Kootenay Zinc. (ZNK.V) has been a bit of a TSX-V success story of the last few months, andt he share price of the company has been jumping nicely.
Here’s what we love: a dream advisory board consisting of Peter Meredith, former Deputy Chairman and Chief Financial Officer of Ivanhoe Mines Ltd. Tookie Angus, former chairman of the board of B.C. Sugar Refinery Ltd and a director of First Quantum Minerals and Bema Gold until its takeover by Kinross in 2007. It keeps going, Johnathan Rubenstien is the chairman of Mag Silver Corp., a director of Detour Gold Corp. and a director of Eldorado Gold Corp.
This is like when the US basketball team first assembled the Dream Ream for the Olympics. Watch the fuck out, Latvia.
They also had what you’d call an amazing share structure. New name, freshly consolidated capital structure, and it was sitting at a dime last November when they announce this.
2016-11-04 – (ZNK.V) Kootenay Zinc Corp. has closed the previously announced non-brokered private placement.
Pursuant to the private placement, the company sold an oversubscribed amount of 16.5 million common shares of the company at a price of five cents per placement share for gross proceeds of $825,000 [at $0.05 per]. Pursuant to a finder’s fee agreement between the company and Canaccord Genuity Corp., in connection with the private placement, Canaccord will receive 535,000 common shares of the company. In addition, pursuant to an advisory agreement between the company and Canaccord, the company will issue 500,000 common shares to Canaccord.
[…] All of the placement shares are subject to a statutory hold period of four months and one day from the distribution date.
Fast forward a bit and the stock walked up to a respectable price of $0.60 a share, or an eleven-bagger, before any work has even had a chance to be done on the ground.
so, as the 5 cent financing stock became free trading about a week ago, someone with a nice big holding decided to sell up and ride their warrants. So the share price gets knocked down to $.40 and people start calling their brokers asking what’s up.
This happens a lot. The early guys get a good profit and things take a little longer to get to drilling than you’d like because weather or logisitics or (shrug), and suddenly someone decides to get off the train, and the stock takes a hit, which leads others to do likewise. This is life in the penny game. You’re either the first one out, or the first one losing money.
But the powers that be at ZNK have been to this rodeo before.
As a result of the selling pressure, which took a third off the share price, they called around and made a smart deal:
KOOTENAY ZINC CORP. ANNOUNCES VOLUNTARY POOLING AGREEMENT
All subscribers and eligible finders/brokers who participated in Kootenay Zinc Corp.’s previously announced private placement (see Nov. 4, 2016, news release) have entered into a voluntary pooling agreement with the company, whereby the common shares will be released in accordance with the schedule shown in the attached table.
Term — Percentage of common shares
Feb. 28, 2017 — 25%
May 31, 2017 — 25%
July 31, 2017 — 25%
Aug. 31, 2017 — 25%
Translated: They’ve called those early investors and said, ‘bruh, you’ve made good money so far, but you’re going to make much better money if we don’t blow this thing up with short term thinking. Hold your stock for a bit, and let us get those drills turning already.’
And the investors, to their credit – they agreed.
So the next trading day, what happens? The stock goes back up to $0.53, a 23.2% jump, and all looks Kosher again.
It is my opinion that the company is going to go on an acquisition binge, though that’s just a guess. Zinc is hot at the moment, and this team is geared for big things
Here is what’s in the company asset portfolio right now.
Kootenay Zinc is a mineral exploration and development company that is presently targeting the Sully property, focused on discovering large-scale sedimentary-exhalative deposits.
The Sully property comprises 1,375 hectares located approximately 30 kilometres east of Kimberley, BC, and overlies rocks of similar age and origin as those which host the world-class Sullivan deposit, owned by Teck Resources Ltd. Over its 100-year lifetime, Sullivan produced approximately 150 million tonnes of ore, including approximately 300 million ounces of silver, eight million tonnes of zinc and eight million tonnes of lead.
One BC project of some significant merit, and that’s it.
Yes Zinc is a hot commodity but I can’t imagine this group is going to go in on a single play. Which is why we went in on the last financing.
— Chris Parry
FULL DISCLOSURE: The author owns stock in ZNK, though they are not an Equity.Guru marketing client.