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Defense Metals Corp., a prominent player in the mining sector, has announced the successful closure of its recent private placement initiative. This strategic move has garnered C$16,153,334 in gross proceeds, positioning the company for the next phase of its Wicheeda project. The funds will be instrumental in advancing key studies and operational work as the company consolidates its market position.
The private placement consisted of two components: the brokered offering and the non-brokered offering.
The company raised an impressive C$11,500,200 through the brokered offering by issuing a total of 38,334,000 units, each priced at C$0.30. The success of this segment was bolstered by the full exercise of an option that allowed agents to expand the offering by approximately 15%.
Table of Contents:
Breakdown of the offerings
The non-brokered offering contributed an additional C$4,653,134, with 15,510,446 units sold. This offering is expected to see a second tranche closing shortly, potentially adding another C$570,000 to the total proceeds. The funds generated from both offerings will significantly aid in the ongoing development activities.
Understanding the units sold
Each unit that was sold under this private placement comprises one Class A common share and half of a Common Share purchase warrant. Holders of these warrants can purchase an additional common share at a set price of C$0.45 until October 31. Notably, these warrants may face an expedited expiration if the company’s shares reach a closing price of $0.90 for a consecutive period of ten trading days.
Mark Tory, the company’s CEO, expressed his gratitude for the substantial backing from both new and existing investors. He conveyed optimism about the financial position the company has achieved, stating, “We are now in a solid financial position to move forward with starting the Bankable Feasibility Study in the near future.”
Agents and compensation details
In facilitating the brokered offering, Paradigm Capital Inc. served as the lead agent, with EAS Advisors LLC also playing a key role. For their services, the agents received a total of C$805,014 in cash commissions along with 2,683,380 non-transferable compensation options. These options allow them to acquire common shares at $0.30 per share until October 31.
Furthermore, the company allocated $41,582 in finder’s fees and issued 63,708 compensation options to arm’s length finders in relation to the non-brokered offering. The compensation options are subject to a mandatory four-month hold period, expiring on March 1.
Investment opportunities and regulations
The units acquired by Canadian residents under the LIFE Exemption are exempt from any hold period, apart from the four-month hold mandated by the TSX Venture Exchange policies. It is essential to note that the completion of the offerings awaits the final approval from the TSXV.
Defense Metals intends to allocate the net proceeds from this offering towards various initiatives, including optimization testing of the flow sheet detailed in a prior pre-feasibility study and conducting pilot plant test work. The funds will also support energy and transmission studies, initiate a feasibility assessment of the Wicheeda project soon, and facilitate ongoing baseline studies required for future permitting processes.
Notably, insider participation in the non-brokered offering amounted to approximately C$670,300. This participation qualifies as a related party transaction under the Multilateral Instrument 61-101 regulations. The company has opted to rely on exemptions from formal valuation requirements and minority shareholder approval stipulations.
Conclusion and forward-looking statements
The securities discussed in this announcement have not been registered under the U.S. Securities Act and cannot be sold or offered within the United States without appropriate registration or exemption. This news release does not serve as an offer to sell or a solicitation to purchase any securities.
In conclusion, Defense Metals is poised to leverage the funds raised through this private placement to propel its Wicheeda project forward, navigating the various regulatory and operational challenges ahead. With a solid financial foundation, the company is optimistic about its future prospects in the rare earth elements market.
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