The second part of the story is: How is it possible for us, regular shareholders and Tyhee' followers, not to be aware of the coming financing, while other investors can get the information? This is not the first time I have seen this happening and not with Tyhee only but many other companies. Dave thinks that there are some no-good-nicks out there. . No doubt. At times during negotiations on pricings (which is only being conducted by insiders) there’s selling pressure. John Kaiser of the Bottom Fisher Report, an expert in tracking financings, sometimes knew about a pending financing before the company did. Oftentimes, financings lead to 10% swings or more in a share price.

The only explanation I have, beside insider trading/disclosure, that I totally reject, is that the July investors are the ones who are manipulating the share price for their own benefits. We all remember how difficult and diluting the financing was...Are the sharks already in the aquarium and enjoying the taste of innocent little fish/shareholders?
If this is the case (and they would have a lot of food available to survive through the cheap warrants still not exercised) Tyhee has to get rid of them. HOW? Good question!

Legally speaking there is nothing that can be done! Except to contact the TSX when manipulation seems obvious -like the 500 shares sold so many times in the last few days. What else can Tyhee do? This activity started February 23rd, the day after Tyhee filed final closing documentation with the Exchange. Tyhee has to NEVER ASK THEM AGAIN for financing and direct the agents to stop talking to them and to keep them away from the board's decisions.
As a shareholder I am more and more thinking of submitting an official complaint to the TSX. If anyone, reading this blogdozen, is interested in joining me, please let me know.

What have we seen in the last 12 months: Total shares issued: 44 836 000 shares issued for total cash $6533000. You have to add 25 446 000 warrants to these numbers. (I did not include the February financing). If we continue with the same kind of financing, Tyhee will be worth nothing. The plant financing will never happen and the share price will be worth 5cts !!!

This appears to be a rather cynical view of the financing that was just completed.

Tyhee managed to get 4,830,000 warrants that were in the money and showing up in its fully diluted share capital converted into shares by issuing 2,415,000 warrants convertible at $0.25. This put $724,500 in its treasury. As an alternative to raising funds Tyhee could have had a conventional PP (currently the market is completing unit financings creating shares and full warrants) priced at market at best, and a 25% discount to market at worst. So, assuming an average, Tyhee could have raised $724,500 by issuing between 4.4 million shares ($0.165($0.20 x .75)) and 4.4 million warrants at $0.20, AND still have 4,830,000 warrants out at $0.15. So, net on net, Tyhee could have the funds and 2,415,000 warrants out at $0.25, as opposed to 4.4 million warrants at $0.20, AND NO COMMISSIONS OR FEES. It was a great deal for Tyhee shareholders.

So what could be the solution in order to get out of this bad situation?


Waiting for the market to react positively with good news from drilling and PFS...We have been waiting for the same in the last 2 years...for nothing! Good news we got from Tyhee...Better valuation we did not and more dilution is not helping. Don't get me wrong: Tyhee is doing a wonderful job on the exploration and advancement to production but 98% of the failures, of mining companies to go to production, is money related!

So the only solution I see is: Strong financial backing through JV or like Romarco large investors with big pockets. If you have followed Romarco' story you know that they had 2 large financings with more than 50 millions shares issued each.. Romarco has 438 millions shares fully diluted! But getting cash is not a problem (so far).
I am well aware that Dave Webb has said many times that he wants to go alone. He is sweating a lot in order to achieve this goal (and we are sweating with him). He has put in place (last year) a Shareholder Rights Plan.... BUT what if the board decides, NOW, to issue a news release saying: "The board is ready to evaluate any offer to help get Tyhee to production..........."
The share price will jump...takeover target...let them make the offer...
I remember reading an email where the sender was saying "I am ready to follow Tyhee until they are taken out..." At the time I thought...Not a chance. Maybe.... I was wrong ?

Hubert

It’s naive to think that people are not looking at Tyhee as a possible takeover. As discussed on Agoracom’s forum, a deal at these prices aren’t good for shareholders. If there was a hostile takeover attempt, they would most likely have acquired just under ten percent of Tyhee’s shares prior to disclosing and have had to have spoken to Tyhee’s largest shareholders. If there was a competing bid, the shareholders would be best served by this type of action. Whereas a friendly offer typically takes the hostile bid off the table by making it more difficult, by that, youessentially take "yourself" off the table.

Thank you Dave.

Cheers,

Baires