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Lundin Gold in C$50M financing

Lundin Gold has launched a bought-deal financing underwritten by BMO Capital Markets for 4.15 million common shares at C$12.05 for gross proceeds of $50 million (US$36.3 million).
Lundin Gold in C$50M financing Lundin Gold in C$50M financing Lundin Gold in C$50M financing Lundin Gold in C$50M financing Lundin Gold in C$50M financing

Lundin Gold plans to increase throughput at its Fruta del Norte mine in Ecuador

Staff Reporter

The deal includes an overallotment option for up to 15% of the offering, which is expected to close by June 11.

Newcrest Mining, which owns 32% of Lundin Gold, along with Orion Mine Finance which holds 11%, have exercised their respective pre-emptive rights to participate in the offering.

Lundin expects three family trusts which account for a further 27% of the company's holdings to also participate in the financing to maintain their respective holdings.

Proceeds of the offering will be used to study increased throughput at the flagship Fruta del Norte gold mine in southeast Ecuador, resource expansion, potential COVID-19 related costs, and as general working capital.

Newcrest recently raised about US$720 million to increase its exposure to Fruta del Norte.

Meanwhile, Oxygen Capital's Pure Gold Mining said its balance sheet had been bolstered by C$12 million (US$8.9 million) after shareholders exercised 14.47 million warrants at 85c.

Combined with the Eric Sprott-backed $15 million (US$11 million) placement announced last week, Pure Gold will have about $101 million cash and US$35 million of undrawn credit.

Pure Gold has about $86 million capex remaining to complete development of the PureGold mine in Red Lake, Ontario, and is now strongly positioned to undertake aggressive exploration programme on its property.

"Our mine has all the attributes of a company maker - location, grade, size, and transformative growth potential," said CEO Darin Labrenz.

"The opportunity for value creation is tremendous, with near term cash flow delivered in a rising gold market, and a strong organic growth platform to build out our vision of a long-life growth company. Having only scratched the surface across our 7-plus-kilometre-long high-grade gold system, we are taking measures to expedite our growth plan."

Shares in Lundin Gold (TSX:LUN) edged 1.69% higher on Tuesday to $6.61, capitalising it at $4.9 billion (US$3.56 billion), while Pure Gold (TSXV:PGM) closed 5% in the red at $1.32, which capitalises it at $474 million (US$344 million).