Global Minerals Ltd. (CTG – $0.055 & DFPN – €0.025) is going to execute a reverse stock split at a ratio of 1-for-5. In addition, the Company is conducting a financing to raise up to $3 million. It plans to use the proceeds to collect a bulk sample from the Strieborná vein on which more detailed metallurgical tests will be conducted to find out more about its lucrative antimony content.
Reverse Split & Financing
Concurrent with the close of the financing, the 1-for-5 reverse split will be executed. As a result of it, the total number of shares outstanding will be reduced from almost 111 million to a little over 22 million. So if you own 1,000 shares today, you’ll own 200 shares after the reverse split. The total value of you shares will remain equal as the stock price will go times five at the time of the split.
Additionally, Global announced that it was going to raise up to $3.0 million immediately after the reverse split. Each unit will be priced at $0.25 and will be comprised of one post-split common share and one share purchase warrant, exercisable to purchase one post-split common share for two years at a price of $0.35. So basically, a maximum of 12 million units will be offered in the financing.
Despite tough market conditions we’re positive the Company will be able to raise most of the $3 million it’s seeking. Thanks to the management’s solid reputation, Global easily raised $12.5 million in March of 2012. Although we realize market circumstances were far better two years ago, we’re convinced good reputations still go a long way. We wouldn’t be surprised when the financing is closed before the end of this month.
Use of Proceeds
As we learned in the recent audio interview with Global’s CEO, Mr. Bill Pincus, the Company is working hard on putting together a Preliminary Economic Assessment for its Silver/Antimony property Strieborná in Slovakia. That’s exactly where most of the raised funds will be attributed to. We heard that the Company is going to collect a 500 tonnes bulk sample from the Strieborná (which translates as “Silver”) vein to conduct some final metallurgical testing on.
In order to collect the sample, miners will have to make a 100 meters long tunnel, starting from the existing underground tunnel at level 6 (approximately 180 meters below surface), to intersect the vein. This will take no more than six months.
Global is making this effort because it wants to have an as realistic as possible sample. That’s the only way to conduct realistic metallurgical tests to exactly determine the silver and antimony content. In the latest analyst report on Global Minerals, it was mentioned that “Antimony is a product of which the reserves are expected to run out in the next 8 to 12 years. Based on the current resource estimate, Strieborná contains about 56 million pounds of antimony with a gross market value of $250 million.” It’s obviously important to determine this because producing antimony as a by-product can have a significant economic benefit to the project.
It’s always unfortunate to do a financing at a depressed stock price. However, Global Minerals needs the money now to continue its progress at Strieborná.
I, for one, prefer to own diluted shares of a company which puts its head down and moves forward, than to own non-diluted shares of a company that hibernates. So at the end of the day, Global made a tough but correct decision.
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