Roscan Gold (ROS.V) appears to be taking advantage of the current interest in the company and its exploration projects in Mali as the previously announced marketed offering has now been upsized to C$4M. The syndicate with Canaccord, Cormark, Eight Capital, M Partners and long-time supporter Clarus Securities have now agreed to issue 40 million units (with the option to upsize this by an additional 10 million units for an additional C$1M) which consist of one common share and ¾ of a purchase warrant. Each warrant will allow the warrant holder to acquire an additional share at C$0.16 for a period of 24 months.
While it’s a clear positive Roscan Gold is effectively able to raise a decent amount of cash so it will be able to execute on its exploration plans, issuing an additional 30 million (up to 37.5 million) warrants with a strike price of C$0.16 will probably continue to keep a cap on the stock. The total warrant count that have an exercise price of within 10 cents from the current share price will now increase to 63.7 million (33.65M at C$0.12 expiring in July 2020 and the 30 million at C$0.16 of the current marketed offering – excluding the potential upsize of the placement), and this will probably limit the upside potential of the share price as a sudden share price increase will very likely trigger the warrant holders to exercise a portion of their warrants.
But on the positive size, should all these warrants end up in the money and exercised, Roscan Gold will receive C$8.8M in proceeds and that will allow the company to continue its exploration programs for the next few years without having to tap the equity markets again.
Disclosure: The author has a long position in Roscan Gold. Roscan is a sponsor of the website.