Great News: RES to raise $50 MillionThis is very good news.
Raising $50 million is a pretty high bar for a so-called "junior" who's still in the exploration phase. Assuming a strike price of $10 dollars, we'll raise this amount by issuing only 5M shares. If they had done this last August for example, when the stock was trading and around $3, the dilution would have been 16.6 million new shares. Instead, with this new funding, RES will get a big injection of cash and still only have some 41M shares out on an undiluted basis.
Importantly, $50M will buy some very important work. In addition to more drilling, it will fund further metallurgical work and a pilot plant test.
The pilot plant program they'll do in 2011 could be a huge development as testing a bulk sample of the oxide resource will determine whether the individual rare earth elements can be extracted and sold—at much higher prices than the current "concentrate" status.
Success here greatly changes the sales price of the REEs and thus the entire mining economics. 40 of the holes they drilled this year were to collect the bulk sample material for the pilot plant.