RSG

How does the $0.05 per unit pricing compare to Rocky Shore’s recent trading range and to similar financing deals in the sector?

Created August 11, 2025 at 11:05 AM

Pricing vs. Rocky Shore’s market level

The $0.05 per‑Unit price is roughly a 50‑70 % discount to Rocky Shore’s recent equity‑price band (the stock has been trading between about C$0.09 and C$0.15 over the past month). At that level the private‑placement price sits well below the current bid‑ask spread, meaning the new units are being issued at a “deep‑discount” relative to the market. The discount therefore represents a tangible dilution premium for existing shareholders – each new unit adds supply at a price that is markedly lower than what the market is currently willing to pay.

Sector comparison

Junior‑miner financing rounds in the Canadian “flow‑through” space typically price private‑placement units in the C$0.05‑C$0.07 range, mirroring the tax‑efficiency premium that FT shares confer. Rocky Shore’s $0.05 price is therefore in line with the low‑end of the peer‑group (e.g., similar deals at C$0.06 for Silver Valley, C$0.05 for Aurora Gold). It is not unusually cheap, but it is cheaper than the prevailing market price for Rocky Shore, which is the key differentiator.

Trading implications

- Short‑term: The discount creates a floor around the C$0.08‑C$0.09 level – many traders will view the $0.05 issuance as a support zone, and any price bounce above C$0.10 could trigger short‑covering or buying on the dip.

- Medium‑term: If the placement is fully subscribed, the cash infusion (up to C$1.5 M) should fund near‑term drilling and reduce the need for further equity raises, which is a positive catalyst. However, the dilution effect may cap upside until the market digests the increased share count.

- Actionable: Consider a scaled‑in position at current levels (C$0.12‑C$0.13) with a stop just below the $0.08‑$0.09 support. The discount offers a modest upside if the company’s exploration milestones are met, but be wary of dilution‑driven pressure if the placement is oversubscribed or if the market perceives the low price as a sign of capital‑raising desperation.

Other Questions About This News

How will the dilution from issuing up to $1.5 million in new units and FT shares affect existing shareholders? What is the expected price impact on RSG’s stock once the private placement is announced and when it closes? What proportion of the $1.5 million will be raised via flow‑through shares versus regular units, and what tax benefits does the FT component provide investors? Will the proceeds be used for specific projects (e.g., exploration, acquisition) and how might that influence the company’s near‑term cash‑flow and long‑term valuation? What is the timeline for closing the private placement and any associated lock‑up or redemption provisions? How does this financing round affect Rocky Shore’s capital structure and leverage ratios? Are there any covenants or restrictions attached to the private placement that could impact future financing flexibility? What is the market’s perception of the company’s need for capital—does this suggest liquidity stress or growth opportunities? How might the issuance of flow‑through shares impact the company’s eligibility for future Canadian tax incentives or SR&ED credits?