Reunion Gold unveils $20 million bought deal
Reunion Gold Corp. [RGD-TSXV] said Tuesday it is raising $20 million from a bought deal private placement with proceeds earmarked for exploration activities at its South American projects, including OKO West in Guyana.
Under an agreement with an underwriting syndicate, the private placement will consist of 77 million units priced at 26 cents per unit.
Each unit will consist of one common share of the company and one half of one common share purchase warrant. Each warrant will entitle the holder to purchase one common share at an exercise price of 39 cents for 24 months after closing.
However, if the volume weighted average closing price of the common shares is equal to or greater than 55 cents for 10 consecutive trading days, the company may elect to accelerate the expiry of the warrants.
In addition, the company is granting the underwriters an over-allotment option to purchase a number of offered securities that is equal to 15% of the offering on the same terms. The offering is expected to close on July 6, 2022.
Reunion shares were active on the news, easing 6.7% or $0.02 to 28 cents on volume of 1.54 million. The shares are currently trading in a 52-week range of 36 cents and $0.055.
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.