X-Terra Resources Closes “Strategic” Financing At 50% Discount To Market Price
X-Terra Resources Inc (TSXV: XTT) announced this evening that it has closed a “strategic” private placement for gross proceeds of $700,000. The placement, conducted at $0.10 per unit, currently features in-the-money shares and warrants, with units sold at a price that the company has not traded at for at least a month. The kicker, is that insiders are the company were also involved in the “strategic” financing.
The financing saw a total of 7,000,000 units of the company sold at this price of $0.10, with each unit comprising of one common share and one common share purchase warrant. Each warrant entitles the holder to acquire one common share at a price of $0.15 for a period of two years from the date of issue.
Proceeds from the financing are said to be used for exploration on certain of its mining properties in Quebec and New Brunswick, along with working capital purposes.
While the company indicates that the financing is strategic in nature, it’s unclear what specifically is strategic about the financing. The company saw one insider participate to the tune of $100,000, or roughly 14.3% of the total financing, indicating that the strategy at hand was not to get one specific large investor involved in the organization.
The company last conducted a private placement in March of this year, raising $240,000 at $0.08, with warrants being priced at $0.13. Given the recent share price performance of the company, it’s likely that those warrants have now been exercised, putting another $390,000 in the treasury. At the time of closing of that transaction, the company had closed the market the day prior at a price of $0.06 – demonstrating that some degree of demand existed for the company. Thus, its unclear why the company would conduct its most recent placement at such a discount to the market.
Securities issued under the strategic placement are subject to a four month hold, expiry December 8, 2020.
X-Terra Resources last traded at $0.20 on the TSX Venture.
Information for this briefing was found via Sedar and X-Terra Resources. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
2 weeks ago the share price was 12 cents. Pretty sure a private placement doesn’t appear out of thin air – takes a couple or three weeks to put together, so 10 cents at that time was perfectly reasonable, couple cents below the price at the time.