RE: RE: My Mistake - It's Even Worse, PeteyKnumskull,
You're right, my mistake! Here are the two deals - the "private placement" and the Coalcorp deal.... I don't mind the first "private placement" of $2 million - it's the $8 million that was the bad deal. The deal is done but it doesn't mean it was a smart transaction.
The Company has closed the previously announced non-brokered private placement of 1,333,375 Units at a price of $1.50 per Unit (the "Unit Offering") resulting in gross proceeds of $2,000,063. Each Unit is comprised of one common share and one-half of one transferable common share purchase warrant, each whole common share purchase warrant entitling the purchase of one common share of the Company at a price of $1.60 per share until May 06, 2012, subject to the Company's right to accelerate the expiry date in certain circumstances.
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Vancouver, BC, May 07, 2010, Formation Metals Inc. (FCO-TSX) (the "Company" or "Formation") is pleased to announce the successful completion of financings totalling $10 million. The proceeds of these transactions are intended to be used by Formation to finance the further development of its Idaho Cobalt Project and for other general corporate purposes and working capital. The financings were comprised of non-brokered private placements of an unsecured convertible debenture and units comprised of common shares and common share purchase warrants at $1.50 Unit.
The Company has sold, on a non-brokered private placement basis, an $8,000,000 unsecured convertible debenture (the "Debenture") to Coalcorp Mining Inc. ("Coalcorp"). Coalcorp is a Toronto Stock Exchange listed company (CCJ-TSX) that capitalizes on the mining sector expertise of its board members and management and uses its cash resources to pursue early-stage opportunities in the mining, metallurgical and mineral industries.
The Debenture will have an initial term of 18 months with an interest rate of 12% per annum (the "First Term") and may be extended in whole or in part, (the "Extended Debenture") by either party for an additional term of 18 months (the "Second Term"). If the First Term is extended by Formation, the Extended Debenture will bear interest at the rate of 15% per annum. Interest on the Debenture or Extended Debenture will be calculated daily and is payable quarterly, subject to regulatory approval, in common shares of Formation at a price per share equal to the 5 day volume weighted average trading price (the "Market Price") at the time of issue.
Coalcorp may, at any time during the First Term, convert the Debenture into common shares of Formation at $1.50 per share and, during the Second Term, subject to regulatory approval, convert the Extended Debenture into common shares of Formation at the Market Price of the shares at the end of the First Term. In addition, Formation has the right to call or redeem the Debenture and the Extended Debenture upon payment of a penalty, subject to certain conditions and, in certain circumstances, regulatory approval.