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Uranium Energy Corp (UEC) and a smash’n’grab financing deal (from IKN489)

The devil is always in the details with these deals. And there’s a realy devilish one in this gig. What you do expect from Amir Adnani, a man who doesn’t have a clue about mining but is an expert in converting worthless paper into dollar bills Rick Rule taught him well. 
This from last weekend’s edition of The IKN weekly, when UEC was a U$1.70 stock. The new paper now free and trading today has pushed it to where we are today, any number of small hedge funds having clipped their warrants.

Uranium
Energy Corp (UEC) and a smash’n’grab financing deal
The news that US listed Uranium
Energy Corp (UEC) is running a U$10m underwritten deal priced at U$1.60 per
unit (unit = share + ½  warrant at a
$2.05 strike) passed my desk on Friday morning (19) and got my eyes to roll,
yet another Amir Adnani vehicle doing yet another round of paper production
instead of anything approaching mining. To be honest, I only read the title
line and the first sentence before closing the mail and moving on, which was a
mistake. However, thanks to A Reader, the interesting part of this deal was
before my eyes the next day. He got a mail from his broker Sprott Global, which
has obviously been subbed by lead broker Wainwright to move paper. The Sprott
Global cover mailer covers the basics of the deal and further down a brief biog
of the company, but it’s this part of the letter that stands out:
“…the UEC deal
comes free trading on day one meaning shares can be sold right away after the
October 3rd close -though it may take a few days for the shares to be booked to
your account. Each unit will only come with a half warrant but note that this
offer is available to non-accredited investors.”
Indeed, on reading the UEC NR I
hadn’t noticed that the deal was on the back of a “shelf” registration done by
UEC previously. That’s a document which, when accepted by the SEC, allows a
company to run a financing with no escrow on the shares or warrants once
closed. The typical Canada-style 121 day wait in lock-up does not apply to this
company’s placement and, as it stands this weekend at U$1.72 and the financing
due to close Wednesday October 3rd (Sprott Global wants all orders
in and confirmed by September 30th, i.e. today, there’s a set-up for
real selling pressure on UEC in the days ahead. I can’t help but wonder whether
all the people who might sign up for this deal fully know what they are letting
themselves in for.

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