South Star Battery Metals Corp. (TSX-V:STS, OTCQB:STSBF) announced that it intends to complete a non-brokered private placement of units to raise around C$2 million, followed by a share consolidation.
The placement will consist of 13,333,333 units priced at $0.15 apiece, with each unit comprising one common share and one common share purchase warrant.
Each warrant will entitle the holder to purchase one additional common share of the company at an exercise price of $0.25 per common share for a period of five years from the date of issue.
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South Star said it may pay finders' fees under the offering in accordance with applicable securities laws and the policies of the TSX Venture Exchange. The securities will be subject to a four-month hold period from the date of closing.
In order to increase its flexibility in the market and make its securities more attractive to a wider group of potential investors, South Star is planning a share consolidation. Upon closing the placement, the company will consolidate its common shares on the basis of one post-consolidation common share for every five pre-consolidation common shares.
Common shares issued pursuant to the placement will be issued on a post-consolidation basis. The warrants issued in the consolidation will be issued on a post-consolidation basis, and upon the completion of the consolidation will automatically be adjusted to the post-consolidation terms, which means five pre-consolidation warrants will entitle the holder to acquire one post-consolidation warrant at a price of $1.25.
The private placement is subject to a 25% over-allotment option and to an acceleration clause.
If during a period of 10 consecutive trading days between the date that is four months from the closing of the private placement and the expiry of the warrants the daily volume-weighted average trading price of the common shares of the company on the TSXV exceeds $0.50 on a pre-consolidation basis for each of those 10 consecutive days, the company may, within 30 days of such an occurrence, give written notice to the holders of the warrants that the warrants will expire at 4:00 p.m. (Vancouver time) on the 30th day following the giving of notice unless exercised by the holders prior to such date.
Upon receipt of such notice, the warrant holders will have 30 days to exercise their warrants. After that, any unexercised warrants will expire.
South Star is a Canadian battery metals project developer focused on the selective acquisition and development of near-term production projects in the Americas.
Contact the author at jon.hopkins@proactiveinvestors.com