Sandspring Resources Ltd. [SSP-TSXV; SSPXF-OTCQX] has raised $7.5 million from a non-brokered private placement that included a $1 million investment from Gran Colombia Gold Corp. [GCM-TSX] as well as the participation of Howe Street financier Frank Giustra.
Sandspring said proceeds from the private placement of 37.5 million units, priced at 20 cents each, will be used to start work on a Feasibility Study for its flagship Toroparu Gold Project located in the Mazaruni-Cuyuni region of Western Guyana, South America. Proceeds are also earmarked for step out and exploration drilling at the Chicharron silver-gold project in the Segovia Mining District of Colombia.
The announcement came after the close of trading on August 27, 2019. On Wednesday August 28, Sandspring shares advanced on the news, rising 2% or $0.01 to 42 cents. The shares are trading in a 52-week range of 15 cents and 43 cents.
Sandspring is a junior exploration company with a focus on South America’s emerging western Guyana gold district.
Back in June, 2019, the company released the results from a Preliminary Economic Assessment (PEA) of the Toroparu Project, which hosts a global gold resource of 7.3 million ounces in the measured and indicated category and 3.1 million ounces of inferred material.
The PEA envisages annual production of 4.5 million ounces, of which 3.6 million will be produced in the form of doré bars over a 24-year life span. That’s up from a 2013 estimate of 3.7 million ounces. During the initial 10 years of production, the gold doré and silver by-product will be recovered via a carbon-in-leach process. That marks a change from the 2013 PFS, which envisaged that gold and copper would be recovered from a gold-bearing copper concentrate.
The new PEA estimates pre-production capital expenditures of $378 million, down from the previous estimate of $501 million.
Sandspring said each unit in the placement consists of one common share and one share purchase warrant, entitling the holder to buy an additional share for 35 cents for 60 months following the closing date. Sandspring said the placement was fully subscribed and included an investment of $1 million from Gran Colombia Gold that left Gran Colombia’s equity position in Sandspring at 19.4%
In connection with the placement, Gran Colombia acquired 5 million Sandspring units. As a result, it now has control over an aggregate of 53.3 million common shares, 31.8 million share purchase warrants and 5.2 million subscription receipts.
Assuming conversion of the receipts and exercise of the share purchase warrants, when combined with the company’s existing ownership, Gran Colombia will be left with control and direction over 95.5 million common shares, representing approximately 30.20% on a partially diluted basis of the then outstanding shares of the company.
As a result, Gran Colombia can become a control person of Sandspring if the receipts are converted or the share purchase warrants are exercised. Sandspring intends to seek shareholder approval for the creation of Gran Colombia as a control person at its annual meeting later this year.
The placement also included a $350,000 investment from financier Frank Giustra that will leave him with 23.6 million common shares and 14.4 million share purchase warrants, plus 400,000 options, an amount that represents approximately 8.6% of the company’s issued and outstanding shares.
All securities issued in connection with the private placement are subject to a four-month and one-day statutory hold period, expiring on December 28, 2019.
Meanwhile, Brian Paes-Braga, a Canadian entrepreneur and head of merchant banking at SAF Group, directly acquired 9.3 million Sandspring units, representing 3.4% of the issued and outstanding shares of the company. Closing of the private placement leaves Paes-Braga with control of over 16.5 million common shares and 12.4 million share purchase warrants of Sandspring, or a 6.04% stake.