What is a private placement?
Private Placements or Private Placings are a private issue of new equity or debt from a public or private company. When a public company issues shares as a private placement, these shares are not tradeable at the time of issue and often will have minimum hold periods (for TSX its usually 4 months). Additionally, a trading halt will have to be lifted before they can be sold.
Who can invest?
Many investors in the USA, Canada, UK and Globally can participate in private placements. All jurisdictions have their own eligibility criteria for who can participate. Eligibility depends on exemptions under various financial services and securities acts which stipulate that an investor must exceed certain wealth thresholds such as net worth, income or financial assets in order to participate.
What are the benefits?
The benefit of participating in a private placement for investors, is that private placements within the mining sector are often offered at a significant discount to the market price on exchanges such as AIM, TSX-V, OTC Pink and OTCQB, NASDAQ etc. And you can acquire a higher volume of shares than would typically be available via your traditional broker account. You also get to purchase shares on terms that have been set by the issuer, this can often entitle you to warrants for each share purchased. This then gives you the right but not the obligation at a later date to buy more shares at a fixed price which can sometimes be a very attractive proposition.
Private placement opportunities within the mining sector and the associated warrants packages available to investors, along with recovery of the sector offer investors a real advantage to capture real value, especially if the company is a real deal. We believe so, which is why we are launching a sell-side service to cover energy and mining companies on AIM, OTC, TSX-V and Nasdaq for the Asian Audience, to allow them to understand the company more. So if you have any company that you will like us to research on. Feel free to reach out.
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