Selwyn Resources (SWN.V) - pricing for C$10m financing announced

Comment by Objective Capital , Jul 31, 2007
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Selwyn Resources announced it is pricing its C$10m financing at 65 cents per unit. Each unit will consist of a common share and one-half of a share purchase warrant. Each whole warrant will be exercisable at 85 cents over the next two years. The financing, led by Paradigm Capital Inc, includes provision for an over-allotment option of up to C$1m in additional units.

Objective's view:

The new financing gives Selwyn the cash it need to continue its C$25m exploration programme on the Selwyn zinc-lead project. We view this as positive, as much of the current and planned drilling is testing potential high-grade. zones that could materially add to the economics of the project.

In that the unit price is significantly below our base-case valuation the issue is dilutive to our valuation. The net result of the financing would result in a decrease in our valuation from C$0.92 to $C0.89. However, recent assays from the high-grade zones offer an equivalent increase in our valuation.