Nick Hodge,
Publisher
Oct. 4, 2024
As you might know, I run a private placement service called Private Placement Intel along with my partner and Digest Publishing co-owner Gerardo Del Real.
And as we always tell everyone… We eat our own cooking.
That means we’re investing in the same companies we’re recommending to you.
Some people don’t like that. But we wouldn't have it any other way. It means we have real money on the line, so we have more to lose if we’re wrong.
But it’s not for everyone.
You have to meet certain income and net worth criteria to qualify.
Even if you can’t participate in private placements, you can still buy shares of the companies in the open market if you want. You just may not get the same price or the benefit of a warrant that we get in private placements.
In today's article, I’ll show you three of the junior resource companies we recently financed privately in Private Placement Intel so you can decide for yourself if you want to buy them.
But more than that, I’ll pull back the curtain on the world of private placements so you can see if it’s something you want to get more involved in. I know it’s one of the ways I’ve really been able to add to my net worth. And the same is true for Gerardo.
You can learn more about Private Placement Intel and the current uranium deal we have open here.
(Or you can call Jimmy Mengel at 844-334-4700 to get a run through of the service and discuss pricing.)
Private Placement FAQs
What is a Private Placement?
When a company needs to raise money, they can do it in the private market as opposed to the public market so they can do it faster and so they can avoid fees. If they raise money privately like we do through Private Intel, they can avoid having to register the securities and they can also avoid having to file a prospectus. They can get the capital from investors' hands into the company at a much faster pace than they would if it were to be raised publicly.
In a private placement, you fund a company directly so they issue the securities to you. In that case, they become the issuer so you're buying the securities directly from the company itself. When this happens, when you get an alert from Private Intel, you'll typically contact someone at the company in a managerial or in a director position, and they'll get you the necessary paperwork. That paperwork is called the Subscription Documents, or Sub Docs for short. It'll tell you what company you're investing in, what the terms of the deal are and what price the shares are being issued, if there is a warrant and what the terms of that warrant are if there is one.
Why can Private Placements be so lucrative?
Private placements can be lucrative because in many cases, we, the investors, are taking on more risk and so, there needs to be incentives for us to provide the company with capital. In some cases, that can be a discount to market where you're issued the shares at a discounted price to what they're trading publicly. In other cases, it can be a warrant to sweeten the pot. You may either get a half warrant or a full warrant that allows you to buy more shares at a future date at a specified price. Warrants give you leveraged upside with no risk because you do not have to exercise them if the stock goes down, but can buy more at a lower price if it goes up.
Do you need to be an accredited investor to participate?
Yes, you'll need to be an accredited investor to participate in these deals. There are various ways you can meet the requirements to become an accredited investor. The two most common are:
- Net worth, not including your house, of $1 million.
- Average annual income of $200,000 if you’re an individual or $300,000 if you file jointly.
There are many other exemptions for which you can become an accredited investor. Make sure you ask your broker or you check with the SEC or other governing body's website to make sure you're accredited.
Is there a minimum amount required to invest in Private Placements?
Oftentimes, there is no minimum to invest in the deals, but you want to make sure of a couple of things. You want to make sure, one, that it's worth your time and money and two, that it's worth the company's time and money. Remember, this is sometimes not a cheap process for you or the company. You'll need to wire funds. You'll need to fill out subscription documents that are sometimes 30 or 40 pages in length. Then, you'll have to use a broker who in turn will have to parlay with the transfer agent. You really want to make sure that the amount of capital involved is worth everybody's time, including your own. That's a different number for everybody, but as a general ruIe I would say you don't want to invest in these private placements with less than $5,000 per deal.
Do you need a full-service broker to participate in Private Placements?
You absolutely need a full-service broker to participate in these deals. I have accounts at multiple brokerages and use each for various purposes. If you need a recommendation, I am happy to provide one.
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Next Level Speculation: Three Recent Private Placements*
*Note these deals are closed and for example purposes only.
It's not hard to find private placements.
A company has to file with the exchange when they're going to be raising money. You can sift through filings and know on a daily basis when new private placements open.
What’s harder to find are quality deals. And getting access to quality deals is harder still.
That’s what Private Placement Intel provides — vetting and access.
We vet the pedigree of the people and/or the business plan and/or the asset(s). It's our network that has afforded us the chance to invest in these private placements over the past decade.
We see private deals come across our desk all the time. But the secret sauce to success is figuring out which deals are going to be better than other deals. And then getting an allocation to them. That's the service we endeavor to provide to you.
You can learn more about Private Placement Intel and the current uranium deal we have open here.
(Or you can call Jimmy Mengel at 844-334-4700 to get a run through of the service and discuss pricing.)
Here’s a recap of three recent companies we financed via that service.
Alcon Silver — I have been involved with the company for a number of years, since its sole asset was La Princesa, a 30 million ounce silver asset in the Puno Mining Region of Peru.
The historical resource is 91 grams per tonne silver plus some lead and zinc, and could be open pittable. It is just down the road from Minsur’s San Rafael mine, which is the largest tin mine in South America and the third largest in the world. Bear Creek’s fully-permitted Corani silver-lead-zinc mine is also about 100 kilometers away.
The resource at La Princesa only includes 56 drill holes totalling 8,057 meters along 1.5 kilometers of strike on a single vein system. This is on a 3,500 hectare (8,650 acre) land package, representing an excellent exploration opportunity for both potential additional resources on the known Veta La Princesa and to discover blind deposits on previously untested structures. Princesa itself is intermittently exposed along a strike length of 2.2 kilometers. There is water (Rio Cullco) and power (national electric grid) at site and access is via paved and gravel roads.
Alcon has also struck a deal to get Pan American Silver’s Caujul project, also in the Puno Mining Region of Peru.
Caujul is a large 14,000 hectare land package that was Pan American's top silver exploration asset in Peru until it decided to focus on other jurisdictions. Pan American spent $1.25 million on exploration and permitting at Caujul prior to 2020. Permits are in place to drill 37 holes from 20 drill platforms at two sites through March 2026.
Alcon has an option for 100% of Caujul, and has already paid $200,000 and issued 1.5 million shares. It has to make another $400,000 payment and issue 500,000 shares in 2026, and then a final $550,000 payment in 2027. There is a 2.5% NSR on all production from Caujul properties, of which Alcon can buy back 0.5% for a payment of US$2.5M.
Alcon Silver currently has 33.6 million shares out and no warrants, options or debt. Insiders own 24% and Pan American owns 5%.
We recently participated in the C$0.30 IPO being led by Red Cloud. Each share came with half a warrant at C$0.45 good for two years. Listing is expected on TSX in the next few months.
The post-money valuation of the company will be C$14 million with C$4 million in the bank assuming full uptake of the deal. That values the 30 million ounces at La Princesa at C$0.33 each with absolutely zero value assigned to Caujul or to any exploration upside at either project.
It’s a pretty straightforward story that took a long time to come to market but it looks like the wait was worth it. Well-structured and high-quality silver exploration stories are desperately sought after. And this fits the bill at a time when silver is near or over $30 per ounce.
Alcon Silver expects to IPO in late 2024.
New Private Deals Available & Upcoming
Private placements are off limits to most investors because there are income and net worth requirements.
These are the types of deals the rich use to get richer.
At Private Placement Intel, we’ve been vetting and participating in private placements for a decade with great success.
If you’re a high-net-worth or professional investor, we have new private placements available now and more upcoming.
Learn more about our newest private placement deal here.
Q2 Metals (TSX-V: QTWO)(OTC: QUEXF) — Gerardo, with whom I co-run Private Placement Intel, likes to say this is his second-favorite lithium play next to Patriot Battery Metals. He has a soft spot for Patriot because it made us and subscribers millions of dollars.
Both companies have an excellent management team, great technical team and the flagship asset, in Q2’s case Cisco, has scale and grade. With lithium sentiment at a low (it’ll turn) the company is an excellent contrarian play that provides great lithium exposure in a top-tier jurisdiction.
We believe the flagship Cisco project will quickly grow into one of the better lithium projects in James Bay and the re-rating will see the stock trading in dollars not cents.
We recently participated in a private placement for Q2 metals in which it raised C$7.5 million at a price of C$0.25 with an attractive half warrant at C$0.50 for a period of two years. Shares are currently trading just over C$1.00 a few months later, some 320% higher than the financing price and I suspect that will continue.
The funds will be used to continue drilling at the flagship Cisco property in Quebec.
Hannan Metals (TSX-V: HAN)(OTC: HANNF) — We have financed Hannan Metals (TSX-V: HAN) several times going back to 2017 at prices ranging from C$0.10 to C$0.26.
Every single position in Hannan has so far worked out well for us. Hannan climbed above C$0.50 in 2020, allowing us to take some profits off the table. And it jumped above C$0.60 in 2021, allowing us to exercise multiple in-the-money warrants we had that were priced at C$0.15 and C$0.25. That initial run was sparked by Hannan’s move into copper and precious metals in Peru in 2019 after pivoting from zinc in Ireland.
It has since become a top-ten landholder in Peru, outlined multiple porphyry and sediment-hosted targets across an entire basin, attracted the capital and partnership of two major mining companies, and has made substantial progress on permitting and early exploration.
Hannan is focusing on two main projects in Peru:
San Martin: High-grade sediment hosted copper-silver analogous to the Central African copper belt. Japan’s main mining arm — JOGMEC (Japan Oil, Gas and Metals National Corporation) — has entered into a US$35 million strategic joint venture to earn up to a 75% interest in San Martin
Valiente: Multiple (up to 18) major copper-gold porphyry, skarn, epithermal systems located in a new, unexplored Miocene belt (100% owned)
Teck Resources came in with a C$2.6 million strategic investment in Hannan to take 9% of the company in 2022, and has since upped that stake to 9.9%.
Hannan Metals currently has 109.5 million shares outstanding, 121.9 million fully diluted. The fully-diluted total includes ~9 million options that are all in-the-money below C$0.29 and 3.5 million warrants priced at C$0.35 that expire next May. Management owns 14%. Teck owns 9.9%. Supportive and strategic shareholders, including me and Gerardo, own a few more percent.
We most recently participated in a C$2.5 million private placement in which the company sold units at C$0.35. Each unit came with a share and a half warrant at C$0.50 good for two years.
That was just three months ago in June. We even had a big webinar inviting you to join us.
Those shares are now more than 70% higher as the company awaits highly anticipated drill permits.
Conclusion
We did a full webinar about private placements for you in June 2024 to invite you to participate in that Hannan private placement.
That deal is long gone.
But we are participating in a new private placement in a uranium company this week. It’s with a team we have financed before that ultimately delivered us more than ten-bagger returns. Our original shares were at 15-cents, and then the uranium asset was sold twice, first to Azarga Uranium and then to EnCore Energy. EnCore then listed on the Nasdaq and ran to nearly C$7.
We are financing that team again this week at a ~$3 million valuation. Both Gerardo and I are participating. And we are both expecting to make multiples of our money again.
You can participate alongside us, but you must be a member of Private Placement Intel. Click here to do that now. Or call Jimmy at 844-334-4700 to learn more and discuss pricing.
Call it like you see it,
Nick Hodge
Publisher, Resource Stock Digest