Rodinia Lithium's (CVE:RM)(OTCQX:RDNAF) recent $3 million private placement received positive commentary from MicroCap.com's lead analyst and publisher Danny Deadlock.
In a recent article, Deadlock said the company was "the poster child for financing juniors in a tough market".
is a Canadian mineral exploration and development company with a
primary focus on lithium exploration and development in North and South
It is focused on developing Argentina's Salar de Diablillos lithium
brine project, which contains a recoverable resource of 2.82 million
tonnes lithium carbonate equivalent and 11.27 million tonnes of
potassium chloride equivalent.
The project contains a recoverable inferred resource of 952 million
cubic metres grading 556 milligrams per litre lithium and 6,206
milligrams per litre potassium.
Last week, the company "took the high road to protect the interests
of existing shareholders", Deadlock said, by announcing a $3 million
financing using subscription receipts.
The financing involved a structure tied to future production of
potash with a conversion feature priced at 45 cents per share – 100
percent higher than the recent trading price.
The financing monetizes the potash from this project as a by-product,
creating a "potash stream preferred share" that is interest-bearing and
has a one-half common share warrant exercisable at 45 cents.
The company has until 2015 to produce potash and if delayed, it would incur a production penalty, the report noted.
"Rodinia has a world class project in Argentina and is working to
prove up a positive feasibility study by the end of 2012. Results to
date have been very impressive and as noted back in November, the early
economics are very encouraging," Deadlock wrote on MicroCap.com.
MicroCap's Deadlock highlighted that Rodinia's financing approach was
different from other junior resource companies who "finance near the
bottom of their charts" by issuing "more cheap paper than they need to"
and attaching warrants that make dilution even worse.
"As the stock moves higher, those who participated in the financing
often dump their original investment and sit on the warrants. All this
excess paper and selling pressure makes it very difficult for existing
shareholders to recover their investment," Deadlock wrote.
When speaking of Rodinia's method, Deadlock said: "Not everyone is
able to find investors willing to finance under such creative terms, but
it demonstrates management’s commitment to protecting and building
In 2012, Rodinia Lithium
will focus on continuing to develop the Diablillos project by
completing additional drilling and advancing it through to feasibility
In November 2011, the company's preliminary economic assessment for
Diablillos indicated a potentially low cost operation with a net present
value as high as US$964 million, and a mine life of greater than 20
In March, Rodinia said that it started the construction and operation of a pilot production facility at its Argentina project.
The facility is to produce battery-grade lithium carbonate on site,
including production of by-products potash and boric acid, giving a
glimpse of how a potential final production facility would operate.
Deadlock said he thinks the company is maintaining talks with its
strategic partner Shanshan, a major lithium player in China, and with
other parties "that may be interested in off-take production