U.S. China Mining Group, Inc.: announcements explained, share price

Announcements, explained

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

13 Jan 2011capital raising announcement● Neutral

This amendment corrects the January 7, 2011 private placement: 3,750,000 units were sold at $4.00 (not 3,375,000), with net proceeds of $13,650,500 after $1,349,500 of commissions and costs. Every other term is unchanged, including the $6.80 warrants, the 375,000 agent warrants and the 120,000 shares to Greenview. The larger unit count means somewhat more dilution than the original filing showed.

What it means for a shareholder

3.8m new shares at $4.00 to raise about $13.7m. That's 20% dilution: every existing holder's slice gets 20% smaller. If you held $1,000 of shares (250 at the issue price), your slice goes from 0.00167% to 0.00134% of the company. To keep it you'd need 63 more shares - about $252 at the issue price.

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12 Jan 2011capital raising announcement● NeutralMajor

On January 7, 2011 the company sold 3,375,000 units at $4.00 each in a private placement to investors, with Euro Pacific Capital as placement agent. Each unit is one common share plus a five-year warrant for 0.5 share at $6.80, and the filing states net proceeds of $13,653,000 after $1,347,000 of commissions and costs. It also issued 375,000 warrants at $6.80 to the placement agents and 120,000 shares to Greenview Capital for consulting on the deal, so existing shareholders are diluted. The company must file a resale registration within 45 days of closing or pay penalties of 1% per 30 days up to 10%. The filing does not say what the money is for. The unit count and proceeds were corrected the next day.

What it means for a shareholder

3.4m new shares at $4.00 to raise about $13.7m. That's 18% dilution: every existing holder's slice gets 18% smaller. If you held $1,000 of shares (250 at the issue price), your slice goes from 0.00167% to 0.00137% of the company. To keep it you'd need 57 more shares - about $228 at the issue price.

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