Re: KWG Files Amended and Restated Preliminary Short Form Prospectus for Equity...
posted on
Nov 15, 2014 12:49AM
Black Horse deposit has an Inferred Resource Now 85.9 Million Tonnes @ 34.5%
The NR say: "Each unit (a “Unit”) is comprised of three non “flow-through” common shares of KWG (each an “Offered Common Share”) and two non “flow-through” common share purchase warrants (each an “Offered Warrant”) at a price of $0.15 per Unit (the “Unit Offering Price”). Each Offered Warrant will entitle the holder to purchase one non “flow-through” common share of KWG (a “Warrant Share”) until the date that is 24 months following the closing of the Offering at a price of $0.10 per Warrant Share.
In addition, the Offering includes common shares of KWG, which will each qualify as a “flow-through share” (each, a “Flow-Through Share”) within the meaning of the Income Tax Act (Canada) at a price of $0.05 per Flow-Through Share (the “Flow-Through Offering Price”)."
This is similar to the NR for the previous Prospectus with price reduction (~10%)
- Non flow-through: From $0.165 to $0.150 per 3 units (or from $0.055 to 0.050 per 1 unit). Each 3 unit has 2 wts attached (conversion to 1wt to 1 share at $ 0.10)
- Flow-through: From $0.055 to 0.050 per shares.
It's not clear (at least to me) how the non flow-through and flow-through mix would be applied to arrive at the desire amount (say the max $10M for discussion purposes), but in general term, a price reduction would mean additional dilution. However, a 10% price reduction for the offering would only change the end result by ~2% if the total OS is considered (Current OS: 778Ms, additional shares to raise $10M: 200Ms (at $0.05/s), and 182Ms (at $0.055/s). How would CLF holding be affected after the offering?
- Shares only ($10M in KWG treasury): CLF holding would be reduced from 14% to 11.4% (compared to "new holders": 20%)
- All wts in offering exercised (additional $13M in KWG treasury): CLF holding reduced to 10% (compared to "new holders" ~30%).
Notes:(a) KSU holding would be reduced from 10% (2012) to 7% and 6.3% respectively; (b) management: <10% before offering.
Please note that the above results were based on simple assumptions for a general picture following the offering...and don't forget to check my math.
Bottom line: Price reduction in offering would not change the big picture much. If the maximum amount was raised then KWG would rake in $10M and an additional $13M (after the wt conversion) which are quite good under the current market conditions.
goldhunter