Last Friday, NWM Mining Corp. (NWM.V) announced an update regarding their debt situation. The company announced they were able to extend the maturity date of their debt for six more months. Although it’s reassuring they were able to get six additional months, the price for the extension was high. Not only did the company had to pay $150,000 in cash, NWM also had to issue 10.5M shares to Renvest Mercantile Bancorp Inc., for a total consideration of C$780,000 based on a share price of C$0.06. This seems to be a very high price for an extension of only six months.
Positive
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- NWM has six additional months to pay approximately $20M in debt and interests
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Negative
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- The interest rate is still sky high at 15% per annum
- NWM has to pay $150,000 in cash
- NWM has to issue another 10.5M shares to Renvest, meaning 2% more dilution
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Conclusion
Renvest definitely ‘won’ the negotiations. They agreed to extend the maturity of the debt, but the price NWM is paying for this extension is extremely high.
You can read the press release here (pdf).
Disclosure: The author holds a long position in NWM Mining Corp. Please see our disclaimer for current positions.
