Information on the Target

Torex Resources Inc. ("Torex") is a Canadian mining company engaged in the exploration and development of mineral resource properties. The company focuses on innovative approaches to optimize the extraction and processing of minerals while ensuring environmental sustainability. The recent financing round, totaling $4,295,000, includes a private placement of 2,636,000 flow-through special warrants and 800,000 common shares, each priced at $1.25. The special warrants are convertible into common shares at no extra cost, enabling shareholders to increase their investment in the company.

With this financing, Torex will bolster its exploration and development programs for the remainder of 1999 and throughout 2000. Following the completion of this private placement and the subsequent conversion of the special warrants, Torex will have approximately 27.296 million shares outstanding, providing a solid foundation for future growth and operational expansion.

Industry Overview in Canada

Canada's mining industry is a crucial sector of the national economy, contributing significantly to employment and exports. The country is rich in natural resources, and its long-standing expertise in mining makes it a global leader in the extraction of various minerals including gold, copper, uranium, and diamonds. This industry is characterized by a strong regulatory framework which promotes responsible mining practices while ensuring the protection of the environment.

In recent years, the demand for commodities has seen a rebound driven by economic growth in emerging markets, particularly in Asia. The mining sector in Canada is expected to benefit from this trend, as it ramps up production to meet global needs. Furthermore, advancements in exploration technologies and sustainable mining practices are enhancing efficiency and reducing the environmental impact of operations.

The Canadian government has actively supported the mining industry through initiatives that foster investment and innovation. Regulatory policies aimed at improving access to financing for junior and mid-cap companies, like Torex, are paving the way for new exploration and development opportunities. In particular, the flow-through share structure allows companies to attract investments by providing tax incentives to investors.

The Rationale Behind the Deal

The primary motivation behind Torex's recent financing is to secure the necessary capital to execute its ambitious 2000 capital program, which has been budgeted at $21.3 million. This funding is crucial for undertaking extensive exploration and development drilling activities, as well as making significant investments in land and seismic initiatives. By raising these funds, Torex aims to enhance its resource base and increase shareholder value through strategic asset development.

This structure not only provides immediate financial support but also positions Torex well for future growth. The participation of established private equity firms like Lime Rock Partners adds credibility to the financing and reflects confidence in Torex's growth strategy.

Information About the Investor

Lime Rock Partners is a prominent private equity firm based in Westport, Connecticut, focusing on the energy sector. With extensive experience in providing growth capital, Lime Rock specializes in investing in small to mid-cap energy companies across the globe. Their strategy is to partner with management teams to drive operational efficiencies and unlock value in their portfolio companies.

In this transaction, two funds managed by Lime Rock Partners, Riverside Investments, LLC, and Friends of Lime Rock LP, acquired a combined total of 800,000 common shares in Torex. This investment supports their strategy of identifying promising energy ventures, ultimately seeking to capitalize on the growth potential of companies like Torex.

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This financing round can be viewed positively from an investment perspective, particularly as it positions Torex to tap into its extensive growth prospects. The company’s commitment to strategic exploration and development, combined with the robust support from Lime Rock Partners, indicates a strong alignment of interests between management and investors.

Moreover, the involvement of reputable financial agents such as National Bank Financial Corp., Griffiths McBurney & Partners, and Peters & Co. Limited further lends credibility to the offering. Their engagement suggests thorough due diligence and a favorable outlook on Torex's operational capabilities.

However, potential investors should remain vigilant regarding the volatile nature of the mining industry, which is often influenced by fluctuating commodity prices and regulatory challenges. While Torex appears well-prepared to handle upcoming projects, external factors could impact its short-term performance. Nevertheless, the combination of financial backing and a planned capital program presents a compelling case for investment in Torex Resources Inc.

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