American Eagle up 28% on Teck investment news

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American Eagle Gold Corp. [AE-TSXV] shares jumped 28.6% in active trading Monday after the company said Vancouver metals giant Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) has pledge to make a strategic investment in the company through a flow-through share financing on a private placement basis.

The company said it will issue 14.4 million shares on a flow-through basis at $0.205 per share for proceeds of approximately $2.96 million. Teck will subsequently acquire the shares for a purchase price of $1.87 million or 13 cents a share.

Immediately after closing of the offering, Teck will hold 14.4 million common shares of American Eagle, or 15% of the company.

American Eagle shares advanced on the news, rising 28.6% or $0.03 to 13.5 cents on volume of 674,080. The shares are currently trading in a 52-week range of 33.5 cents and $0.02.

The junior will use the proceeds to fund its 6,000-metre drill program this year on a number of targets at the NAK copper-gold porphyry project, which is located 85 kilometres from Smithers, B.C., in the Babine copper-gold porphyry district of west-central, British Columbia.

The property lies close to past producing mines (Bell, Granisle) and is road accessible.  Drilling there is expected to commence in June, 2023.

“This investment affirms the value our team sees in NAK and solidifies our drilling and exploration plans for 2023,’’ American Eagle said in a press release. “NAK’s 2022 drilling program discovered broad intercepts of bornite-bearing copper-gold porphyry mineralization,’’ the company said. This year, the objective is to continue advancing he property by expanding its known mineralized footprint and identifying the high-grade source of copper and gold on NAK.

American Eagle shares began trading on the TSX Venture Exchange almost exactly two years ago

At that time, the focus was on exploring for a world class gold deposit on its Golden Trend property, which is situated in one of the largest gold-producing districts in Nevada. Gold was first discovered in the district in the early 1800s.

The property is located on the Cortez gold trend in Nevada about 72 kilometres south east of the town of Battle Mountain and next door to Barrick Gold Corp. [ABX-TSX, GOLD-NYSE] and Newmont Corp.’s [NGT-TSX, NEM-NYSE] Gold Rush and Cortez mines, which host over 27 million ounces of gold.

The company previously said it planned to drill and advance the relatively unexplored property and continue to focus on acquiring and advancing gold projects in the area.

In July, 2020, American Eagle struck a deal to acquire the Golden Trend project from privately-owned Rubicon Resources Inc. Prior to Rubicon, the project was owned by Kinross Gold Corp. (K-TSX, KGC-NYSE), which drilled two exploration holes. The property spans 2,286 acres

Despite having numerous owners in the past, the property remains relatively unexplored with next to no historical drilling at depth.

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