Private placement by Cal Graphite

A $3-million private placement involving 750,000 units (shares and warrants) at $4 per unit has been announced by Cal Graphite (VSE).

Each unit will consist of one common share and a warrant to purchase one-quarter of a share. The warrants will be exercisable for two years, at $4 per full share during the first year and $4.60 per full share during the second year.

The company said it will use the proceeds for improvements to its mill at Graphite Lake, near Kearney, Ont., and to help fund operations there. The company mines graphite at the site just north of Huntsville. In a recent release, the company said mill output has risen to 10 tons per day of finished product. Since January, the company has been shipping quantities of coarse flake product to a major customer and has begun commercial sales of other size fractions. The company said newly installed equipment will improve sizing of the final product and permit shipments to another major customer.

Cal Graphite has a new president. Craig Esterly, formerly acting general manager, has replaced John Stirling at the top post. Stirling remains a director and the company’s largest shareholder.

Stirling and another founding director, Edward Blanchard, have agreed to surrender for cancellation 1.75 million of their escrowed shares in the company. Stirling has offered up one million shares, which would reduce his ownership interest in Cal Graphite to 23%, and Blanchard 750,000 shares, which would reduce his interest to 9.6%.

The cancellation (subject to regulatory approval) of these shares by way of gift will change Cal Graphite’s authorized capital to 28.25 million shares and will reduce the number of issued shares to about 9.8 million shares. Stirling said the gift donation will enable the company to raise about $9 million (through sale of the shares) without shareholder dilution.