North American Tungsten Corporation Ltd NATUF

Losing Money Hand Over Fist! More Debt and Dilution!

[StockExpertPro]

If tungsten prices recover sometime in the distant future. NTC shareholders might not be able to benefit from higher prices if dilution and debt gets out of control. Management seems to be willing to milk this company dry in order to continue the outrageous compensation for the company directors. Why doesn't management shut the company down until tungsten prices fully recover? Meanwhile Wolf Minerals in England and several other junior mining companies are all rushing in to begin construction on their tungsten projects so they can begin production. When will these mining companies learn? It's very foolish to rush into the tungsten market. Just because prices barely cracked $400 per mtu a few months ago. These companies never seem to learn from past mistakes. Didn't they learn anything from natural gas and gold? Everyone rushed in as fast as they could then prices collapsed and everyone lost their shirt from mass production. At least Ned Goodman and the newly appointed board of directors at Woulfe Mining have enough sense to try and properly time their entrance into the tungsten mining industry without blindly rushing in. "I assume this ultimately means more shareholder dilution........ It Seems that certain key Insiders will be making out like bandits regardless of the outcome while small retail investors will be left scratching there heads as to how we ended up here." The company also announces the recapitalization of $10-million (U.S.) of indebtedness owing by the company into an aggregate principal amount of $10-million (U.S.) of debentures. The debentures have a two-year term and bear interest at a rate of 11 per cent per annum. Subject to the receipt of regulatory approval, the principal amount of the debentures will be convertible into common shares of the company at a price equal to the lower of 12 cents and the volume-weighted average closing price of the company's common shares for the 10 trading days prior to the date on which shareholder approval for the conversion right is obtained. The debentures apply a fixed exchange rate of $1 (U.S.) equalling 94 cents. An aggregate of $8.55-million (U.S.) of the debentures were subscribed for by insiders of the company. Accordingly, the company anticipates that shareholder approval will be required as part of the necessary regulatory approvals. The company plans on holding a shareholder meeting in February, 2014. In the event regulatory approval is not obtained by March 31, 2014, the interest rate for the debentures will increase to 18 per cent per annum until such time as regulatory approval for the conversion right is obtained. The debentures are secured by a general security interest in the company's assets that is subordinated to the company's senior indebtedness.