Eloro Resources (TSX: ELO) has crashed nearly 19% after announcing a discounted financing last night after the closing bell.
The financing, priced at $1.20 per unit, aims to raise $3.96 million in gross proceeds for the company under a listed issuer financing exemption. The exemption enables the units to be free trading upon issuance.
The equity notably closed yesterday’s session at $1.53 per share, meaning the offering was a nearly 22% discount to the closing price.
Units under the offering contain one common share and one warrant, with each warrant containing an exercise price of $2.00. Warrants are to expire at the earlier of two years from the date of issuance, or two business days after completion of a change of control. They also contain an acceleration provision, enabling the company to accelerate the expiry of the warrant in the event the equity trades above $3.00 a share for five consecutive trading sessions.
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Funds from the offering are to be used to satisfy an option payment for its flagship Iska Iska silver-tin polymetallic project in Bolivia, as well as for further exploration. Under an option agreement entered into in January 2020, the company was required to pay US$10 million to the title holder by July 6, 2024.
To date, the company has paid US$4.9 million, leaving US$5.1 million left to be paid over the course of the next several months. With little prospect of paying off the remainder by the due date, earlier this month the company amended the payment schedule, pushing off the final due date. Payments of US$500,000 are now due on each of July 6, 2024, December 30, 2024, and April 30, 2025, with the remainder to be paid by July 6, 2025.
With a cash balance of C$1.5 million as of December 31, 2023, the company is expected to still fall short of funding requirements, with further funding likely needed ahead of the final option payment date.
The offering is expected to close March 27.
Eloro Resources last traded at $1.24 on the TSX.
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