Positive angle of the financing There is a lot of short-term vision here. Hopefully it’s not bashing from those who would like to buy cheap shares during price weakness.
I decided to summarize longer-term pros of the financing:
1) Market conditions
Risk-free rate is high on top of tough market environment moving to recession.
Though lithium is safe haven so far, even cash flow positive companies getting hammered. Small caps without profits are demolished trading at fraction of what they were even several months ago.
There's 4-5 month gap between now and PFS, If lithium will have ultimate plunge even great PFS give you nothing. There'll be even more dilution later. 7% dilution is balanced approach.
2) Partnering Goldman Sachs and RBC
GS is the #1 in equity financings, especially for NASDAQ companies. The CAD10m (half of CAD20m) deal for them is working for peanuts. For my 10 years in the industry I actually have never seen they did something less than USD100m. Take a look at the recent USD650m GS bought-deal with CAMECO. https://www.cameco.com/media/news/cameco-announces-closing-of-us747.6-million-bought-deal-offering-of-common
It’s not just about the money at this stage. These partners will put us on the radars of the best institutional investors and help to raise hundreds millions later for development.
3) Management
It's too early for seasoned mine builder, we can't really speed up the process until power line is ready. It will increase burn only. Trevor is doing quite well. I'm glad we don't burn new shareholders with pump schemes. In the end it's fair that every shareholder will have return depending on risk and time with the company.
4) Chemical processing plant
If we could start operations right now, we wouldn’t need to build it. We don’t know how market will look like in 2026-2028. Still the plan is to start produce spodumene in 2026 and then plant comes in 2028.
I doubt we can have any direct long-term supply contract without chemical plant in sight. Margins can always fluctuate from upstream to downstream and back depending on capacity. Yet in 2020 you could struck long-term contract with fixed spodumene price having only chemical plant and some mining companies locked in themselves with the agreements lacking better options.