Yes, Debsyl, such halts USUALLY put a on the faces of investors. These halts are ordered any/every time that market regulators are notified of news perceived as ESPECIALLY noteworthy.

While this COULD be either something really good or really bad, the odds are generally stacked pretty heavily toward "good news". Sometimes a halt will be ordered right AFTER a piece of news is released - simply because the market reaction was so extreme that regulators want to "cool off" the trading with a halt.

Usually however they are handed a news release FROM the company/companies in question IN ADVANCE of releasing it, because the company KNOWS that something will make a big impact on the market. Note that sometimes these announcements are mixed blessings. For instance, imagine how betrayed we would all feel if the "good news" was an announcement that some larger miners had swooped in and BOUGHT OUT the company - with the share price lagging and production just around the corner.

So don't go lighting up any celebratory cigars just yet...

"Colossus Minerals Inc. Announces CAD$75,000,000 Bought Deal"

www.stockhouse.com/tools/?page=%2FFinanc...I%26newsid%3D8339933

Colossus Minerals Inc. (the "Company" or "Colossus") (TSX:CSI) has today entered into an agreement with Dundee Securities Ltd., on behalf of a syndicate of underwriters consisting of Clarus Securities Inc., Canaccord Genuity Corp., and GMP Securities L.P. (collectively, the "Underwriters"), with PowerOne Capital Markets Limited to act as a selling group member, pursuant to which the Underwriters have agreed to sell, on a bought deal basis, 75,000 units (the "Units") of the Company at a price of CAD$1,000 per Unit, for gross proceeds to the Company of CAD$75,000,000 (the "Offering"). Each such Unit shall consist of a $1,000 face value Senior Unsecured Gold-Linked Note (the "Notes") and 60 Common Share Purchase Warrants (the "Warrants").

The Notes will mature on December 31, 2016 (the "Maturity Date") and will bear interest, accruing and calculated and payable semi-annually in arrears on June 30 and December 31 of each year, at a rate of between 6% and 13%, dependent on the simple average of the London PM Gold Fixing Price. The Notes will yield 9.0% based on the current London PM Gold Fixing Price. The first interest payment date is December 31, 2011, and will consist of interest accrued from and including the Closing Date calculated in accordance with the simple average of the London PM Gold Fixing Price during the stub interest payment period.

Subject to any required regulatory approval and provided no event of default has occurred, the Company has the option, upon not more than 60 nor less than 40 days' prior notice, to satisfy its obligations to pay on redemption or maturity, the principal amount of and premium (if any) on the Notes, in whole or in part, by delivering freely tradeable Common Shares. The Company may elect from time to time, subject to any required regulatory approval and provided that no event of default has occurred, to satisfy all or part of its interest payment obligations by delivering sufficient freely tradeable Common Shares to a trustee for sale, in which event holders of the Notes will be entitled to receive a cash payment equal to the interest owed, from the proceeds of the sale of the requisite number of Common Shares by the trustee.

The Notes will rank subordinate in right of payment of principal and interest to all senior obligations of the Company to a maximum principal amount of $25,000,000 but pari-passu with any existing unsecured senior obligations outstanding of the Company.

Each Warrant shall entitle the holder thereof to acquire one Common Share of the Company at a price of $8.50 for a period of five years following the Closing Date.

The Underwriters will also have the option, exercisable in whole or in part at any time up to 30 days after the closing of the Offering, to purchase up to an additional 15% of the Units of the Company. In the event that the option is exercised in its entirety, the aggregate gross proceeds of the Offering will be CAD$86,250,000. Closing of the Offering is expected to occur on or about November 8, 2011 and is subject to regulatory approval including that of the Toronto Stock Exchange.

The Units will be offered by way of a short form prospectus in all provinces in Canada, except Quebec. The Issuer agrees that the Underwriters may distribute the Units in the United States by private placement to "qualified institutional buyers" as defined in Rule 144A, and such other jurisdictions as may be agreed upon by the Company and the Underwriters.

The Company intends to use the net proceeds of the Offering to fund advancement of the Serra Pelada project and for general corporate purposes including working capital.

This news release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the Unites States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.

About Colossus

Colossus is a Canadian-based exploration and development company focused in the mineral prolific Carajas region of Para State, Brazil. Our primary focus is to advance the Serra Pelada project into production. Serra Pelada is host to one of the highest grade gold and platinum group metals deposits in the world. Between 1980 and 1986 Serra Pelada was host to the largest precious metals rush in Latin American history. Colossus Minerals' Common Shares trade on the Toronto Stock Exchange (TSX) under the symbol CSI. The Company is headquartered in Toronto, Canada.

This is obviously "big" news, but I'm still trying to digest whether it will be perceived as "good news" or "bad news".

Here are my first impressions after some quick number-crunching: Colossus has managed to do a LARGE financing ($75 - $85 million) while only "diluting" the share structure with about 4.5 million warrants - priced at $8.50 each. So this is UNUSUAL in that it is primarily a debt-based rather than an equity-based financing.

So several things seem to be apparent here. On the one hand, it is VERY impressive that Colossus could raise this kind of CASH while surrendering such a TINY chunk of equity. You simply RARELY see the bankers commit to these dollars without grabbing a BIG piece of the pie for themselves. And the fact that the warrants are priced at $8.50 is also quite encouraging - given the present share price. They didn't just "give away" the warrants.

On the OTHER hand, Colossus now sits with $75 million of short-term debt AND at a high rate of interest ("...a rate of between 6% and 13%, dependent on the simple average of the London PM Gold Fixing Price").

Personally, I really like this deal since as everyone knows, Brian and I both believe this company is going to kick-out BIG revenue numbers once it gets anywhere NEAR full commercial production. So while the debt-payments are going to eat up most of their revenues for a year or two, shareholders are essentially seeing the company get what I assume will be the last financing they need to go to production with VERY LITTLE dilution to the share structure.

Congrats to management!

As a "P.S." the interesting aspect to this deal will be note HOW the interest rate varies with the gold price.

The "appropriate" way to link the interest rate to the price of gold would be for the interest rate to go LOWER as the price of gold goes higher. This is because a higher gold price implies greater profitability for Colossus (and lower risk). Naturally the reverse would also be true.

The "greedy" way (for the bankers) to structure the interest payments would be for the interest rate to go up WITH the price of gold - since we all know that is the direction that prices will take. Ultimately this is a question which will have an impact of several million dollars on the company's bottom line - so it is a significant consideration, although not "huge".

If anyone is able to find out (either from management or "SEDAR") how the interest rate is structured, then please post that information.

Hi Jeff,

Thanks for the info.

I am a bit confused.
The release says, "75,000 units (the "Units") of the Company at a price of CAD$1,000 per Unit, for gross proceeds to the Company of CAD$75,000,000"

I expect these monies are needed to bring them to production. Why would they halt trading? The shares were halted at $6.32. With the number of shares outstanding 104.9 M and floating 102.9941M would an additional 75,000 be a concern?

Why did they use $1000. per unit? Does unit refer to shares? They certainly don't expect shares to be worth that much money.

Alos, can you tell me the difference between outstanding and floating shares please.

Thanks

Sorry, about my last post, I didn't realize you had posted two more.

Did your questions get answered with my follow-up posts?

Thanks, Jeff, a number of the questions were answered, but I need to research the difference between warrants and shares. I saw a hint of it on BBC, but will need to find it back. Can you tell me you where the post is regarding warrants?

I purchase my shares though RBC and I see there are two numbers re shares. I am curious what the difference is between
Shares outstanding 104.9 M
Floating 102.9941M

When I saw the notice of halting trading I didn’t “panic” because I believe from my DD that it is a good company, but I must admit I totally didn’t think of it as an explorer due to the share price . Now I am wondering, since I have a fair number of these, whether I should take profits sooner than later and reduce my position considering it is a near production explorer. I understand that companies like Premium Exploration and Helio are much more of a “risk” but I am curious at what can go wrong with a company like CSI at this stage of development.

I'm going to jump in here a bit. I've had computer troubles of late, and have been on the sidelines.
I consider CSI a development company. The near production explorer is basically the same thing. A development company usually trades sideways for a while until they get VERY near to production. There usually is a big move to the upside then.

What could go wrong? They can go broke trying to get to production. Fortunately for CSI, they are not a penny stock, and did not have to release an avalanche worth of shares to raise capital for the final push.

What is the difference between Shares Out and Float? Shares out are the total releases number of shares minus warrants or options. The public float are the shares out that are available, and not held in private placements. (like this last round of financing).

As for trading. I'm trying to hold onto CSI, they are grinding out their way to production. admittedly, I have dipped into the number of shares on occasion to buy into some of these depressed share prices of other companies. Trust your instincts with a caveat. Trust them when you are grounded.

debsyl wrote:
Thanks, Jeff, a number of the questions were answered, but I need to research the difference between warrants and shares. I saw a hint of it on BBC, but will need to find it back. Can you tell me you where the post is regarding warrants?

I purchase my shares though RBC and I see there are two numbers re shares. I am curious what the difference is between
Shares outstanding 104.9 M
Floating 102.9941M


Debsyl, most recently here is what I've written on the subject of warrants:

www.bullionbullscanada.com/index.php?opt...atid=10&id=11752

In this particular case, the news release above specifically notes that with each $75,000 "unit" in the financing that 60 warrants would be awarded.

As for the difference between "floating" and "shares outstanding", I have no idea what the distinction is. It's obviously not a huge distinction, and personally I'm not especially interested in it - since I always look pretty much exclusively at the "fully-diluted" share count, since it's prudent to factor-in the maximum amount of dilution when we evaluate a company.

Note that with only 4-5 million warrants being issues there's no guarantee that they WILL be traded (publicly). This is about the minimum size of issue where trading is practical, so we'll have to see if these warrants end up getting listed.