Metanor Resources (MTO.V) has announced its debenture holders have approved a resolution whereby the maturity date of the debentures will be postponed by two years. They obviously demanded a quid pro quo for this gesture and Metanor will have to raise C$3M in a private placement of which C$1M will have to be used to repay a part of the debenture.
Metanor now has engaged Secutor and Marquest to conduct a private placement of up to C$4M by issuing 66.6M new units at C$0.06 per unit, consisting of one share and half a warrant whereby a full warrant allows the warrantholder to acquire another share at C$0.075 within 24 months of closing. This placement is conditional upon raising the C$3M as promised to the bondholders.
The extension of the convertible debt was expected and isn’t a real surprise. This will also solve the working capital deficit and Metanor is buying some time The additional private placement is a necessary evil to accomplish the renegotiated maturity date and will lead to further dilution, but what worries us more is the recent underperformance of the company’s production rate.
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Disclosure: The author holds a long position in Metanor Resources. Metanor is a sponsor of the website. Please see our disclaimer for current positions.
