Allegiant Gold Ltd. [AUAU-TSXV] on Thursday July 5 announced a private placement financing and a strategic investment by Goldcorp Inc. [G-TSX; GG-NYSE]. Proceeds will be used to fund the company’s drilling programs, mainly in Nevada, Allegiant said.
Allegiant shares rallied on the news, rising 5.8% or $0.025 to 45.5 cents.
The company was recently spun out to hold the Western U.S. exploration assets of Columbus Gold Corp. [CGT-TSX; CBGDF-OTCQX] and now owns 14 drill-ready projects in the Western U.S., including 11 in Nevada. All were handpicked by Andy Wallace, a successful and highly experienced geologist.
On Thursday Allegiant said it has arranged a non-brokered private placement designed to raise $4.4 million. The placement consists of 12.6 million shares of Allegiant at 35 cents per share.
In connection with the offering, the company said Goldcorp is taking a strategic investment by purchasing 5.9 million Allegiant common shares at 35 cents a share. That will leave Goldcorp with a 9.9% stake in Allegiant.
Under the agreement, as long as Goldcorp maintains an interest of 5% in Allegiant or more, it will have the right to participate in future equity financings to maintain its 9.9% interest.
It will also have the following additional rights:
- To received regular updates of technical information on all of Allegiant’s projects.
- The right of first refusal to match third party offers in connection with proposed transactions on Allegiant’s North Brown, Red Hills, Monitor Hills, and Hughes Canyon gold projects.
- The rights of first refusal on all of Allegiant’s projects except Eastside, to match third party offers in connection with non-equity financings such as royalties and streams.
- The right to appoint 50% of a technical committee with Allegiant with respect to the North Brown, Red Hills, Monitor Hills and Hughes Canyon gold projects.
Allegiant recently added a second drill rig to the resource expansion program currently under way at the 100%-owned Eastside gold project, located 32 km west of Tonopah, Nevada.
The goal is to double the pit-constrained inferred resource, which currently stands at 721,000 gold equivalent ounces at the Original Zone deposit, and reduce the strip ratio.
The company said one drill rig continues to test the western extension of the Original Zone, which Allegiant successfully extended 300 metres to the west in recent drilling.
Highlights include drill hole 147, which returned 42.7 metres of 2.49 g/t gold, including 9.1 metres of 9.03 g/t gold.
The drill program continues to test the western extension of the Original Zone, which still remains open.
A second drill rig has been added to test the southern extension of the eastern part of the Original zone, which also remains open.