A BIG reason for the weakness in BGM share price has little to do with uncertainties and doubts. I think it has much more to do with this below. This selling will greatly cash up the company and should be temporary.
There are over 5.3 million $0.85 warrants that expire August 31 2012 and 6,509,160 $0.85 warrants that expire August 28, 2012 and $5.5 million in a convertible bond (convertible at $0.85) that is due August 26 2012. The bond holders are likely converting and selling right now to lock in a much better return. So in total there is likely to be up to 18.2 million in warrants and shares from bond conversion that is sold into the market to lock in profits.
As at February 29, 2012, the Company had outstanding share purchase warrants as follows:
Expiry Date Exercise
Price
Outstanding and
exercisable
August 31, 2012 $0.85 5,363,480
June 22, 2013 $1.10 10,796,258
July 17, 2013 $1.10 3,203,073
July 20, 2013 $1.10 325,037
Balance, February 29, 2012 19,687,848
As at February 29, 2012, the Company had outstanding broker warrants as follows:
Expiry Date Exercise
Price
Outstanding and
exercisable
June 22, 2013 $1.10 2,078,431
July 17, 2013 $1.10 464,144
July 20, 2013 $1.10 65,007
Balance, February 29, 2012 2,607,582
On December 22, 2011, the Company issued 10,796,258 share purchase warrants and 2,078,431 broker warrants, as
part of the first tranche of the private placement, with an estimated fair value of $1,268,968 and $347,144
respectively on the issuance date. The warrants are exercisable on or before June 22, 2013 at a price of $1.10 per
share and $0.85 per share respectively.
On January 17, 2012, the Company issued 3,203,073 share purchase warrants and 464,144 broker warrants, as part
of the second tranche of the private placement, with an estimated fair value of $464,641 and $96,487 respectively
on the issuance date. The warrants are exercisable on or before July 17, 2013 at a price of $1.10 per share per
share and $0.85 per share respectively.
On January 20, 2012, the Company issued 325,037 share purchase warrants and 65,007 broker warrants, as part of
the second tranche of the private placement, with an estimated fair value of $45,009 and $12,536 respectively on
the issuance date. The warrants are exercisable on or before July 20, 2013 at a price of $1.10 per share per share
and $0.85 per share respectively.
During the year ended February 29, 2012, a total of 1,767,545 broker warrants were exercised (2011 – Nil). The
weighted average trading price at the time of exercise was $1.74.
Barkerville Gold Mines Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year-ended February 29, 2012
Page 37 of 57
16. SHARE CAPITAL AND RESERVES (CONTINUED)
b) Share Purchase Warrants (Continued)
During the year-ended February 28, 2011
On November 22, 2010, the Company issued 192,308 share purchase warrants with an estimated fair value of
$88,500 on the issuance date. The warrants were exercisable on or before November 22, 2012 at a price of $1.30.
On August 28, 2010, the Company raised a total of $5,535,000 from the issuance of $5,535,000 of senior secured
convertible notes (the "Notes") and 6,509,160 common share purchase warrants (the "Warrants"). The Notes are for
a two-year term and bear interest at an annual rate of 10% per year. Interest is payable quarterly in arrears
commencing November 30, 2010 to August 26, 2012. The Notes are convertible at the option of the holder (the
"Noteholder") into common shares of the Company (the "Shares"), at any time after 18 months from the date of
issuance for a conversion price of $0.85 per Share. In the event of a change of control of the Company, the
Noteholders will have the option to have their Notes redeemed by the Company. The Notes may be redeemed for
cash at the option of the Company at any time after 6 months from the date of issuance, without penalty or
premium. So long as any Notes remain outstanding, the Company may not undertake any further debt financings
without prior approval of 66 2/3% of the Noteholders outstanding at that time.
The Notes were issued pursuant to a trust indenture among the Company, 0847423 B.C. Ltd, and Computershare
Trust Company of Canada. The Company has granted a charge against the QR Mining Lease, subject to permitted
obligations and liabilities, to collateralize its obligations under the Notes.
As part of the convertible note a sinking fund is required to be paid when the Company has free-cash flows. The
amount of the payments is 25% of free-cash flows. During the year ended February 29, 2012, the Company did not
pay any sinking fund payments and no sinking fund payments are expected for the year ended February 28, 2013 as
production at the QR Mine has ceased.
The Warrants are exercisable for a period of 2 years from the date of issuance at a price of $0.85 per share. If,
after four months and one day after closing, the volume weighted average trading price of the Company's shares,
for a period of 20 consecutive trading days exceeds $2.00, the Company may within five days after such event,
provide notice to the warrant holders of the early expiry of the warrants, the Warrants will expire 30 days from
such notice.
The warrants had hold periods expiring December 28, 2010 in accordance with applicable securities legislation.
As at February 29, 2012, an aggregate of 5,363,480 common shares would be issuable upon conversion of the Notes
should the note holders choose to convert.
On the transaction date, the fair value of the debt component of the Notes was estimated at $4,738,000. The
Company allocated the fair value of the Notes to the debt component by discounting the future cash flows at a
market rate of interest on debt without a conversion factor of 20%. The difference between the fair value of the
Notes and the amount allocated to the debt component was allocated to the equity component. The difference of
$797,000 was charged to equity.
The debt has been designated as an “other liability” and is recorded at amortized cost and is accreted over an
expected life of 24 months, using the effective interest rate method.
The movement of the debt portion of the convertible debentures during the year comprised of the following:
February 29, 2012 February 28, 2011
Balance, beginning of year $5,071,000 $-
Proceeds received - 5,535,000
Portion allocated to equity (797,000)
Accretion 939,000 333,000
Repayment (1,357,799) -
Balance, end of year $4,652,201 $5,071,000
Classified as
Current $4,652,201 -
Non-Current - $5,071,000
$4,652,201 $5,071,000 Barkerville Gold |
