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In a significant financial move, Defense Metals Corp. has successfully concluded its private placement efforts, amassing a total of C$16,153,334. This funding, derived from both a brokered and a non-brokered private offering, positions the company strongly as it prepares to advance its Wicheeda rare earth project.
Details of the private placements
The brokered offering yielded gross proceeds of C$11,500,200, with the issuance of 38,334,000 units priced at C$0.30 each. This amount reflects the full exercise of an option allowing an increase of up to 15% in the offering size, showcasing strong market demand.
Meanwhile, the non-brokered offering generated C$4,653,134 through the sale of 15,510,446 units. Anticipation surrounds an additional tranche of this offering, which is expected to conclude in the coming days, potentially bringing in another C$570,000.
Understanding the units and terms
Each unit sold in these offerings comprises one Class A common share along with one-half of a common share purchase warrant. Each complete warrant grants the holder the right to purchase another common share at C$0.45 until October 31. Notably, these warrants may face an accelerated expiry if the company’s shares maintain a trading price of $0.90 or more for ten consecutive days.
Leadership comments and future plans
Mark Tory, the CEO of Defense Metals, expressed gratitude for the robust support from investors and partners, stating, “I am extremely pleased with the level of support in relation to the Offering and would like to thank our financial partners and all of the investors, both existing and new, for their enthusiasm and support.” This funding provides the company with a solid financial base to initiate a Bankable Feasibility Study slated for the first quarter of the following year.
Utilization of funds
The proceeds from the private placements will be strategically allocated towards optimizing the flow sheet established in the pre-feasibility study, conducting essential pilot plant tests, and carrying out energy and transmission studies. Additionally, the company plans to commence a feasibility study for the Wicheeda project in the near future.
Operating expenses and general corporate purposes will also benefit from these funds, ensuring a comprehensive approach to project advancement while maintaining operational efficiency.
Compliance and insider participation
Insider participation in the non-brokered offering accounted for approximately C$670,300. This involvement is classified as a related party transaction, for which the company is leveraging exemptions from formal valuation and minority shareholder approval requirements under the applicable regulations.
Furthermore, all securities issued under the private placements have not been registered with the U.S. Securities Act and cannot be sold in the United States without appropriate registration or exemption. This stipulation underlines the importance of regulatory compliance in such financial transactions.
Looking ahead
As Defense Metals prepares to utilize these funds, the company remains focused on the successful development of the Wicheeda project, which is poised to play a significant role in the rare earth elements market. The ongoing support from investors and strategic planning will be crucial in navigating the challenges of resource extraction and market fluctuations.
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