Reunion Gold raising $10 million for Guyana drilling
Reunion Gold Corp. [RGD-TSXV] said Friday it is raising $10 million from a bought deal private placement with proceeds earmarked for exploration activities at its OKO West project in Guyana.
Under an agreement with an underwriting syndicate, the private placement will consist of 57.14 million common shares priced at 17.5 cents per share. The company said the underwriters have been granted an option to purchase additional common shares at the issue price, potentially adding up to $1.5 million to the financing proceeds.
The option can is exercisable for up to 48 hours prior to the closing date of the offering, which is expected to be on February 24, 2022.
“The net proceeds from the offering will be used primarily to accelerate exploration activities, including drilling and trenching on the OKO West project, and for general corporate purposes,” the company said.
Reunion Gold is a leading gold explorer with a portfolio of projects in the Guiana Shield in South America. Two years ago, the company formed a strategic alliance with Barrick Gold Corp. [ABX-TSX, NYSE] to explore, develop and mine mineral properties in the Guiana Shield.
Under the deal, the two companies pledged to form a 50:50 alliance that will cover certain mineral projects in Guyana, Suriname, French Guiana and the north and northeast regions of Brazil. Barrick committed to increase its stake in Reunion to 19.9% from 15%.
Reunion’s contribution to the alliance was the Waiamu, the Aremu, the Arawini, and the Oko projects, all of which are located in Guyana. In return, Barrick agreed to provide US$4.2 million to fund the initially included projects. This amount represents credit for the historical exploration and money already spent by Reunion. Subsequent funding will be on a 50:50 basis.
In December, 2020, Reunion announced that the NW Extension project in Suriname would be included in the strategic alliance.
The Oko West project is in the Cuyuni Mining District, about 95 kilometres west of Georgetown and is accessible by roads and trails from the town of Bartica or by boat using the Cuyuni River.
The project covers 11,900 acres of mineral rights held by local Guyanese entrepreneurs. Reunion entered into agreements entitling it to conduct exploration activities and acquire a 100% in the project area.
Trenching and drilling programs conducted by Reunion confirmed gold mineralization in shear zones coinciding with gold-in-soil anomalies and geological structures identified from airborne geophysical surveys.
The maiden 1,000-metre diamond drilling program completed in January, 2021 also confirmed the downward extension of mineralized zones discovered through the weathered profile (saprolite).
On January 27, 2022, Reunion Gold shares closed at 19 cents and trade in a 52-week range of 19 cents and $0.055.