Heavy Earth Resources, Inc.: announcements explained, share price

Announcements, explained

Each one in plain English, with the numbers worked through for a shareholder.

15 Feb 2013capital raising announcement▼ BadMajor

On February 13, 2013 the company sold one investor a $1,000,000 15% convertible debenture due in three years, plus five-year warrants for 2,000,000 shares at $0.60. The debenture converts at $0.50 per share, below the $0.60 conversion price of the 2012 debentures, and the interest rate is higher. The investor also gets the right to appoint 3 directors as the board grows to 7 members. The subsidiaries guarantee repayment. Shareholders face more debt, more potential dilution and a shift in board control.

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12 Dec 2012capital raising announcement▼ BadMajor

On December 6, 2012 the company sold one investor a $500,000 6% senior convertible debenture due in three years, plus five-year warrants for 833,333 shares at $0.85. It has the same terms as the August 2012 debenture: conversion at $0.60 per share, interest rising to 12% and 15% if the $6,000,000 public offering and Nasdaq listing targets are missed, subsidiary guarantees, and a registration statement due within 45 days. This adds to the debt and potential dilution from August.

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4 Sept 2012capital raising announcement▼ BadMajor

On August 29, 2012 the company sold two investors a $1,000,000 6% senior convertible debenture due in three years, plus five-year warrants for 1,666,667 shares at $0.85. The debenture converts at $0.60 per share, and the interest rate rises to 12% if a public offering of at least $6,000,000 isn't completed by December 31, 2012, and to 15% if the stock isn't listed on Nasdaq by January 15, 2013. The subsidiaries (Deep Core Inc., DCX S.A.S., Deep Core (Barbados) Inc.) guarantee repayment. This is the company's first new borrowing since the Deep Core notes were converted to equity in May 2012. If converted and exercised, it would dilute existing shareholders. A resale registration statement is due within 45 days.

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18 June 2012capital raising announcement● Neutral

On June 12, 2012 the company sold 416,666 shares at $0.60 each to a non-U.S. investor for $250,000, along with a five-year warrant for 104,167 shares at $1.25. The company must register the shares for resale within 150 days. This is a small raise that slightly dilutes existing shareholders.

What it means for a shareholder

416,666 new shares at $0.600 to raise about $250,000. That's 0.597% dilution: every existing holder's slice gets 0.597% smaller. If you held $1,000 of shares (1,667 at the issue price), your slice goes from 0.0024% to 0.00239% of the company. To keep it you'd need 10 more shares - about $6 at the issue price.

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