West High Yield (W.H.Y.) Resources Ltd., the tiny Canadian miner that last month announced it was selling its main assets for $750 million, said the deal may fall through because the buyer doesn’t yet have financing.
West High Yield surged almost 1,000 percent last month, after the company — which has no revenue — announced it had sold a magnesium deposit in British Columbia for 46 times its market value. The shares have been halted since Oct. 6 and the Alberta Securities Commission launched an inquiry, citing “the magnitude of this transaction.”
“There is substantial risk that the purchaser may not be able to obtain financing necessary to complete the proposed transaction,” the Calgary-based company said Friday in a statement. “The purchaser does not have the financial resources” to complete the deal without third-party funding.
The West High Yield purchase and stock surge raised eyebrows among some investors in Canada, where the junior stock exchange has been dubbed the “wild west” for its volatile penny stocks. West High Yield traded for just 36 cents before the $750 million cash deal was announced on Oct. 5.
The statement Friday raises several questions about the transaction and the buyer. The company and purchaser Gryphon Enterprises LLC haven’t agreed on how liabilities will be settled if assets “fail to produce sufficient quantities and grade of materials in the time required’’ to satisfy agreements, West High Yield said.
For the rest of this article: https://www.bloomberg.com/news/articles/2017-11-03/the-penny-stock-and-the-arcane-metal-behind-a-mega-mining-deal