Even though it only had 44.52 million shares outstanding, First Energy Metals Limited (TSX-V:FE) said it was considering a reverse split and it meant it, announcing Monday morning that it is proceeding for a 1-for-5 share consolidation.
Following the split, First Energy (known as Agave Silver until December 2016) will have about 8.9 million shares outstanding. Currently trading at four cents, shares should jump to 20 cents post-split (5x whatever the closing price is the day before the split is executed), which is expected to be executed on Thursday, February 1.
That share total could rise immediately if the Vancouver-based company completes a non-brokered private placement it has proposed. Per the planned raise, First Energy will issue 2.67 million shares at a post-split price of 15 cents each for a gross of $400,000.
An additional 666,667 "flow-through" shares will be offered as well at 15 cents, for another gross of $100,000. If completed in entirety, about 3.33 million shares will be issued, diluting the post-split shares by about 37%.
The company plans to use at least part of the capital to acquire 100% of the 1,750-hectare Phyllis Cobalt property in the Kenora Mining District of northwestern Ontario. First Energy said Monday it entered into an option agreement for the property for a total of $140,000, with $20,000 due upon signing, $35,000 due on the first and second year anniversaries and $50,000 in year three.
The company also had to commit to expenditures for exploring the property of $75,000, $100,000 and $125,000 during years one, two and three, respectively. As is typical in option deals, First Energy has agreed to pay a 3% net smelter return as well to the current property owner, with a clause to buy back 1% for $1.0 million up the the point of production.
Traders are turning a blind eye to the news, maybe because the company hasn't reported much in the way of developments since closing a private placement last January that raised $416,000 at seven cents per share. The announcement of a drilling permit for its Kootenay Lithium Project, near Revelstoke, B.C. in August was not followed up with any news of progression.
The news flow, which isn't kept current on the company's website, mostly consisted of director changes throughout 2017.
Shares are down half a penny in Monday trading to four cents on volume of nearly 130,000, which is a big uptick from its three-month daily average of 32,700.
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