Tocvan Ventures Corp C.TOC

Happy Easter - the two "GOLDEN EGGS".

[lifegoeson]

Two big "GOLDEN EGG" events occured this week, the price of gold passed $2,000 US, and Tocvan closed a follow-on $600,000 Private Placement with Sorbie Bornholm LP and Orrick, Herrington & Sutcliffe (U.K.).

Quote from Press Release, "Tocvan Ventures Corp. has closed its previously announced private placement with an institutional investor to raise an aggregate amount of $600,000. The proceeds from the placement will be deposited with a third party escrow agent and delivered to the corporation in monthly tranches of $50,000 over the next 12 months pursuant to the terms and conditions of a sharing agreement between the company and Sorbie Bornholm LP dated June 28, 2022, as amended on April 5, 2023, and an escrow agreement dated June 28, 2022, as amended on April 5, 2023, between the corporation, Sorbie Bornholm LP and Orrick, Herrington & Sutcliffe (U.K.) LLP.".

The majority of funding in Canada for early stage, high risk junior resource stocks is generally done through brokerages or privately financed. Brokerages such as Canaccord solicit investors to put money into a private placement. This type of funding is commonly referred to as "Mule Capital" since the large majority of junior companies are just exploratory in nature. They generally don't care about the company or conduct deep due diligence, but rather use market conditions to determine where to place their money.  They get commissions, fees and warrants, and because they are large financial machines, they are ruthless in manipulating prices to fill the private placements, often creating the illusion of great value. Many of these small companies crash and burn when market conditions change, follow-on funding is denied, resulting in a forced consolidation of their shares. I am sure everyone has been caught in a  "Rinse and Repeat Cycle" at some point.

What makes Sorbie a different investment partner?  

 

Let's look at how Sorbie invests, from their website, " Sorbie Bornholm is a global investment firm that provides funding for ongoing business objectives to listed small and mid-cap growth companies. We focus on equity investments in companies that are already listed and looking to expand – and on management teams with a clear growth strategy. Our extensive experience allows us to invest in most industries – and to focus on providing supportive, longer term capital that rewards company growth. Since 2007, Sorbie Bornholm LP founder Greg Kofford has perfected the “Sorbie-Strategy”, utilizing a sharing agreement that supports management and rewards growth. This unique approach has now been used in over 40 private placements. Resulting in many of those companies receiving more cash than the original private placement proceeds – without having to issue any additional shares.

Why did Sorbie invest in Tocvan Resources?

 

I think the answer is straight forward, through Sorbie's extensive due diligence they see Tocvan as an advanced player who could potentially be a near-term cash producer. With over 23,000 m of drilling and a clear growth strategy developed by Brodie, Pilar is moving along quickly with recent surface trenching, crushing of material, and building a 1,000 ton bulk heap leach pad (this is very near completion and ready for first full leaching run). Infill drilling will start soon at Pilar with a goal of putting together a NI 43-101 resource estimate later this year. I also suspect that Sorbie is excited about the recent discovery of underground historical workings which could dramatically improve new drilling target locations (these new audits had been covered over through years of weathering and never mapped before, just think how many more of these will be found and how this data will advance future drilling). There is also plenty of "Blue Sky" potential with unexplored areas within the main area of Pilar, and plenty of upside with their recent 100% acquisition of El Picacho (results from the first drill program last year dramatically increased the understanding of the geology). Tocvan remains focussed ONLY on these two properties in Sonora Mexico.

Sorbie has now made two investments in Tocvan using a sharing agreement. The first in June 2022 for $5.12 M  and now this one for $600,000. In each case they reward performance based on a benchmark price. The upside for Tocvan shareholders is there is no upper limit placed on the additional proceeds receivable by the Company as part of the monthly settlements and no additional shares issued. They provide very flexible terms and can adapt to market conditions, and generally always approve additional funds for follow-on investments and warrant exercises to support their initial investment. Sorbi and Tocvan have common goals of increasing the asset value of both Pilar and El Picacho, and in the short term bringing Pilar to production and possibly being acquired.  I suggest everyone review the terms and conditions of the financing filed on SEDAR   (https://www.stockwatch.com/News/Sedardoc/5338695.pdf).

One important distinction between Sorbie and other small brokerages in Canada, Sorbie's investment thesis is to build investment assets by not selling stock. Generally, brokerages sell stock at higher prices during a promotion from a lower price private placement to pay for the next private placement, flooding the market with more and more stock, and if market conditions aren't right, they generally just sell and move on. Sorbie has already allocated funds for follow-on investments, making them a strong shareholder and also keeping the number of outstanding shares in tight control.

I understand Brodie Sutherland (CEO) is heading to Germany next week with a schedule full of meetings and presentations.Tocvan has a strong base of German shareholders who are very excited to hear more about the approach going forward, i.e. drilling Pilar and El Picacho; update on 1,000 bulk sample leach test, metallurgical results, and implications; and how money will be used to advance both properties.  According to the recent filing, as of March 29, 2023, the Company has only received $1,035,243 from Sorbie's initial investment of $5.12 M in June 2022 due to low share price of Tocvan, leaving approximately $4M to drawdown. This combined with the recent $600,000 injection by Sorbie, and the previous $638,000 raised largely from existing shareholders, Tocvan has money for at least two years, with significantly more capital that can be raised through warrant exercise (which has a warrant acceleration clause). Tocvan is in a strong financial position with less than 40 M shares outstanding and plenty of room to raise inexpensive capital at higher share prices with little share dilution. All of these factors work together to provide significant security to existing shareholders, thus the reason for low volume.

Have a Happy Easter - I hope the "Golden Egg" finds you well.