Mysteries of Flow Through shares Placement
Canada NewsWire
TORONTO, Dec. 19, 2019
TORONTO, Dec. 19, 2019 /CNW/ - Wallbridge Mining Company Limited (TSX:WM, FWB: WC7) ("Wallbridge" or the "Company") is pleased to announce that it has closed a non-brokered private placement (the "Offering") for aggregate gross proceeds of $7.9 million through the issuance of 7,999,700 common shares in the Company. A total of 2,590,700 common shares were issued on a flow-through basis ("Super FT Shares") at a price of $1.05 per Super FT Share and 5,409,000 common shares in the capital of the Company on a flow-through basis ("National FT Shares") at a price of $0.95 per National FT Share. Collectively, the Super FT Shares and the National FT Shares are the "Offered Securities".
"The completion of this financing gives us additional financial flexibility to achieve our goals of advancing Fenelon and pursing additional advanced-stage projects which would add to the Company's near-term project pipeline," said Marz Kord, Wallbridge's President & CEO. "We are also pleased that Eric Sprott has chosen to participate in this private placement."
The gross proceeds from the issuance of the Offered Securities will be used for Canadian Exploration Expenses and will qualify as "flow-through mining expenditures," as defined in subsection 127(9) of the Income Tax Act (Canada). The Super FT Shares will also qualify for the two 10% enhancements under section 726.4.9 and section 726.4.17.1 of the Quebec Taxation Act. The Offered Securities will be renounced with an effective date no later than December 31, 2019 to the initial purchasers of the Offered Securities in an aggregate amount not less than the gross proceeds raised.
In connection with the Offering, the Company paid a cash finder's fee of $300,014. All securities issued under the Offering will be subject to a four-month hold period from the date of issuance in accordance with applicable securities laws. The Offering is subject to final acceptance of the Toronto Stock Exchange.
The Offering constituted a related-party transaction within the meaning of Multilateral Instrument 61-101 ("MI 61-101") as Mr. Eric Sprott, a reporting insider of the Company subscribed for 2,967,000 National FT Shares pursuant to the Offering. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the participation in the Offering by Mr. Sprott does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Company did not file a material change report in respect of the related party transaction at least 21 days before the closing of the Offering, which the Company deems reasonable in the circumstances in order to complete the Offering in an expeditious manner.
I'm a little confused by the flow through share offerings. It appears to me that ES took up 2,967,000 shares at .95 of 5,409,000 available at .95.
This would leave the rest of the .95 flow through shares or 2,442,000 still available at .95.
In addition to that there are 2,590,700 available at $1.05.
Is this a correct reading of this ? And also is anyone familiar enough with flow through shares to explain how the tax enhancements work.