Liberty Gold announces $20 million bought deal
Liberty Gold Corp. [LGD-TSX] has announced details of a bought deal financing that is expected to raise $20 million, with proceeds earmarked for the company’s Black Pine Oxide Gold Project in Idaho.
News of the financing comes after Liberty released an update on a previously announced plan to spin-out its Goldstrike project and adjacent Antimony Ridge discovery into a separate corporate entity. The move follows the discovery of a new 400 metre long, third zone of coarse-grained, high-grade antimony oxide mineralization, located 1,500 metres west of the previously identified high-grade mineralization.
Under the bought deal financing the underwriters have pledged to buy 60.6 million units priced at 33 cents per unit, each of which consists of one common shares and one half of one common share purchase warrant. Each warrant entitles the holder to acquire one common share for 45 cents for 24 months after closing.
Liberty shares were active on the news, easing 10.9% or $0.04 to 32.5 cents. The shares currently trade in a 52-week range of 43 cents and 25 cents.
The company said it has granted the underwriters the option to purchase an additional 9.09 million units to cover over-allotments on the same terms, a move that could produce additional proceeds of $3.0 million. That option can be exercised for 30 days after closing.
Liberty Gold is focused on exploring for a developing open-pit oxide deposits in the Great Basin of the U.S., a region that stretches across Nevada and into Idaho and Utah. The company is advancing the Black Pine Project in southeastern Idaho, a past-producing, Carlin-style gold system with a large, growing resource and strong economic potential. The company is also actively de-risking and expanding the Goldstrike Project in southwestern Utah, a past-producing oxide gold system, which now includes the newly staked Antimony Ridge Prospect.
In its latest update, the company said the Goldstrike Project, with the Antimony Ridge discovery is expected to be named Specialty American Metals Inc., currently owned 100% by Liberty Gold.
The proposed spinout structure is expected to be affected by a plan of arrangement between Liberty Gold and Specialty American and is expected to be subject to customary conditions, including shareholder, regulatory and court approval.
Under the arrangement, a portion of the common shares of Specialty American would be distributed to Liberty Gold’s shareholders, at a ratio to be determined in due course. Liberty Gold will retain a percentage of shares of Specialty American in exchange for funds already invested in the project.
Should the arrangement become effective, Liberty Gold shareholders would own shares of two companies,
Russell Starr has been named CEO of Specialty American. Starr is a former Bay Street executive and associate hedge fund manager. He is also a seed investor in Echelon Wealth Partners, a large Canadian investment dealer.