Q: Emerita announces recent Financing Aug-14 (tranche one drawn). Can you comment on the structure, specifically how it compares to terms in the mining/exploration sector. Is this a win/loss/fair for the company at this stage?
5i Research Answer:
It is a loan arrangement, and the first tranche ($6M) has been drawn upon. The deal includes bonus warrants (9.9M warrants, four month hold, exercise price 82.5c). Other tranches will have similar terms, with warrants priced at a 25% premium. It is a fairly standard type of agreement. EMO gets cash now, and potentially more cash if and when the warrants are exercised. We would consider it an OK financing. Debt of course comes with obligations, and typically we would prefer a straight equity deal. But the company likely does not want to see lots of dilution, and this arrangement helps that goal.