Woodstock (a.k.a. masked man, Loan Aranger) last summer asked Dave Webb about a Tyhee Right's Offering, one similar to Rob McEwen's MUX. Woody thought this would be the best way to prevent dilution and finance a mine. Woody, thanks for sharing this with the forum.
Here, paraphrased, was Dave's response:
We have studied a rights issue in the past and there are several hurdles to clear. The biggest would be the cost to complete such an issue. We'd have to complete prospectus level documentation which involves independent audits and reports on all of our assets and operations. The cost would be about $100,000 and the time frame could be greater than three months. We also would not be certain how much money could be raised. The latter issue could be minimized by arranging for a back-up, a large investor who might agree to purchase some or all of the unexercised rights. The first issues are daunting when considering a typical PP can be completed in a few weeks for $20,000 or so, knowing what the final amount might be. Generally it is in the shareholders’ best interest (cheaper and faster with less dilution) to complete a PP. Shareholders who wish to participate could often obtain similar priced shares in the market.
As we get closer to obtaining our permits and delivering feasibility study, we open another avenue for financing, debt. We fully expect project financing to be available through conventional non-recourse structures typical in the industry. Our CFO has done this many times in the past, and this would allow for the construction of our operations and production of gold with minimal new shares to be issued. For example, junior mining company Equinox Minerals Limited raised substantially all of their money for the Lumwana Mine construction by debt and off-take agreements. Likewise, it might be possible for Tyhee to raise 100% of the funds needed for construction by debt and other non-dilutive means.
We are now finishing a revised resource estimate to be used in the Feasibility Study and anticipate the FS to be completed at the same time (+/-) as we exit the permitting stage in the first half of 2012. We would then, should our schedules not be altered, be seeking project financing by mid-2012. In a perfect world our share price would reflect our status in light of the gold price and published project economics.
