This is what we were looking for, some kind of deal for the company to get rid of its debt. We thought it would be through a royalty, though that is still a possibility for the future.
This press release is a little detailed and made for you lawyers, but the gist of it is pretty simple: management has reached an agreement to settle the outstanding debt related to the acquisition of the Gabbs project and will complete a non-brokered private placement of convertible debenture units for up to $1.7 million.
P2 basically settles the outstanding debt of US$8.8M for roughly US$1.6M, including the value of the stock. That’s roughly 18 cents on the dollar. Not bad!
Waterton will now own 19.9% of the company, an increase of 3% but still less than management’s ownership.
The debenture will likely be converted, and if so there would be no payments. And management has the option of paying the interest in shares or cash, with the number of shares based on the share price at the time interest payments are due.
Overall, this is a big win for P2 in my view, and importantly will allow the company to get Gabbs moving towards production.
The stock popped on the news this morning, now treading water, probably the victim of a big down day for gold. But this is good news and will materially push the company forward. I remain overweight the stock, and if you like a company with a viable economic study on a gold project that meets the criteria majors look for, the stock is a clear buy at these levels.
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