eResearch | Like other industries, the global mining sector has been impacted by the COVID -19 pandemic, but mining was deemed “essential” in many countries and, in an environment with higher commodity prices, some companies have emerged in excellent financial and operational shape.
Gold, silver, platinum, and palladium recorded recent highs in the late spring and continue to receive investor interest.
Copper, Cobalt, Nickel, and Zinc continue to perform well, although they are below their recent highs, and benefit from ties to electric vehicles and the green economy.
With higher commodity prices, mining deals and M&A remained strong with some of the larger deals earmarked to get companies closer to production.
Rio2, Foran, Marathon, and Jervois are entering into the sweet spot of pre-production, a key time for investment.
With the pre-production sweet spot, research has shown that exploration companies can experience upward stock price movement starting from the time that mine construction starts to the time of the first pour.
Below are some of the most notable deals that have closed so far this summer.
McEwen Mining Announces $80 Million Private Placement
July 6, 2021
McEwen Mining (NYSE: MUX) announced a non-brokered, private placement financing of up to 8 million shares of its wholly-owned subsidiary, McEwen Copper for gross proceeds of up to US$80 million at a subscription price of US$10 per share.- With this private placement, McEwen Mining plans to advance the Los Azules Copper Project in Argentina. It now holds a 100% interest in this project as well as in the Elder Creek exploration property in Nevada.
- Evanachan Ltd., an investment management firm owned by Rob McEwen, has committed a lead order to purchase 4 million shares of McEwen Copper for US$40 million. Subscription for the remaining 4 million shares is available to qualified, accredited investors.
- When the offering closes, McEwen Mining will be the controlling shareholder owning 68.6% of McEwen Copper.
Apollo Announces Closing of $52.9 Million Financing
July 7, 2021
Apollo Gold & Silver (TSXV: APGO) announced that it completed its $52.9 million financing of 70.5 million subscription receipts.- Apollo plans to use the net proceeds from the financing to fund the acquisition of all of the issued and outstanding shares of Stronghold Silver, a US-based, privately-held silver development company.
- Stronghold holds rights to three large-scale silver projects, the Silver District project in Arizona, and the Waterloo and Langtry projects in California.
Lucara Signs US$220 Million Senior Debt Facilities for Financing of the Underground Expansion and Ongoing Operations of the Karowe Mine
Jul 12, 2021
Lucara Diamond (TSX: LUC) announced that it signed loan documentation pertaining to its previously announced senior secured project financing debt package of US$220 million between Lucara Botswana Proprietary (PTY) Ltd. and a syndicate of 5 mandated lead arrangers (MLA).- Lucara Botswana Proprietary Ltd., which is a 100% owner of the Karowe Mine, is the borrower while Lucara Diamond is the guarantor until the project completion date.
- The MLAs are African Export-Import Bank (Afreximbank), and Societe Generale of London, Africa Finance, ING, and Natixis. Afreximbank is acting as a facility agent.
- The financing includes a project finance facility of US$170 million to fund the development of the underground project, and a US$50 million working capital facility to re-finance Lucara’s existing debt and support its ongoing operations.
Marathon Gold Enters into Indicative Term Sheet for US$185 Million Senior Secured Project Financing Facility for the Valentine Gold Project
July 20, 2021
Marathon Gold Corporation (TSX: MOZ) has recently announced that it has entered into an exclusive, non-binding Indicative Term Sheet with Sprott Resource Lending Corp. (TSX:SIL | NYSE MKT: SILU), a company specializing in bridge and mezzanine lending, for a senior secured project financing facility of US$185 million.- The Credit Facility is structured as a term loan with a 6.5-year tenor. Proceeds from the Credit Facility would be used for the development of the Valentine Gold Project, located in the central region of Newfoundland and Labrador.
- The Credit Facility represents the contemplated senior secured debt portion of these financing arrangements. Additional financing is contemplated through equity and equipment leasing.
- The Valentine Gold Project is located in one of the top mining jurisdictions in the world and consists of a series of five mineralized deposits along a 20 km system.
Rio2 Arranges Project Financing of US$125 to US$135 Million to Fully Fund Its Fenix Gold Mine to Production
July 20, 2021
Rio2 Limited (TSXV: RIO | OTCQX: RIOFF | BVL: RIO) recently announced that it has arranged mine construction financing of US$125 to US$135 million for the development of a mine at its Fenix Gold Project in Chile, 100%-owned by the company.- The mine financing package will allow Rio2 to commence pre-construction activities at the Fenix Gold Project after receiving the necessary environmental impact assessment (EIA) approvals and permits for its planned 20,000 tonnes per day, run of mine, dump leach operations.
- The financing package is to be comprised of a US$50 million Gold Purchase Agreement agreement with Wheaton Precious Metals (TSX: WPM | NYSE: WPM | LSE: WPM), a C$25 million (US$19.6) equity brokered offering and US$5 million private placement equity offering. The price per share of the equity offerings will be determined in the context of the market with a syndicate of underwriters.
Eldorado Gold buys 11.5% stake in Probe Metals for $23.7 million
Jul 21, 2021
Eldorado Gold (TSX: ELD | NYSE: EGO), a Canada-based mid-tier gold and base metals producer, announced that it has acquired 15.0 million shares of Probe Metals (TSXV: PRB | OTC: PROBF), a precious metal exploration company, for an aggregate purchase price of $23.7 million at$1.575 per share. Eldorado now owns 11.5% of the outstanding shares of Probe.- Prior to this deal, Eldorado did not own any shares of Probe. According to Eldorado, the shares have been acquired for investment purposes, pursuant to a private transaction.
- Probe is currently working to complete a Preliminary Economic Assessment (PEA) at its Val d’Or East Pascalis project in Val d’Or, Quebec, a district-scale land package, which is 100% owned by Probe.
- In Jan 2021, Eldorado acquired all the shares of QMX Gold Corp. (TSX: QMX) for $132 million or 30 cents per share in a friendly transaction.
Jervois to acquire Freeport Cobalt for US$160 million
July 27, 2021
Jervois Mining (ASX: JRV | TSXV: JRV | OTC: JRVMF) announced that it will acquire Freeport Cobalt for US$160 million- The deal implies a 7.6x 2020 EBITDA of US$21 million at US$15/lb cobalt price
- Jervois plans to raise A$313 million via an equity raise to fund the acquisition and further develop the Idaho Cobalt Operations (ICO) in the U.S.
- Earlier in the month, Jervois raised US$100M through a bond offering to fund the construction of the ICO and to purchase a 100-person accommodation camp for ICO from a local vendor in Boise, Idaho.
Asante Gold Raises C$80 Million to Finance the Acquisition of the Bibiani Mine
August 5, 2021
Asante Gold Corporation (CSE: ASE | FRANKFURT:1A9 | U.S.OTC: ASGOF) recently announced that it has accepted Subscription Receipts from accredited investors for C$80.0 million at C$0.70 per share.- On completion, the Subscription Receipts will convert to 118.9 million common shares of Asante.
- The investors are Emiral Resources, a UAE-based group of companies engaged in mineral exploration and production, and Fujairah Holdings, a global investment company that manages a diversified investment portfolio to generate steady returns and capital through a disciplined investment process.
- Asante is a pure gold exploration and development company with a high-quality portfolio of projects in Ghana.
- Earlier in the month, Asante gold announced the acquisition of the Bibiani Gold Mine in Ghana from Resolute Mining Limited (ASX:RSG) for $90 million in cash.
Foran Mining Announces Completion of Strategic C$100 Million Private Placement by Fairfax
August 6, 2021
Foran Mining (TSXV: FOM | OTCQX: FMCXF) recently announced the completion of the strategic C$100 million private placement by certain entities controlled by Fairfax Financing Holdings (TSX: FFH | TSX: FFH.U).- Gross proceeds of C$50 million was raised through the issuance of 27.8 million shares (at C$1.80 per share) and other C$50 million through the issuance of 27.8 million non-voting units (at C$1.80 per unit).
- The net proceeds of the financing will be primarily used to advance the development of the McIlvenna Bay Project and centralized mill for the Hanson Lake District, as well as for further exploration on landholdings.
- Foran Mining Corporation is a diversified exploration and development company with projects in central Canada’s Flin Flon mining belt. The McIlvenna Bay Project is a carbon-neutral copper development project located in Saskatchewan, Canada
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