February 2, 2023: Reyna Silver (RSNVF; T.RSLV) raises C$4M.
The dilution from last night’s announcement amounts to 11.3%, admittedly on the high side. That and the full warrant good at only a penny above yesterday’s closing price is the reason the stock is selling off.
But I spoke to management to understand this deal a little better, and learned some things it appears the market is not aware of…
I’m told the company was offered these terms a few days ago when the share price was C$0.30. After the results from Medicine Springs, investors and banks started showing interest in Reyna, and those conversations apparently had been ongoing for several weeks. Management wanted to do a deal soon, since they’d need cash to explore all 3 properties and drill contracts needed to be secured now—and to do so required being fully financed.
They were offered a bought deal, which, by the way, is relatively rare for a company at this stage. The terms were agreed upon when the stock was at C$0.30, and before the deal closed the shares moved to C$0.38, likely on the Fed’s announcement. Had the timing been a little different, these terms wouldn’t look so onerous.
The important thing is that Reyna Silver is now fully funded for their 2023 exploration program, having ~C$8M after this deal closes. They will be drilling all 3 projects (Guigui, Batopilas, and Medicine Springs).
Management also shared with me their goals for exploration at each project:
“Guigui: Following the results from Discovery hole GG21-28 and the subsequent Phase 2 drilling campaign, the company has engaged a new detailed geophysics survey. The aim of the survey is to assist in vectoring toward the source of the Santa Eulalia District, and identifying if there are possible upper-level targets within Guigui itself. The new geophysics will be combined with the drill results to determine strategic drill targets that maximize drilling value.
Batopilas: The discovery of gold mineralization in this historically native-silver district provided a new exploration opportunity. The technical team conducted an extensive sampling survey, intensive structural study, and new geophysics and concatenate this with existing data developing refined, strategic drill targets to move towards discovering additional high-grade ore-shoots like those that made the district famous. The aim is to begin deploying these drill targets in Spring 2023.
Medicine Springs: After the recent results from the initial reconnaissance drill holes, including 2.4m of 1,021 g/t Ag. The results revealed not only high-grade silver, but an extensive section of potential host rock for a large Carbonate Replacement Deposit. The technical team will combine those results with existing and new data to determine the most prospective drill targets within our extensive inventory of permitted drill pads. The company looks forward to the next stage of drilling and beginning to understand the framework of the system and identify where the significant silver mineralization came from.”
Given the activity ahead, and the prospective nature of all 3 assets, Reyna Silver is a core silver speculation for me. This year could see some very interesting developments, with a share price that follows. My bet is that Peter Megaw and team are successful here.