"Pursuant to the terms of the note, Ms. Kent converted the note into units at $0.05. Each unit consisted of a common share and a common share purchase warrant exercisable at $0.10. The conversion of the principal amount, warrants and interest resulted in the issuance of 8,255,714 shares to Ms. Kent."
The principal debt was C$200K. It was eliminated with the $.05 conversion to common shares:
C$200,000 / $.05 = 4,000,000 common shares
I can see this registered on SEDI. However, on SEDI, I can also see the common shares converted from warrants.
4,000,000 common shares * $.10 = C$400,000
The only way PK could have exercised the warrants is by paying $.10 for each common share. As a result, the C$400,000 has to be new money.
So, it sounds like PK's actions had a positive impact to the balance of about C$600,000 (C$200,000 elimination of debt and C$400,000 new cash), plus interest elimination.
It looks like we picked up C$750,000 in new cash this week (C$400K from PK and C$350,000 from the Poderosa deal).
I think I now have a firmer guess as to why PK converted her debentures and exercised the warrants at this time (when she didn't have to for a long time into the future). I think it might be to assist with eliminating the $1M cash that is due to MRI. The C$750,000 goes a long ways towards this objective, without having to rely too much on existing cash balance and cash flow from San Juan.
As a side note, it means we increased our assets this week by C$1,120,000 (the C$750,000 cash + C$370,000 value of the Poderosa shares).
Potentially, some of that asset value was parlayed into eliminating $1,200,000 debt ($200K PK + $1M MRI)from our balance sheet (plus the elimination of interests).
The sell off in our share price this week is very unfortunate, especially given all the positive business developments.
1 comment:
Production, thanks for that post. I must admit that even I overlooked the fact that PK put up $400,000 new money to convert the warrants into shares. This is akin to insider buying and should be a bullish indicator.
Based on many posts I've read over the years on many different forums, many retail shareholders don't understand what a warrant is and don't know that you have to pay to convert warrants into shares.
It is common practice for insiders, or other companies that have provided financing, to sell their shares to raise the cash to pay for the conversion of shares into warrants. We've even seen companies, that had provided financing to CMM in the past, first sell all of their shares and just before the in-the-money warrants were about to expire, embark on a plan to convert a small number of warrants to shares, sell those, and then use that cash to convert more warrants into shares. This would continue until all of the warrants were converted and all the shares sold.
Since the SEDI filings have now been updated, we know that PK hasn't sold any shares to raise the $400,000 needed to convert the warrants into shares. This is all new personal money that she has put into CMM's coffers.
Post a Comment