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Auryn and Eastmain agree bought deal private placement financing of subscription receipts to raise gross proceeds of C$22,500,000

The subscription receipts will be exchanged for common shares of Auryn concurrent with completion of the recently announced transaction whereby Auryn will acquire Eastmain after spinning-out Auryn's Peruvian operations to Auryn shareholders

Dollars and gold
The Eastmain transaction will create Fury Gold Mines Limited. a leading developer of Canadian gold projects

Auryn Resources Inc. (TSX:AUG) said that it and Eastmain Resources Inc. (TSX:ER) have entered into an agreement with a syndicate of underwriters, co-led by Canaccord Genuity and Beacon Securities, in connection with a bought deal private placement financing of an aggregate of 7,500,000 subscription receipts to raise gross proceeds of C$22,500,000.

The subscription receipts will be exchanged for common shares of Auryn concurrent with completion of the recently announced transaction whereby Auryn will acquire Eastmain after spinning-out Auryn's Peruvian operations to Auryn shareholders.

The Eastmain transaction will create Fury Gold Mines Limited. a leading developer of Canadian gold projects. It will also result in two additional new independent companies holding Auryn's Peruvian projects. The sale of subscription receipts will fulfil a principal condition of the Eastmain Transaction.

READ: Auryn Resources executes transformational deal with Eastmain Resources to create Canadian-focused gold explorer Fury Gold Mines

In a statement, Ivan Bebek, executive chairman of Auryn commented: "We are excited to welcome these investors as new shareholders of Fury Gold and to position the company with $22.5 million to carry out its aggressive growth plans through exploration and development over the next 12 months. With this financing condition met, we look forward to commencing our planned 50,000 meter drill program commencing this fall to expand the Eau Claire high-grade gold deposit, following the closing of the Eastmain Transaction."

Blair Schultz, interim president & CEO of Eastmain added: "This financing is a big step forward for Eastmain as we prepare to become Fury Gold Mines shareholders. Fury is creating a Canadian focused gold company, well-positioned to capitalize on the opportunities at Eau Claire and across its pipeline of high-grade gold assets."

The subscription receipts are being sold concurrently in two tranches. The first tranche will be issued at a price of C$2.00 per subscription receipt for gross proceeds of C$5,000,000 and the second tranche will be issued at the higher price of C$3.50 per subscription receipt and will be exchanged for Fury Gold shares, which are designated as flow-through shares.

Pricing of the subscription receipts reflects that the Fury Gold common shares, into which both tranches of the subscription receipts will be exchanged on a basis of one subscription receipt into one common share of Fury Gold, as constituted after the spinout of Auryn's Peruvian projects and common share consolidation.

Therefore, the subscription receipts do not participate in the spin-outs and will not be consolidated.

Common shares that qualify as "flow-through shares" require the company to renounce in favour of the investors who paid the flow-through price certain Canadian income tax deductions which the company incurs by spending the proceeds on qualifying Canadian exploration expenses.

Auryn said it does not have any near term need for these income tax deductions and shares designated as "flow-through shares" are otherwise identical to the company's other common shares. The flow-through obligations will be met when the company completes its planned drill program at the Eau Claire project in Quebec.

Contact the author at jon.hopkins@proactiveinvestors.com

Quick facts: Fury Gold Mines

Price: 1.94 CAD

TSX:FURY
Market: TSX
Market Cap: $227.95 m
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