Looking for the Right Financing Deals in the Junior Mining Industry.June 24, 2011.
When looking for companies to add to my Junior Watch List, I usually start off by looking at specific company news announcements about financing deals and private placements. The ones that really catch my eye are the companies who are getting big financing deals done.
What do I mean by big financing deals?
Something over $10M is a good starting point, anything less is peanuts and will always need additional financing later on down the road, which leads to more dilution. So I usually don’t bother researching companies that raise only a few million, however there have been exceptions, but I will save that for another news letter about IPO and PP investing.
I came across this press release and thought $76 M is a good chunk of change, so I read over the NR and was impressed just by the amount they raised.
They are doing the deal at $0.90 with no warrants, so they see value in this company under $1.00. Today the stock is trading at $0.84 which is at a discount to the offering price, nothing unusual in today’s environment.
I am not rushing into buying this one just yet because I haven’t done any research on the company and management. I am however willing to put a low ball bid in at $0.74 cause the stock could still come off in price over the summer months. This way, I can buy some shares at a cheaper price than the offering, especially if someone has weak hands and decides to sell in panic and there is low volume.
I find investing in resource companies who are able to raise big funds is generally a smart idea. They were able to raise that kind of capital for a reason and that’s when the smart money gets in, so that’s when I want in. The bonus is getting in cheaper than them because of some weak handed panic selling.
I am not suggesting to buy this stock and I may not take a position in it for awhile, I still have to do my DD on it. But I do feel comfortable enough putting a low ball bid in and then holding it for the long haul. Once I complete my DD on this company and if my impression is favorable, I will accumulate when the time is right. For now, I’ll leave a low ball bid in and see what happens. I’ll let the charts tell me when it’s time to accumulate, until then it’s on my radar.
Vin
Golden Fortunes
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Friday, June 24, 2011
IBERIAN MINERALS ANNOUNCES CLOSING OF $76 MILLION FINANCING
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