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Mandalay Resources announces plans to buy back all outstanding warrants

Published: 15:45 10 May 2012 EDT

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Mandalay Resources (TSE:MND) said it plans to offer to buy back all outstanding common share purchase warrants as it seeks to simplify the company’s capital structure and reduce concerns over dilution associated with the warrants.

The exchange offer, by way of a substantial issuer bid, enables each warrant holder to exchange their illiquid warrants for common shares traded on the Toronto Stock Exchange, without incurring the cash outlay that would otherwise be required upon exercise of the warrants, the company said.

Based on the closing price of the common shares on the Toronto Stock Exchange Wednesday of $0.66 per share, the exchange price for each series of warrants represents a premium to "both intrinsic value and Black Scholes value", Mandalay said.

The exchange offer will not be conditional on any minimum number of warrants being tendered, but will be subject to other customary conditions.

Warrant holders have at least 35 days to tender their warrants, after the date of commencement.

The exchange prices on warrants can be viewed at: https://www.mandalayresources.com/site/ywd_mandalayresourcescorp/assets/pdf/mnd_may_10_2012.pdf

Mandalay’s board unanimously approved the course issuer bid. BMO Capital Markets is acting as financial advisor and dealer manager in connection with the exchange offer.

Additionally, the company has suspended repurchases of warrants under the initial course issuer bid it announced on October 13, until the current exchange offer expires.

Further information concerning the terms and conditions of the offer will be contained in the documents that will be mailed to warrant holders and available on SEDAR when the offer is formally launched, the company said.

Mandalay Resources is a Canadian natural resource company with producing assets in Australia and producing and exploration projects in Chile.

Yesterday, Mandalay said both of its mines performed well in the first quarter to end-March 2012 and EBITDA rose to US$6.12 million in the period from US$3.38 million in the fourth quarter.

The company delivered record gold and silver production from the Cerro Bayo mine in Aysen, Chile, since operations restarted in the third quarter of 2010.  This was despite disruption due to public protests against certain government policies in the region in February and March this year.

In addition, quarterly gold and antimony production from the Costerfield mine in Victoria, Australia, was the second highest since Mandalay restarted operations there in the fourth quarter of 2009.

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on 13/5/22