A notice from directors
regarding the upcoming Annual General Meeting for Donner Metals (TSX:V.DON
, Stock Forum
) has asked shareholders to approve a plan that it hopes will keep the company alive.
The plan asks for a 60-to-1 share consolidation, the sale of the interests in five JV properties to pay debt, and the moving of the company head office from British Columbia to Quebec.
The company says it has received a right of first refusal offer from Glencore Strata (OTO:GLNCY
, Stock Forum
) of $2,395,200 for the five Matagami property interests, which Donner wants to use to repay $1.0 million of the currently outstanding balance of $3.53 million to Ressources Québec Inc., a subsidiary of Investissement Québec, Société de développement de la Baie-James, Capital croissance PME and Fonds régional de solidarité FTQ Nord-du-Québec.
According to the notice, “If the Sale of Interest Resolution put forward at the 2013 AGM is not approved and the Company is unable to satisfy its obligations under the Loan or repay the Loan when due, the Company may not be able to continue as a going concern. This would put the Company under severe financial hardship and may result in a forced sale or liquidation of its assets through bankruptcy.”
The company intends to pay the remainder of the debt through cash in hand.
Regarding the share consolidation, “The Board of Directors of the Company is of the opinion that the current share capital structure of the Company is too large for the growth strategy of the Company and therefore has determined that it would be in the best interests of the Company to reduce the number of outstanding common shares by way of the Share Consolidation.”
Donner currently has 316 million shares outstanding, which are valued at $0.005 each, leaving it with a $1.58 million market cap.
At the time of writing, there are 6.9 million shares on the ask at that price, with no bids.
The rollback would leave the company with some 5 million shares outstanding, valued – if only for a short time - at $0.30 each.
The company hopes to moves its base of operations to Quebec because “key management and a majority of the proposed directors of the Company are resident of the Province of Québec” and the company hopes to begin exploring for gold again in that province once the matters above have been seen to.
Donner plunged into chaos when, in early September, it defaulted on a $5 million JV payment
to Glencore and duly lost its share in the Bracemac-McLeod mine.
FULL DISCLOSURE: The author of this article holds 20,000 shares in Donner Metals.
Because the roulette tables were busy and, come on, half a cent!