Manitou Gold Inc. [MTU-TSXV] said Thursday it is poised to accelerate exploration at its 100%-owned Goudreau project near Wawa, Ont., after closing a $3 million financing and announcing strategic investments by Alamos Gold Inc. [AGI-TSX, NYSE] and O3 Mining Inc. [OIII-TSXV].
The Goudreau project consist of 22,500 hectares of consolidated gold properties located on the Michipicoten Archean Greenstone Belt. The assembled lands consist of 37 kilometres of strike length with at least seven under-explored large-scale deformation zones showing favourable lithology.
The entire set of properties are located between Alamos Gold’s Island Gold Mine and the past-producing Renabie Gold mine near the town of Missanabie.
Manitou shares advanced on the news, rising 22% or $0.01 to $0.055 on volume of 1.3 million. The shares are currently trading in a 52-week range of $0.02 and $0.07.
The rally came after Manitou said it has closed a brokered private placement of 40 million flow-through shares at $0.05 per share and 20 million units at $0.05 per unit, generating proceeds of $3 million.
Each unit consists of one common share and one common share purchase warrant. Each warrant is exercisable at $0.05 into one common share for a period of five years following the date of issuance.
Manitou said Alamos Gold has purchased 36.7 million common shares in connection with the offering, representing 19.9% of the issued and outstanding shares of Manitou immediately after closing on a non-diluted basis. Prior to the offering Alamos did not own any Manitou shares.
As a result, Alamos and Manitou have entered into an investor rights agreement giving Alamos the following rights:
- The right to nominate one director to Manitou’s board.
- Non-dilution rights, such that Alamos can retain its pro-rata ownership in Manitou by participating in any subsequent share issuance, so long as Alamos retains at least 10% of Manitou’s common shares on a partially-diluted basis.
- The right to participate in a joint exploration committee which will be established to discuss and advise on the exploration strategy for Manitou’s Goudreau Project.
Meanwhile, O3 Mining Inc. and its assignees have collectively bought 14.5 million units of the offering, representing approximately 7.9% of the issued and outstanding shares of Manitou immediately after closing, as calculated on a non-diluted basis (or 15.7% on a partially diluted basis assuming the exercise of warrants comprising such units only).
Manitou has agreed to grant O3 Mining the right to nominate one director to the Manitou board as well as non-dilution rights such that O3 Mining can retain the pro-rata ownership of it and its assignees in Manitou as held immediately after closing by participating, directly or through its assignees, in any subsequent share issuance as long as O3 Mining and its assignees retain at least 7.5% of Manitou’s outstanding common shares on a partially-diluted basis.
The gross proceeds of the flow-through share portion of the offering will be used by the company to incur Canadian exploration expenses within the meaning of the Income Tax Act (Canada) related to the Goudreau Project on or before December 31, 2020, for renunciation to subscribers of flow-through shares effective December 31, 2019.
Brokerage fees of 8% cash were paid and 4.8 million broker warrants issued to IBK Capital Corp., which acted as agent in the offering. All securities issued and issuable in connection with the offering are subject to a statutory hold period ending on May 1, 2020.