From the sale of special warrants, Dakota Mining (TSE) received US$6 million in gross proceeds to finance development of the Anchor Hill project at the Gilt Edge gold mine near Deadwood, S.D.
The company closed a private placement of 4.8 million special warrants. Each warrant (at US$1.24) will be convertible into one common share of Dakota. Dakota Mining is seeking another $2 million from a second offering of special warrants. And when completed, the company will solicit shareholder approval, as required by the Toronto Stock Exchange, in order to exceed a 25% dilution of the current common shares outstanding.
These funds are in addition to an agreement with Repadre Capital (TSE). The agreement consists of a US$4-million royalty in a form similar to a production loan at an interest rate of 9.5%, and is repayable on a sliding scale based on net smelter returns commencing at 5%. The money is currently being held in escrow, awaiting the issuance of permits to mine the deposit. In resolution of a prior dispute, Atlas (NYSE) agreed to purchase $3 million in special warrants. Last year, Atlas and Dakota reached an agreement whereby Atlas would purchase 3.1 million preferred shares of Dakota. However, Atlas decided not to proceed with the purchase, even though Dakota felt the agreement was binding.
In accepting the offer of the special warrants, each party releases the other from any liability arising from the matter.
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