Talon falls to offer price funding Rio nickel JV

Talon Metals (TSX: TLO; US-OTC: TLOFF) plans to raise about $24 million (US$17.6 billion) to fund the development of its feasibility-stage Tamarack nickel-copper-cobalt project led by Rio Tinto (NYSE, LSE, ASX: RIO) in Minnesota. However, Talon stock dropped as investors digested the pricing.

The fundraising is to be conducted via two separate financings: a bought-deal private placement led by Canaccord Genuity for $10 million, and a non-brokered placement for $13.7 million.

The Canaccord-brokered financing will see Talon issue 45.5 million units priced at 22¢ each, while the non-brokered offering comprises 62.2 million units, to be issued under the same terms. Each unit contains one common share and one-half of a warrant, with each full warrant exercisable at 28¢ per share for a period of three years.

Shares in Talon Metals sank 15% or 4¢ to 22¢ apiece, the same as the offering price, by mid-Monday. The stock spiked as much as 50% from 20¢ to 30¢ intra-Thursday after the explorer disclosed a Tamarack assay with 11% nickel and copper. 

The Toronto-based company has a current market capitalization of about $207 million.

Tamarack project

The funds will be used to support Talon’s ongoing work on the Tamarack project, which it is developing under a joint venture with Rio Tinto as the project’s operator and 51% owner.

Currently, Talon’s team is looking to expand the Tamarack resource ahead of a feasibility study, part of the project’s environmental permitting process.

The last resource estimate in 2022 revealed 8.6 million tonnes grading 1.73% nickel and 0.92% copper in the indicated category and 8.5 million tonnes grading 0.83% nickel and 0.55% copper in the inferred category.

This resource will likely see a large increase following the high-grade discoveries made by Talon from infill drilling over the past few months, the company has said. One result last month showed the highest grade ever at Tamarack, with nearly 13% nickel and 14% copper over 8.25 metres from about 708 metres depth.