All About Private Placements - Part I

Proven and Probable

 Credit: Thumbnail Image taken from Streetwise Reports.

Tekoa Da Silva of Sprott USA, sits down with Maurice Jackson of Proven and Probable in this exclusive 4 Part Series entitled all about Private Placements. This is one, if not, the most comprehensive beginners guide to understanding the value proposition of private placements.

1:06 | What is a Private Placement
2:46 | How Can I Participate
3:55 | What are the Requirements
6:28 | When is it a Good Time to Invest
10:11 |Junior Mining Company vs. a Mining Company
11:53 | What are the Terms
14:38 | Cost of Capital

Video length: 00:19:25
Watch: All About Private Placements - Part 2 
Watch: All About Private Placements - Part 3


Maurice Jackson: Thank you for joining us for aspecial four-part series entitled All About Private Placements. Joining us for a conversation is Tekoa Da Silva; he is an accomplished licensed financial advisor for Sprott USA, the preeminent name in the natural resources space. Full disclosure, the following is not a Sprott USA endorsed product, and is for educational purposes only.

Tekoa Da Silva: Hi, Maurice, pleasure to be with you.

Maurice Jackson: There's a lot of ambiguity regarding private placements and we thought it would be good for readers to have a comprehensive overview regarding this topic. Tekoa, what is a private placement?

Tekoa Da Silva: My understanding is that it's simply a vehicle that is used to allow an investor to fund directly a corporate entity. I'm guessing in the context of this conversation, private placement is probably in relation to natural resources and mining industries. And I believe the bottom two segments of that industry, in exploration and development-stage businesses, [private placements are] their lifeline, in terms of their primary source of capital infusion.

A private placement is a vehicle used to move cash directly into the entity, and then in exchange for your cash, you get some form of security or ownership. And the securities that you could get could be common stock, they could be stock options, warrants, debt securities. So that is what a private placement generally is.

Maurice Jackson: So it allows you to get either shares or a debenture. How do I participate in a private placement?

Tekoa Da Silva: Assuming that we're talking about the North American context, and if you are, let's say, based in the U.S., an accredited investor, how would you participate in a private placement? I think if a person is sitting in front of a computer at home and they see a press release come up for, let's say, a gold exploration company, and they look at it and it says that the company is announcing a private placement and they say, how do I participate in that?, probably the first thing that a person would do, or could do, is to call the company or e-mail them and say, "I'd like to participate."

What would happen next is the company would reply and probably provide a few documents. A private placement memorandum is the lead document and they would provide that to the person to complete and return, and that would start the process of participating in a private placement. The investor relations personnel of that company would sort of hold your hand and walk you through the process of that.

Maurice Jackson: What are the requirements to participate in a private placement?

Tekoa Da Silva: The requirements to participate in a private placement, again, from the North American context, is usually, firstly, being an accredited investor. So having a net worth of US$1 million or more, excluding the value of your main residence. There's also an income qualification part of it too, that may change over time. So you always want to look online for the most precise definition announced by, I believe it's the SEC [Securities and Exchange Commission] or FINRA [Financial Industry Regulatory Authority] in the United States.

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Disclosure: I or members of my family own shares of Novo Resources.

Proven and Probable LLC may receive financial compensation from its sponsors. The compensation is used is to fund both ...

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