For all interested, the following is a situation alert that I issued regarding Bomax. Bomax was one of my recommendations in the January issue of The Resource Indicator. If you would like a copy, just e-mail me privately. Thanks.
The Resource Indicator: SITUATION ALERT 1/97 February 12, 1997
BOMAX RESOURCE CORP. (bxs.v/$0.42)
Several subscribers have e-mailed me with concerns about Bomax. Bomax sought and received permission from the VSE to extend the private placement closing till March 4, 1997. The private placement is a key deliverable. Bomax needs money to expand the granite quarry and carry out promotion once Vancouver approves the deal. Having some money in the bank will also help to attract new investors and partners for some of the other ventures (sand & gravel) as described in the January letter.
Extension of the private placement was sought for several reasons:
1. The first sale of uncut granite was supposed to be finalized by the first week of February, just before the private placement date. Although SSI/Bomax has the sales agreement in their hands (signed by the buyer), they have not signed. SSI/Bomax wants credit guarantees from the buyer. The buyer is seeking this in the form of a line of credit from their bank. This is standard practice for transactions of this magnitude. SSI/Bomax wants to make sure the buyer can pay for the purchase (in excess of $1 million US) before shipping out the granite. The buyer's bank is new to dealing with companies in Surinam and thus their due diligence is taking longer than expected. The first sale is always the hardest but I fully expect it to go through. The private placement placees need to see this happen before investing a considerable amount in the venture. The placees are fully aware of the past delays in the vend-in and need to see results to have confidence in the business. We are looking for the same thing and that is why we have outlined a three tiered accumulation strategy.
2. If the private placement had closed on February 5, 1997 as planned, money from the placees would have been put in trust till shareholder approval was received. This means that neither Bomax nor the placees would have access to the money till March 24, 1997. The placees don't like to see their money sit around.
3. Bomax has several people interested in investing large amounts into the venture. I speculate that some of these investors would like to become partners rather than passive shareholders. If this is true, than Bomax would need some time to evaluate all their options and pick what is best for the shareholders.
I am going to count this as strike one against Bomax but I strongly believe that SSI/Bomax will be able to attract the required financing. I am speculating that it will be a combination of the private placement and direct partnerships. We should continue to follow our accumulation strategy. Wait for the granite sale before investing the 2nd tier. We may see some more pressure on the stock price but, in the VERY NEAR future, these prices are going to look like a gift. |
