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Sprott Launches IPO Fully Subscribed and raises $189 Million

0 Comments|April 17, 2007

Moly lovers get a participation stock

Moly lovers get a participation stock

Sprott Molybdenum Participation (TSX: T.MLY, BullBoards) has settled into its second day on the TSX at a comfortable $5.72, up 72 cents from its successful IPO yesterday. On Monday, the company sold 37.8 million units at $5.00 each, bringing in a total of $189 million.

Purchasers received one share and one half of a warrant. Each warrant entitles shareholders to purchase one common share in the fund for $7.50 until April 16, 2009. The IPO was fully-subscribed and saw the agents fully exercise the 5% overallotment option.

According to the Sprott Molybdenum Participation (SMP) website, Sprott Chairman and Chief Executive Eric Sprott created the fund as an investment holding company that will invest in Molybdenum assets such as the securities of public and private companies, as well as physical molybdenum.

The Sprott Molybdenum Participation fund recently purchased 10% of moly exploration company, International PBX (TSX: V.PBX, BullBoards). Sprott management purchased a total of 20% of the junior, for a total of $7 million.

In April, moly-producer Blue Pearl (TSX: T.BLE, BullBoards) sold three million of its shares at $12 each to Sprott Molybdenum for a total of $36 million in a private placement.

There has been strong interest in the junior molybdenum market recently, with many analysts suggesting further upside in the white metal's price, since little has been added to supply. The molybdenum market is considered very tight.

According to SMP director Denis Battrum's March 2007 essay, "Structural Changes in Molybdenum Demand," "Molybdenum is undergoing significant structural change on both the supply and demand sides which makes a return to earlier price structures unlikely."

Doug Hadfield is the Chief Editor of the Resourcex Investor, an internationally distributed newsletter specializing in identifying as-yet-undiscovered resource companies representing the best in their class. For more information, visit the website


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