FinancingI was not at all happy about the financing so I emailed Steve. Here is his response:
"Yes Parral continues to fund out exploration expenses and that puts us in an enviable position amongst our peers, but as you know we still have to prepare and plan for the construction of Los Ricos South, which is a combination of cash and debt, and we feel with this raise completed we have enough cash that when we go out and get bids for the debt we can get the best economics from the providers.
We are also going to be expanding on the drilling program in the north because the potential is just that large and Parral may not be able to keep up to fund a 12-14 rig program.
Also, given our experience with selling assets, we have found over the last 25+ years of developing assets, building mines, and selling projects that the best price comes when you have completely de-risked the assets which includes financing risk. We see these small raises as chipping away at the capital that is required to get our assets to a potential sale or into production as we view both paths as the same.
We received the same critical feedback at .70 cents in Feb 2020 when we raised money and then again in Sep 2020 when we completed another financing at 1.50 with always the concern over dilution. We have created a lot of value since those previous financings and we expect to continue to do more of the same now. At the time of this financing our cash position was less than 10% of our market cap and this raise represents 3.4% dilution to the capital structure, numbers which we believe are all well withing reason."
So it would seem that GGD is preparing to advance LRS in the near term, while delineating LRN further. Brad has suggested all along that LRN is far larger and better than LRS. In this way they can sell off LRS at a tidy profit, at the same time as LRN is fully evaluated. Let's remember that GGD has delivered shareholder value over the last year and is poised to do so again. GIven that the dilution is very small, the action today suggets reaction to metal prices more so than the bought deal financing. The fact that the financing was at $2.50, and likely to be oversubscribed indicates the consortium of buyers believe the share price will go much higher. GLTA still holding!