Financings have returned to the scene as two small producers, Breakwater Resources (BWR-T) and Claude Resources (CRJ-T) have concluded multi-million-dollar deals to bring cash into the companies.
Breakwater, which was facing default on existing borrowing arrangements last November, will bring about $18 million into its treasury through a rights offering. Claude has arranged a share-and-warrant issue with Canaccord Capital to increase its working capital.
Low prices for zinc, Breakwater’s principal product, had left the company in a cash crisis in mid-2001. A banking syndicate and Breakwater’s major shareholder, Dundee Bancorp, bailed the company out at that time and Breakwater now expects to have enough cash to meet all its requirements in 2002.
The Breakwater offering is being made by prospectus, and entitles shareholders of record on April 5 to one right for each common share they hold. The right allows the holder to buy a common share at 20 and expires on May 1.
If all the rights are exercised, the company will issue 94.5 million shares for net proceeds of $17.6 million. Dundee Bancorp has agreed to take up a minimum of one-third of the issue if it is undersubscribed, so backstopping at least $5 million.
The rights prospectus now has approvals from provincial securities regulators. It has not been approved by the Securities and Exchange Commission in the United States, so rights will not be issued to U.S. shareholders.
Claude has entered an agreement with Canaccord Capital under which it will issue 5 million shares and 2.5 million purchase warrants for $5 million. Warrants can be exercised at $1.25 for a common share and expire in one year. The financing still requires approval from securities regulators.
Claude, which expects the issue to close on April 23, will use the main part of the proceeds for development at the Seabee gold mine in northern Saskatchewan. Some will go toward working capital.
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