Crystallex: Units Offer Is Not a Good Sign
Junior mining company Crystallex (KRY) announced a public offering of units. According to the press release, the company “plans to use the net proceeds from the financing to develop the Las Cristinas Project, for debt service and for general corporate purposes.”
As longtime readers know, I was once bullish on Crystallex, but soured on the stock after the long-anticipated environmental permit never materialized. That was several months ago, and the company still has not received the environmental permit.
I
firmly believe that if the permit was forthcoming, Crystallex would do
everything in its power to avoid a dilutive financing at these low
levels. Thursday’s announcement suggests that Crystallex remains in the
same position it was one month, six months, and a year ago — burning
cash and praying that one day Hugo Chavez will deliver the permit.
Until that happens, I will avoid Crystallex. Hope is not an investment
thesis.
DISCLOSURE: No position.
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This article has 2 comments:
- Fred Roth
- 9 Comments
Jan 28 07:52 PMMy first take on the share issue was similar to yours. One things confuses me though. $60 million is not chump change. Who is buying up this share issue? Is it a potential suitor? Is it senior management? The answer to this question may be quite enlightening as to the future of Crystallex and Las Cristinas. Disclosure: Long KRY.
- microcap speculator
- 6 Comments
My Website
Jan 31 11:21 AM