Atna raising $15M for new mines

VANCOUVER — Atna Resources (ATN-T) is taking advantage of a small uptick in its stock price by raising $15 million in a bought-deal financing.

The financing, at $1 a share with no warrant, was originally set at $12.5 million but was raised a day later. The underwriter, Canaccord Genuity, also has the option of buying 2.25 million shares at the same price within 30 days of the closing, which if exercised would bring total proceeds to $17.25 million.

Atna plans to spend the money on its near-term Pinson project, an underground gold mine in Nevada’s Humboldt County, and its permitted Reward gold mine near Beatty, Nevada. 

The financing comes in addition to what the company is bringing in from its active Briggs gold mine in southeastern California, where it sold 8,108 oz. gold in the second quarter for $4.9 million in operating cash flow and $3.4 million in income before tax. Production was 13% lower than the first quarter, missing guidance, but 5% higher than the second quarter of 2011.

The lower production numbers were the result of a breakdown in the crushing plant, which required Atna to remove and repair the secondary crusher and resulted in a shortfall of ore on the leach pad. The company is currently working on rebuilding and replacing key pieces of the crushing plant, which is the main constraint at Briggs. Because of the crushing issues the company has reduced its 2012 production target from 40,000 to 47,000 oz. gold to 35,000 to 42,000 oz. gold. The reduced production also boosted cash costs per oz. to around US$900 per oz. gold.

Overall for the quarter the company made a net income of $2 million or 2¢ per share and ended it with $8.4 million in cash and equivalents.

The company is targeting fourth-quarter production at Pinson, with secondary access to the historic workings recently completed and construction started on an on-site assay lab. The company is still waiting on final permits, but the Nevada division of the Environmental Protection Agency has informed the company that the modification of its water pollution control permit is administratively complete, with technical review for final approval now underway. The company has also been told that its quality permit was approved.

The Pinson project hosts proven and probable reserves of 1.7 million short tonnes grading 0.369 oz. per tonne for 644,000 oz. gold. As of a late May technical report, and based on US$1,300 per oz. gold, the mine has an internal rate of return of 103%, a net present value of US$72 million using a 10% discount rate, and a payback of 2.2 years. Atna plans to produce 90,000 oz. a year from the mine for six years.

The company is also developing the Reward project, which also has a six-year mine life, producing 35,000 oz. per year. At US$1,300 per oz. gold, the mine has an IRR of 48%, an NPV of US$68.6 million using a 5% discount rate, and a payback in 2.2 years. Before the latest financing Atna had diverted resource from Reward to focus more on Pinson.

Atna’s share price closed at $1.06 on news of the financing with 615,000 shares traded. The company has a 52-week share price range between 66¢ and $1.54 with 121.7 million shares outstanding.