The announcement of Bayhorse Silver’s $500,000, 12% convertible debenture would be a fairly normal course transaction except for one provision. Along with debenture warrants – more below – the instrument contains a right to be paid in silver when the Bayhorse Mine in Oregon goes into production.
I called Graeme O’Neill, CEO of Bayhorse (V.BHS) for more details.
“Yes, the debenture is convertible into shares of Bayhorse or into silver at $16.50 per ounce when we are producing,” said O’Neill. “We’ve done similar debentures before. In the past the vast majority of our debenture holders have converted to shares. The history of Bayhorse debentures is solid. Investors make money.”
O’Neill is well aware of the market conditions this debenture is being launched into. “The market is depressed,” said O’Neill, “Precious metals are depressed.” He didn’t need to add that summer is the slowest time of the year for the junior market and for precious metals markets.
“Part of each US$5000.00 convertible debenture unit are 20,000 debenture warrants with an exercise price of $0.20 per share,” said O’Neill. “Frankly these warrants are an incentive to potential purchasers to risk their money.”
For silver bulls, and there are still lots of them out there, a silver convertible option is like locking in a $16.50 an ounce silver price and being paid 12% interest and debenture warrants for your trouble. The debenture may be purchased by qualified investors or individuals who already hold shares in Bayhorse under the existing shareholder exemption. (Not, unfortunately, available to Ontario residents.)
O’Neill has done this before and is very confident the debenture will sell out. “I have already had interest from Germany and Belguim as well as the US and Canada,” said O’Neill. “The $150,000 private placement we are doing at the same time is substantially filled and will close in the next week and a half. The debenture is larger and will take a bit longer. Likely about a month. And, yes, you can participate in one without participating in the other.”
Interestingly, for the smaller investor, the silver convertible debenture is being sold in units of US$5000.00. In round numbers, excluding interest, that would entitle the investor to 300+ ounces of silver and the 20,000 warrants, plus accrued interest, on redemption. Given the tendency of the silver market to occasionally breakout significantly to the upside, an interest-bearing asset which gives the investor a call on silver might make an attractive and efficient addition to a portfolio.
(Disclaimer – one of the partners in motherlodetv.net is currently contemplating an investment in one or more of the Bayhorse Silver 12% silver convertible debenture units. We’re doing our due diligence and we strongly advise that you do yours.)