Roxgold raising $11M for West African gold

One of 2011’s success stories, Roxgold (ROG-V) has seen its share price rise from a low of 19.5¢ in February to a high of $1.55 in mid-October on the back of spectacular gold hits from its flagship Yaramoko gold project in Burkina Faso.

The Vancouver-based junior plans to raise $11 million in a bought-deal private placement led by Cormark Securities. The underwriters have agreed to purchase 10 million shares at $1.10 each, with the proceeds to be used for continued exploration of the company’s West African gold properties and for working capital.

The bought deal will bring the total amount raised by Roxgold this year to $38.5 million, all in bought-deal placements led by Cormark. The first financing was in May at 75¢ for a total of $7.5 million, and the second was in early October at 85¢ for $20 million.

Roxgold initially held an option to earn up to a 60% interest in its group of Burkina Faso gold projects from Riverstone Resources (RVS-V), but bought out its partner’s share following drilling success at Yaramoko. It paid Riverstone $36 million in late October, comprising $17 million in cash and 16 million Roxgold common shares valued at $19 million. 

Drill results from Yaramoko this year included 6 metres grading 24.6 grams gold per tonne in February, 20 metres of 28.6 grams gold in April, 16 metres of 62.7 grams gold in September and 5 metres of 123.8 grams gold in October.

Drilling at Yaramoko is expected to resume shortly at the main zone, Bagassi Central, as seasonal rains cease and drill access to the area becomes available again. Roxgold says it is extending its 10,000-metre core-drilling contract to 20,000 metres and pursuing drill rigs to complete the program.

Robert Sibthorpe, Roxgold’s president, and Al Fabbro, a director, optioned the interests in the Burkina Faso properties from Riverstone last year through a private company and sold them to Roxgold for 5.62 million shares and management positions in the company. Sibthorpe, a geologist and former Yorkton Securities analyst, received 750,000 of the shares, while Fabbro, a former Canaccord Capital broker, received 650,000 shares. Two other shareholders of the private company, Richard Mazur and Chet Idziszek, became Roxgold directors last November. 

Idziszek, the 1990 co-winner of The Northern Miner’s Mining Man of the Year award and 1994 winner of the Prospectors and Developers Association of Canada’s Prospector of the Year award for his role in the discovery of the Eskay Creek gold deposit in B.C., has taken the most profits so far. According to insider trading reports, he sold 100,000 of his 500,000 shares around 46¢ when Roxgold released its first set of Yaramoko drill results in late February. He sold another 100,000 shares in the public market at an average of 88.7¢ on April 8, when Roxgold released high-grade results that sent the shares up 160% in a day. Idziszek’s trading has been quiet since, barring the purchase of 40,000 shares at 85¢ apiece in an October private placement. Sibthorpe similarly sold 100,000 shares at an average of 75¢ on April 8.

At presstime on Oct. 28, Roxgold’s shares traded down 2¢ to $1.18 on news of the $11-million placement. The company has 74 million shares outstanding and 95 million fully diluted, not including the recently announced placement.