The Canadian Chrome Company Inc. said it plans to sell up to 1,400,000,000 units at $0.006 each, for gross proceeds of up to $8.4 million. The Toronto-based exploration company, formerly known as KWG Resources, trades on the Canadian Securities Exchange under CACR and CACR.A.
The structure is unusual. Each unit consists of one subordinate voting share plus one hundredth of a warrant — a right to buy shares later at a set price — exercisable for a multiple voting share. Because the two share classes convert into each other at a ratio of 100 to 1, the warrant coverage works out to one warrant share for every unit sold, with a stated exercise price of $1.00 per multiple voting share. On a subordinate-share basis that is the equivalent of $0.01, roughly 67 percent above the unit price.
At the maximum size, the offering would create 14 million warrants. If all were exercised, the company would take in a further $14 million, and the shares issued would be convertible into another 1.4 billion subordinate voting shares. The release does not disclose the company's current share count, so the dilution the financing would cause cannot be measured from the announcement alone.
The warrants run for five years from the first closing, or until two business days after a change of control of the company, whichever comes first. Fractional warrants will be rounded down.
The two classes carry proportionate rights: one vote per subordinate voting share and 100 votes per multiple voting share, with dividend and liquidation entitlements scaled the same way. Holders can convert in either direction at any time at the 100-to-1 ratio.
Finders may be paid up to 5 percent of the amount they refer, settled in units rather than cash, at the same deemed price of $0.006. Buyers must be accredited investors or otherwise qualify for a prospectus exemption, and the securities carry a four-month hold period, standard for Canadian private placements.
On use of proceeds, the company says the money will fund its business of acquiring, exploring, evaluating and developing large-scale chromite and other base metal and mineral deposits, and that this includes overhead, operating expenses and the costs of the placement itself. No breakdown between exploration spending and general corporate costs is given.
The offering is described as proposed. The release does not state a closing date, a minimum size, or whether any portion has been subscribed. Nor does it name a lead agent; the only compensation mentioned is the finder's fee.
Canadian Chrome describes itself as an exploration stage company focused on chromite deposits in the Ring of Fire region of northern Ontario, along with other base and strategic minerals, and on supporting transportation and electrification links to reach remote deposits. It reports no revenue in the release, and no cash position or burn rate is disclosed.
Capital markets appointment
Separately, the company said it intends to appoint Michael Minas as Vice-President Capital Markets. The appointment has not yet been made: management said it will put the proposal to the board of directors for approval at the next board meeting.
According to chief executive Frank Smeenk, Minas traded treasuries at Cantor Fitzgerald in New York, was an executive director at CIBC World Markets, co-founded Genuity Capital Markets and later served as director of institutional sales at Canaccord Genuity Group. Until recently he was chief executive of The Ring of Fire GP Inc., which the company says was engaged by Canadian Chrome.
Smeenk linked the hire to United States markets, saying the appointment comes "now that the path forward into the USA and its capital markets has been addressed for Canada's critical minerals." The release gives no detail on what that path consists of, and no US listing, financing or regulatory step is identified.
Compensation terms for the position were not disclosed.
Source: Newsfile
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