As Mineweb’s Kip Keen recently pointed out, the resource sector saw more than C$480 million worth of equity financing for the month of January compared to the $410 million seen in the final quarter of 2013. And, further to that, it appears that a significant portion of these financings came in the form of multimillion-dollar bought deals.
With the influx in financing hinting at a more positive sentiment in the resource market, it stands to be reasoned that the companies that made it through 2013′s “survival mode” are worth a closer look.
Here is a look a three gold companies that recently announced bought deals.
Lydian International (TSX:LYD) announced a C$15 million bought-deal financing on January 28. The agreement, signed by a syndicate of underwriters led by GMP Securities, and including Scotia Capital, BMO Capital Markets and National Bank Financial, was for 15 million ordinary shares of Lydian at a price of $1 per share. The underwriters also have an over-allotment option to purchase an additional 2.25 million shares at the same price for a total of $17.25 million. The company expects to close the financing on February 18.
Lydian intends to use the funds to move forward with the Amulsar gold project in Armenia, which includes the completion of a bankable feasibility study and detailed engineering. The remainder of the proceeds will be used for general working capital. Prior to the announcement of the bought deal, Lydian announced that Howard Stevenson had been selected by the Board of Directors to head up the company into the next phase of its development.
Amulsar hosts a measured gold resource of 1.8 million ounces at 1.1 grams per ton (g/t) and 0.6 million ounces at 1 g/t indicated. The project also shows an inferred mineral resource of 1.7 million ounces of 0.8 g/t at a cut off grading of 0.3 g/t. According to the company’s website, the mineral resource at Amulsar is commonly surrounded laterally and sometimes at depth by a halo of the inferred mineral resource.
The same day, True Gold Mining (TSXV:TGM) announced a bought-deal offering valued at approximately $36.6 million. True Gold’s agreement with RBC Capital Markets comes by way of a short-form prospectus of 91.4 million units of True Gold consisting of one full common share and one half common share purchase warrant at a price of $0.40 per unit. The company has also granted the underwriters the option to purchase up to 15 percent of the number of units solely to cover over allotments. In the event that the option is exercised, total proceeds from the bought deal will total roughly $42 million.
In conjunction with the bought deal, True Gold announced that its largest shareholder, Liberty Metals and Mining Holdings, elected to exercise its participation rights and has purchased 21,181,218 units. Gross proceeds for the company from both financings, prior to the over-allotment options, total $45 million.
True Gold plans to use the proceeds of the offering to move ahead with the proposed development and construction of the Karma gold project in Burkina Faso and for working capital. The company recently received its official mining permit for Karma.
Lastly, Torex Gold Resources (TSX:TXG) announced an impressive $125-million bought-deal financing on January 21. The Mexico-focused exploration and development company signed an agreement with a syndicate of underwriters led by BMO Capital Markets by way of short-form prospectus for 104.2 million units consisting of one common share and one half common share purchase warrant at a price of $1.20 per unit. The company plans to close the offering on February 12, 2014.
Torex plans to use the proceeds of the offering to fund the development of the El Limon and Guajes projects, as well as for general corporate purposes. The El Limon and Guajes projects are located in the company’s Morelos gold property in the highly prospective Guerrero Gold Belt outside of Southwestern Mexico City.
As PI analyst Jim Mustard said at the close of the recent Roundup conference in Vancouver, the recent financings are a significant start to the new year. He hopes they establish a trend.
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.