Was That Financing A Good Thing Or A Bad Thing?

Lets run the basic numbers

One of the frustrating but unavoidable things about emerging miners is that they have to raise money in order to grow. Big financings can dilute the ownership of existing shareholders, so such announcements sometimes generate a lot of selling.

But not all financings are created equal. Some are well-structured and favorably priced (like this one), and some…are not.

So how do you tell one from the other? The answer isn’t always clear. But there are some basic calculations that offer perspective.

Real-World Example

This week, one of the most interesting junior miners in our portfolio announced a big stock and warrant sale — which it then proceeded to “upsize” in response to strong demand. Existing investors didn’t like this deal one bit, and the stock tanked. So let’s run some numbers and see if they say anything useful.