Palladon Ventures, Alexis Minerals plan $13 million, C$13 million offerings; issuance suffers

By Sheri Kasprzak

Atlanta, April 8 - As volume took a hit from lower stocks Friday, two resource exploration companies - Palladon Ventures Ltd. and Alexis Minerals Corp. - led private placement news.

Palladon Ventures Ltd. said it plans to head to the private placement market with a $13 million offering with Luxor Capital Group.

The offering includes convertible notes that mature in five years, bear interest at 5% annually and are convertible into a total of 17.7 million common shares at $0.90 each.

Luxor will also get warrants for 7.8 million shares, exercisable at $0.99 each for two years.

"Resources stocks are up, and they were up especially yesterday," said one market source familiar with natural resources. "That they priced it at a premium is a good indicator that they're getting a boost from the stock gains in the sector as a whole."

Even so, Palladon's stock slipped $0.01 to close at $0.68 Friday.

Based in Broomfield, Colo., Palladon is an iron exploration company. It plans to use the proceeds from the offering for the development of its iron project and the purchase of interests in the Western Utah Copper Co., currently the joint venture partner of Palladon.

Alexis's C$13 million deal

Another exploration company, Alexis Minerals Corp. handed over the details of its previously announced private placement for up to C$13 million.

The company plans to sell 9.75 million flow-through shares at C$0.80 each and 6,933,333 units at C$0.75 each.

The units are comprised of one share and one half-share warrant. The whole warrants allow for an additional share at C$1 each for two years.

"I think it will go okay for them," said one market source. "I'm not completely familiar with them, but it looks okay."

Placement agents CIBC World Markets Inc. and Dundee Securities Corp. have an over-allotment option for up to C$2 million, exercisable until closing.

The offering is expected to close April 20.

Based in Toronto, Alexis is a mineral exploration and development company. The proceeds will be used for exploration in the Rouyn-Noranda and Val d'Or areas of Quebec and for general corporate purposes.

The company's stock closed down C$0.06 at C$0.76 Friday.

Elsewhere, market sources said issuance stalled as the week ended with issuers watching the stock market and preparing for their next moves.

"I really think it boils down to issuers playing a wait-and-see game," said one sell-sider. "Stocks were off and I think it was just not a good day to get a deal out there."

Stocks also held off issuers in Canada, sources there said.

In the U.S., the Dow Jones Industrial Average lost 84.98 to close at 10,461.34; the Nasdaq composite index closed down 19.44 at 1,999.35 and the S&P 500 dipped 9.94 to close at 1,181.20.

For the week ahead, some sell-siders said health-related companies may be heading to the private placement market as stocks in that sector make gains. Resources companies may also head to the market at the beginning of the week, those sources said.

Curon raises $3.22 million

Curon Medical, Inc. wrapped the first portion of its $11,325,699 private placement for $3,225,699.

The company issued 4,962,614 shares at $0.65 each in the first tranche, a 19% discount to the company's stock price on April 7.

The company also issued warrants for 2,481,298 shares exercisable at $1 each for five years.

The remaining $8.1 million portion of the deal has been deposited in escrow and will be released to Curon upon shareholder approval. The company will seek the shareholders' approval at its meeting next month. The terms of the second closing include 12,461,538 shares at $0.65 each.

"This round of funding strengthens our balance sheet and will provide capital to execute our operating plan," said Larry Heaton, the company's president and chief executive officer, in a statement. "With the addition of the funds being held in escrow pending stockholder approval, we believe we will have satisfied the going concern issue that we raised in our yearend 2004 financial statements."

The company reported a deficit of $94.6 million at the end of 2004 with $5.9 million in cash-on-hand and $6.6 million of working capital.

"What you have here is a company obviously struggling and from what I'm hearing, things aren't getting much better," said one market source following Curon. "The discount on this deal is pretty substantial, but it's substantial because they need more capital and they're pretty much in a position where they have to take what they can get."

SVB Alliant and The Robins Group LLC were the placement agents.

Based in Fremont, Calif., Curon develops treatments for digestive disorders. The proceeds will be used to fund the company's initiatives for the use of radiofrequency energy to treat acid reflux. The remainder will be used for working capital.

On Friday, the company's stock closed down $0.05 at $0.75.

Chamaelo's stock unchanged

A day after announcing its C$305,022,500 private placement, Chamaelo Energy Inc.'s stock didn't budge Friday.

The company's stock closed unchanged at C$6.59, staying where it closed Thursday after losing C$0.12.

According to the terms of the Chamaelo deal, the company will issue series E subscription receipts at C$6.50 each and series D subscription receipts, convertible into debentures, at C$1,000 each. The debentures are convertible into common shares at C$5.75 each.

The proceeds from the offering will be used for Chamaelo's $375 million acquisition of oil and natural gas properties in West Central Alberta and Northeastern British Columbia.

Based in Calgary, Alta., Chamaelo is an oil and gas exploration company.

DRC's stock slides

After the announcement of its plans to raise C$3 million in a private placement earlier this week, DRC Resources Corp.'s stock slipped Friday.

The company's stock closed down C$0.23 at C$6.52.

On Thursday, the company's stock closed up C$0.40, or 6.3%, at C$6.75 on Thursday, and on Wednesday, the company's stock closed up C$0.15 at C$6.35.

The offering includes flow-through shares at C$7.50 each.

Based in Vancouver, B.C., DRC is a gold exploration and development company.

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