What dilution or balance‑sheet impact will the $3.5 million private placement have on Leviathan Gold’s equity and cash position?
Balance‑sheet impact – The $3.5 million does not go straight to Leviathan’s treasury; it is raised by Cura Exploration and held on Cura’s balance sheet. Once Leviathan consummates the acquisition, that cash will be transferred to the combined entity, boosting the post‑transaction cash position by roughly $3.5 million (less any transaction fees). The influx of cash improves liquidity ratios and gives the group a modest runway to fund drilling, pay operating costs or service existing debt.
Equity dilution – To close the deal Leviathan is expected to finance the purchase largely with newly issued equity, as is typical for a cash‑for‑shares takeover of a TSXV‑listed peer. Assuming the $3.5 million cash is the primary consideration, the company will need to issue shares whose market‑value equals that amount. At today’s last traded price (≈ $0.12 CAD per share), roughly 29 million new shares would need to be allotted, expanding the share count by 20‑30 % and diluting existing holders proportionally. The dilution is therefore material but is offset by a stronger balance sheet and the acquisition of Cura’s assets (gold‑bearing properties in Botswana) which could lift the enterprise value if drilling results are positive.
Trading implications – In the short term the market is likely to price in the dilution risk, keeping the stock modestly pressured or flat despite the cash boost. Traders should watch the post‑closing share‑exchange ratio and any accompanying warrant or option issuances that could further dilute equity. If the acquisition is completed at a price that is below the implied fair‑value of Cura’s assets, the combined entity may trade at a discount, presenting a potential entry point for risk‑adjusted long positions. Conversely, if the market perceives the dilution as excessive relative to the $3.5 million cash infusion, a short‑term sell‑off could be anticipated. Position sizing should reflect the net‑cash improvement versus the anticipated 20‑30 % dilution, and stop‑losses should be placed near the recent swing‑low to protect against any adverse news on drilling or financing.