Kiss of death, number one underachiever stock I own!!! cheers, jerry
Lucero Resource Corp (LCR-V: $0.20)
Technical Hold (Dumpster Dive Buy < $0.10)
Lucero Resource Corp (LCR-V) has announced a bizarre financing deal that
one has to hope the CDNX shoots down. It seems that Lucero director Frank
Arcese, a principal of the Macromin property vendor that has brought Lucero
to the threshold of ruin, has connected with some bumpkins from the banking
world who remind me of Steve Martin and Dan Akroyd stalking foxes. CIBC
Capital Partners has agreed to buy US $500,000 worth of Lucero stock at
$0.165, or roughly 4.4 million units, on very unusual terms. CIBC will put
up US $250,000 in escrow from which the money will be released to Lucero
only if Lucero raises another US $500,000. Furthermore, under the agreement
CIBC will have the obligation to buy another US $250,000 worth of Lucero
units at $0.165 only if the results of a first phase drill program are
favorable. These CIBC guys have actually hammered out terms defining
"favourable" as certain grades and intervals they apparently think
constitute a discovery hole for the Macromin copper play. In other words,
if the initial drill program demonstrates that these blind geophysical
anomalies with the totally barren leach caps are indeed Escondida style
copper deposits, CIBC will have the right to purchase another 4.4 million
shares at $0.165-$0.22 on top of the 4.4 million shares they are already
entitled to by the first tranche. That is like getting three warrants for
every private placement share. If you think this is a joke, it gets funnier
still. Lucero management, wondering how to come up with the other US
$500,000, cannot help thinking that the only solution is to find somebody
who wants the same terms as the bankers. But guess what? The venture
capital geniuses at CIBC apparently don't think very highly of this
scenario. From this I conclude that Lucero has no private placement deal
whatsoever. I had downgraded Lucero to a Dumpster Dive Buy below $0.10 last
December, but the stock has scrabbled back to the current level on hopes
that a last ditch financing might still happen. I can understand Lucero
doing a desperation financing of 8.8 million units at $0.165, but this
business of 3 warrants for every share is ridiculous. I am told that this
is acceptable on the TSE, which doesn't surprise me at all. The problem
with Lucero is that its destiny is now in the hands of Frank Arcese, who is
wearing two conflicting hats as a director of Lucero and a principal of
Sol, the Macromin vendor. Lucero's ability to finance a drill program on
Macromin would be helped considerably if Sol would simply restructure the
deal so that Lucero is no longer in danger of imminent default. *JK owns
shares of Lucero. |
