Tocvan raising capital to accelerate bulk sample at Pilar.This strategic financing is great news for Tocvan, another great deal inked for shareholders by management. Tocvan is raising $325,000 at $0.52 with only a half warrant at $0.62, the warrant has an acceleration condition at $0.90 after a 4 month hold.
One doesn't have to look at many companies to see that most junior resource plays have experienced a significant downturn since the middle of 2022, it has been a terrible market to say the least. Many companies have been forced into either consolidating their stock in order to raise capital or forced to do cheap very dilutive share financings, both of these strategies are not very good for shareholders.
In contrast, one only has to analyze the progression of Tocvan's chart. They inked a deal in June for $5.12 M over a two year period based on a $1.10 average monthly drawdown. Since then, the price retreated below $0.40. Part of this decline was not only due to the overall slump in the resource sector, but also due to the rainy season in Mexico (stopped exploration and drilling), and an unfortunate artifact of thinly traded equities which tend to be more volatile and can cause price drift on low volumes.
Tocvan's price has since recovered to $0.60, in fact, Tocvan has only traded about 15 M shares since the start of June (nice little shakeout of weak shareholders). The price began to rise with increasing volumes early in December, based upon the start of drilling at El Picacho, commencement of a 1,000 bulk sample at Pilar, and the anticipation of the restart of infill drilling at Pilar to allow for a maiden resource estimate this year. This is an indication to me that Tocvan has begun to attract new shareholders, and that existing shareholders are buying larger positions in anticipation that Tocvan has begun to mature as a company and has significant potential to return strong shareholder value.
It appears that Tocvan has inked a deal with a strategic investor who is very interested in the production potential of Pilar. New properties that are ready for production are becoming more difficult to find in Sonora Mexico, thus great to see someone willing to put skin in the game to advance the 1,000 ton heap leach bulk sample at Pilar. If results from this bulk sample are positive (as previous small scale studies have suggested), I am hoping this will lead to near-term production at Pilar. I suspect trucks are moving right now, so there will be consistent news flow. I anticipate infill drilling to start at Pilar soon to allow for a maiden resource estimate. I also expect them to be back in drilling Picacho after they evaluate the first drill program that returned excellent results (the sooner the better).
Management at TOC is a testament as to how a well structured company can raise money, advance properties, and provide shareholder value. This has been a great long term play that has been largely de-risked through strategic acquisitions and financings at higher prices as a result of an excellent share structure (about 38M shares). This financing for example will issue 625,000 shares, and only an additional 312,000 shares when warrants are exercised. Thus leaving plenty of room to raise capital at higher prices, as well as providing downside security to existing shareholders that the overall value of Tocvan will be very attractive to future investment as there aren't many producing companies at this low capital structure and share price. Combine this with the huge potential at El Picacho, and as the resource sector typically recovers into the spring, Tocvan is nicely positioned to sustain significant growth and shareholder value.