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In a significant move to bolster its financial standing, Defense Metals Corp. has successfully concluded a private placement, garnering a total of C$16,153,334. This funding will be instrumental in advancing the company’s initiatives, particularly the Wicheeda project, which focuses on the extraction of rare earth elements.
The financing structure included both a brokered and a non-brokered offering. The brokered offering alone accounted for C$11,500,200, where 38,334,000 units were sold at a price of C$0.30 each. This successful placement demonstrates the strong support and confidence from investors and financial partners.
Details of the financing offerings
Under the terms of the brokered offering, the company also allowed for a 15% increase in the overall size, which was fully exercised, showcasing the demand for the units. The non-brokered offering contributed an additional C$4,653,134 through the sale of 15,510,446 units. Furthermore, there is an anticipated second tranche of the non-brokered offering expected to close soon, potentially adding C$570,000 to the total raised.
Structure of the units sold
The units sold in the offerings consist of one Class A common share and half of a warrant. Each warrant allows the holder to purchase an additional common share at C$0.45 until October 31. Notably, the warrants can expire sooner if the company’s shares reach a closing price of $0.90 for ten consecutive trading days, which indicates a robust market interest.
Mark Tory, the CEO of Defense Metals, expressed his gratitude towards investors, 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.” He emphasized that this funding positions the company well for initiating the Bankable Feasibility Study early in the upcoming period.
Agent involvement and fees
The brokered offering was facilitated by Paradigm Capital Inc. as the lead agent, along with EAS Advisors LLC and others. In return 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 are exercisable at $0.30 per share until the same expiration date as the warrants.
Additionally, the company compensated arm’s length finders with $41,582 and issued 63,708 compensation options in connection with the non-brokered offering. The compensation options also follow a standard four-month hold period ending on March 1.
Utilization of funds
The funds raised will be strategically utilized for a variety of purposes, including further optimizing the flow sheet developed in the pre-feasibility study, conducting pilot plant test work, and performing energy and transmission studies. Additionally, plans to initiate a feasibility study on the Wicheeda project are set for early in the upcoming period, along with ongoing baseline studies necessary for future permitting.
Moreover, the company plans to cover operational expenses and general corporate needs, ensuring a comprehensive approach to utilizing the raised capital effectively.
Importantly, insider participation in the non-brokered offering amounted to approximately C$670,300. This involvement is categorized as a related party transaction, and the company is relying on certain exemptions to proceed without formal valuations or minority shareholder approvals, given that the transaction’s value does not exceed 25% of the company’s market capitalization.
Regulatory considerations
The securities involved in this offering have not been registered under the U.S. Securities Act and, therefore, cannot be sold in the United States without proper registration or exemption. Any potential offering in the U.S. will need to comply with necessary regulations and provide detailed information about Defense Metals and its management.
For more information about Defense Metals and its activities, interested parties can visit www.defensemetals.com or reach out directly to the company’s CEO, Mark Tory.
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