Electrum fund boosts stake in Nickel Creek Platinum

The Electrum Strategic Opportunities Fund has increased its interest in Nickel Creek Platinum (TSX: NPC; US-OTC: NCPCF) to 33.88% following the closure of the second tranche of a private placement.

The mining-focussed private equity fund based in New York is part of the Electrum Group founded by billionaire Thomas Kaplan.

The fund purchased nearly 21 million units at a price of 5¢ per unit, raising $1.1 million of Nickel Creek’s total equity raise of $1.53 million.

Each unit comprises one common share in the company and one common share purchase warrant, with each warrant exercisable into one common share for 10¢ per share for a period five years from the date of issuance.

“Electrum was also involved in the first tranche of the financing and because they owned around 26% of the company, they are considered an insider to the company,” Diane Garrett, the company’s president and CEO, said in an interview. “Therefore, they are only allowed to buy no more than 9.9% of our issued and outstanding shares without shareholder approval, hence the two tranches.”

In the first tranche, Garrett added, the fund purchased 9.9% of the shares for $672,000, increasing its interest in the company to around 30.16%. The first tranche closed on April 7.

As a result of closing the second tranche, Electrum increased its interest in the company to 33.88% and now owns 1.1 million common shares and 99.2 million warrants.

“Electrum has been our largest shareholder for the last couple of years and has completely backstopped our financing, so it’s almost a guaranteed offering,” Garrett said. “It’s a phenomenal show of support and confidence in the company, the team and what we’re doing on the project.”

Electrum, Garrett added, has agreed to backstop the next 12 months of working capital for the company at $2.2 million.

The company also plans to complete a third tranche for a further 27.3 million flow-through units consisting of one common share and one share purchase warrant for gross proceeds of approximately $1.5 million.

The proceeds from the private placement, said Garrett, will be used for investigating strategic transactions, ongoing permitting activities and holding costs at its Nickel Shaw project and general corporate and working capital purposes.

A portion of the proceeds will also fund exploration at Nickel Shaw located in the southwest of Canada’s Yukon Territory, approximately 317 km northwest of the capital, Whitehorse.

“Nickel Shaw is a very large polymetallic project with great infrastructure,” Garrett said. “Last year, we undertook a ground-based geophysics program to specifically target areas of massive sulphides and identified a number of large anomalies with high conductivity.”

Money generated from the financing, Garrett added, will be used to drill-test the anomalies this summer.

The project contains measured and indicated mineral resources of 108 million tonnes grading 0.26% nickel, 0.16% copper, 0.015% cobalt, 0.253 gram platinum per tonne, 0.255 gram palladium and 0.046 gram gold for 1.9 billion lb. contained nickel, 1.1 billion lb. copper, 107 million lb. cobalt, 2.6 million oz. platinum, 2.7 million oz. palladium and 480,000 oz. gold.

At press time in Toronto, Nickel Creek was trading at 5.5¢ per share within a 52-week trading range of 1.5¢ and 14¢

The company has 285 million common shares outstanding for a $15.7-million market capitalization.