Vancouver — A recent series of major financings serves as a good barometer of the frothy mining investment climate.
Recently listed uranium producer UrAsia Energy has arranged an underwritten $100-million financing through a syndicate of brokers led by Canaccord, and including BMO Nesbitt Burns and GMP Securities.
The bought deal will see UrAsia selling 39,225,000 shares at $2.55 apiece for gross proceeds of over $100 million. An underwriter’s option allows the purchase of a further 9.85 million shares at the issue price, resulting in additional gross proceeds of $25 million. A “greenshoe option,” or over-subscription allowance, allows the underwriters to purchase a further 15% of the total shares offered and could see up to 7,361,250 shares issued at the offering price. Total potential gross proceeds could reach $144 million and will primarily be allocated towards development of UrAsia’s South Inkai uranium project in Kazakhstan.
UrAsia produces uranium from its 70%-owned Akdala mine, an in situ leach operation in Kazakhstan. Anticipated 2005 production is 760 tonnes (almost 1.7 million lbs.) U3O8 at operating costs in the range of US$5-US$7 per lb. Planned expansion to the 1,000-tonne-per-year level is under way.
The company was listed last fall with a record TSX-Venture Exchange initial public offering of $504 million.
Aspiring copper producer New Gold has arranged a $75-million bought-deal financing through a syndicate of underwriters co-led by GMP Securities and BMO Nesbitt Burns. The company will sell 8.334 million units at $9.00 apiece, with each unit composed of a common share and one-half of a share purchase warrant. Each warrant will be exercisable, at $12, for one share over a period of two years.
New Gold will use the proceeds for ongoing advanced-stage exploration at its New Afton copper-gold project near Kamloops, B.C. The past-producing mine has a measured and indicated resource of 68.7 million tonnes grading 1.08% copper, 0.85 gram gold per tonne, 2.62 grams silver per tonne and 0.12 gram palladium. The company is proposing to develop the project using underground bulk-tonnage methods.
In yet another major underwritten financing, Viceroy Exploration has inked an agreement with a broker syndicate led by Canaccord, and including Orion Securities, National Bank Financial, Paradigm Capital and Haywood Securities, to sell 9.6 million shares at $6.25 per share for gross proceeds of $60 million. The underwriters exercised an over-allotment option.
Viceroy will be using the funds on its Gualcamayo gold project in San Juan province, Argentina. The Quebrada del Diablo (QDD) zone at Gualcamayo holds a measured and indicated resource of 37.1 million tonnes grading 1.04 grams gold (over 1.2 million contained ounces) plus an additional 11.3 million tonne inferred resource averaging 1.2 grams gold (435,000 contained ounces). The Amelia Ines zone has a 2.1-million-tonne measured and indicated resource grading 2.8 grams gold per tonne (171,000 contained ounces). An inferred resource of 2.5 million tonnes grading 1.9 grams gold (151,000 contained ounces) was reviewed on the Magdalena zone.
An early 2005 preliminary economic assessment on the QDD zone, conducted by AMEC Americas, reviewed potential open-pit development with a projected 10-year mine life producing an average of 96,100 oz. gold annually. Preproduction capital expenses of US$55.7 million were estimated with average cash costs pegged at US$133 per oz.
A large number of companies, both senior and junior are taking advantage of the strong equity market conditions to recharge their treasuries. A partial roster includes:
Since the beginning of 2006, well over $800 million in mining equity financings has been arranged, boding well for an active upcoming year of exploration and development.
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