Pure Gold Mining Inc. (CVE:PGM) (LON:PUR) has agreed a non-brokered private placement of flow-through common shares to raise gross proceeds of $15,000,000, with well-known Canadian investor Eric Sprott agreeing to be the back-end buyer of all of the offering.
The group said the placement will see the issue of 9,868,421 charity flow-through common shares at a price of $1.52 each. Its shares closed trade in Toronto at $1.19 each on Tuesday. In London trade on Wednesday, the stock was over 14% higher at 78.50p.
In a statement, Eric Sprott said: "PureGold has all the attributes I look for in a Company - location, grade, size and growth."
READ: Pure Gold Mining continues mine construction in Ontario; ends first quarter with C$78.7M in cash
He added: "PureGold's mine in Red Lake has over 7km of strike with known high-grade shoots that have only been defined down to 1,200 metres compared to 2,500 metres in the neighbouring Red Lake mine complex.
“The ultra-high grade hits in the 8 zone remind me a lot of the HG Zone that built Goldcorp, as well as SMC at Macassa and the Swan Zone at Fosterville. These are the types of discoveries that have the potential to be company makers and tend to lead to a much higher production profile than originally given credit."
Pure Gold said the gross proceeds from the issuance will be used for "Canadian exploration expenses" and will qualify as "flow-through mining expenditures”.
Darin Labrenz, president & CEO of PureGold added: "Mr Sprott is a cornerstone investor of PureGold and continues to be a strong supporter of our vision to becoming a high margin, long-life gold producer uniquely positioned in the Red Lake camp.”
"We are fully funded and on-track to pour our first gold in Q4 2020 into a record high gold price environment for Canadian producers. This new investment in exploration enables us to concurrently ramp up our focus on aggressive resource growth without impacting our capital budget for final mine completion and first gold pour.
“We believe this combination of near-term cash flow through production and organic resource growth will create significant value for our shareholders in the near term,” Labrenz concluded.
The group said it is expected that the closing of the financing will occur on or about June 17, 2020, subject to the satisfaction of certain conditions, including receipt of all applicable regulatory approvals including the approval of the TSX Venture Exchange.
The flow-through shares to be issued under the financing will have a hold period of four months and one day from the applicable closing date. Flow-through shares are a unique Canadian financing incentive that allows the investor to access tax credits in return for mineral resource investment.
In consideration for their services, a finders' fee equal to 6.0% of the gross proceeds of the financing is payable to a group of financial advisors led by Clarus Securities Inc.
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