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The dealers are showing their faith in the fertilizer boom, taking warrants as partial payment for a $25-million financing for Potash North.
Canada's newest potash play - it acquired permits on two Saskatchewan properties in May - sold units for $2.50 each on Wednesday in an underwriting led by Canaccord Capital. Each unit contained a common share and a warrant that allows the holder to buy a share in Potash North for $4 over the next 24 months.
With the general enthusiasm for all things fertilizer and Potash North touching $4.49 on Wednesday - it's changing hands Thursday at $3.38 - it's not hard to understand the appeal of an option on this stock at $4. Which brings us to the dealers' fee.
Canaccord and a syndicate of five dealers took a standard 6 per cent underwriting fee, plus warrants to purchase up to 600,000 Potash North units. Broker warrants are commonplace in small resource financings, and they tend to reflect a bullish view on the company from the underwriters.
GMP Securities, National Bank Financial, Wellington West Capital, Genuity Capital Markets and Salman Partners filled out the Potash North Sales group.
Potash One, another junior play in this sector, has the rights to subscribe for up to 3 million Potash North units to maintain its 20-per-cent stake in the company. This would put another $7.5-million in Potash North's coffers.
All this activity at Potash North is putting a few bucks in the back pocket of former Salman Partners' forest products analyst Sam Magid.
A company controlled by Mr. Magid, Peninsula Merchant Syndications Corp., took a $600,000 fee for work on this week's financing. Mr. Magid sold Potash North those permits back in May for $1.95-million in cash, along with a $1.75-million unsecured convertible debenture.
If Mr. Magid's name rings a bell, it may reflect that fact that he was caught up in the 1997 scandal that saw money manager Veronika Hirsch tagged for filing a false address on a securities trading report. Mr. Magid paid B.C. regulators $30,000 to settle that misunderstanding.
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