Princeton Mining Corporation - financing for Huckleberry Project?
I'm looking for some advise on Princeton Mining Corporation (PMC) which is looking to raise cash for a new mine.
I received in the mail on May 3rd a package from PMC, advising of a Special Meeting (on May 21st 1996) to vote on the issuance of more Common Shares (warrants) and debit securities to raise money for the Huckleberry Copper Mine Project.
To quote part of the notice:
"Over the past year the Corporation has been developing the Huckleberry Copper Mine Project near Houston, British Columbia. The Corporation received a Project Approval Certificate from the British Columbia Government on December 27, 1995 which enabled regulatory agencies to issue the permits, licenses and approvals necessary to permit logging, site preparation and construction of the new eight kilometre section of the access road. This preliminary work
began in March 1996. In addition, on March 27, 1996 the Corporation was informed that it had completed the assessment process under the Canadian Environmental Assessment Act for development of the Project."
"The Corporation is developing Huckleberry Project through a strategic
alliance with a consortium of Japanese companies. Under this alliance, the Corporation would sell a 40% equity interest in Huckleberry Mines Ltd. ("HML")(the Corporation's wholly-owned subsidiary through which the Huckleberry Project is being developed) to the Japanese companies. The Japanese companies have also agreed to a long term copper concentrate purchase arrangement for the total mine production and a senior financing consisting of a US$60 million project loan."
"The Corporation currently requires US$12 million (approximately Cdn $17 million) for its remaining equity contribution to HML for its 60 percent position. In addition, the Corporation wishes to raise approximately $8 million of additional funds for the advancement of its Chilean projects, including the Elenita property, confirmation drilling at the Similco copper mine in British Columbia and for general working capital purposes."
"Accordingly the Corporation is currently negotiating with several investment dealers to raise approximately $25 million. Definitive terms have not been agreed upon or settled, however the Corporation expects the financing will take the form of a private placement of special warrants, a portion of which will be exercisable into equity securities and a portion of which will be exercisable into convertible debt securities. It is expected that the terms and conditions of such securities would be in accordance with the rules and policies established by The Toronto Stock Exchange."
"Given the current market price for the Corporation's Common Shares, it is likely the Corporation may have to issue Common Shares or securities convertible into Common Shares in an amount of up to 100% of the Corporation's existing outstanding share capital"
... etc ....
As of April 18th, 1996, there were 87,208,767 PMC common shares. Potentially doubling the number of shares looks to me to be a serious share dilution of a penny stock that already has too many shares.
Given that Huckleberry is a copper mine (with only a very small amount of Gold) can it really be worth that much share dilution? Copper has been predicted to drop in value by a number of analysts (although a strike at Chile's state-owned Chuquicamata copper mine - the world's second largest - does threaten to reduce the worldwide supply of copper).
Any comments on this? I have to vote FOR/AGAINST this proposal ASAP, or possibly even close my LONG position if PMC is in an unfavourable financial growth position. |
