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In a significant development for the mining sector, Defense Metals Corp. has announced the completion of a private placement that garnered a total of C$16,153,334 in gross proceeds. This strategic move is aimed at advancing the company’s initiatives, particularly the Wicheeda project, which focuses on rare earth elements. The financing was executed through a combination of a brokered offering and a non-brokered placement, showcasing strong investor confidence in the company’s future prospects.
Table of Contents:
Details of the private placement
In the brokered offering segment, Defense Metals successfully raised C$11,500,200, which translated into the issuance of 38,334,000 units at a price of C$0.30 per unit. Notably, this amount reflects the full exercise of a previously granted option that allowed the offering size to increase by up to 15%. The units issued consist of one Class A common share and a warrant, enhancing the investment attractiveness.
Non-brokered offering insights
Concurrently, the non-brokered offering raised an impressive C$4,653,134 by issuing 15,510,446 units. The company is also preparing to finalize a second tranche of this offering, which could yield an additional C$570,000 in proceeds shortly. These funds will be pivotal in furthering the company’s objectives and operational capabilities.
Financial implications and future plans
The raised funds are earmarked for various strategic initiatives, including optimization tests related to the flow sheet developed during prior studies. Defense Metals intends to embark on a Bankable Feasibility Study in the near future, which is crucial for assessing the viability of their projects. The company’s CEO, Mark Tory, expressed gratitude towards investors for their support, emphasizing that this financial backing positions the company favorably for future endeavors.
Agent involvement and compensation
Paradigm Capital Inc. acted as the lead agent for the brokered offering, alongside EAS Advisors LLC, which facilitated the overall process. In return for their services, the agents received a total cash commission of C$805,014 and were granted non-transferable compensation options totaling 2,683,380. Each of these options allows the purchase of a common share at C$0.30 until a specified date. Moreover, finders fees and additional compensation options were provided to recognize the contributions of various stakeholders.
Legal and regulatory considerations
The units sold were issued under a prospectus-exempt basis according to the listed issuer financing exemption. This exemption allows the company to raise capital without the lengthy process of a prospectus, thereby expediting funding to support its projects. However, it is essential to note that the securities involved will not be registered under the U.S. Securities Act, preventing their sale within the United States without proper registration or applicable exemptions.
Insider participation and related party transactions
Interestingly, company insiders participated in the non-brokered offering, contributing around C$670,300. This involvement is categorized as a related party transaction and is compliant with relevant regulations, which allow for certain exemptions from formal valuation requirements.
Utilization of proceeds
The net proceeds from this offering are anticipated to support numerous activities, including the optimization of the flow sheet detailed in the company’s recent pre-feasibility study. Funding will also facilitate pilot plant testing, energy studies, and ongoing baseline studies crucial for future permitting processes. Furthermore, a portion of the capital will be allocated for operational expenses and general corporate purposes.
Overall, the successful closure of this private placement marks a pivotal moment for Defense Metals Corp., as it embarks on an ambitious path to enhance its contributions to the rare earth elements sector while ensuring robust financial health moving forward.
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