Sun Metals (SUNM.V) has closed the C$10.35M subscription receipt financing whereby the company issued 82.8 million subscription receipts at a price of C$0.125 per subscription receipt. Upon completing the sale to Serengeti Resources (SIR.V) (both companies call it a merger, but let’s be fair, when the deal was announced, Sun Metals had a market cap of just C$17.5M while Serengeti had a market capitalization of C$36M).

The proceeds of the subscription receipt financing will now be held in escrow until both companies complete the transaction (expected this quarter) where after the sub receipts will be converted into units with each unit consisting of a share and ½ warrant of Sun Metals with each full warrant allowing the warrant holder to acquire an additional share at C$0.18 for a period of two years after the closing. The warrants do contain an acceleration clause and the company can accelerate the expiry if the Sun Metals share price trades above C$0.30 for a period of 20 consecutive days.

Disclosure: The author participated in the subscription receipt financing and has a long position in Sun Metals (and no position in Serengeti Resources). Please read our disclaimer.

Leave a comment