Premier Gold upsizes share offering to $38 million

The South Arturo gold mine on the Carlin Trend, Elko County, Nevada, a joint venture between Premier Gold Mines and Barrick Gold. Source: Premier Gold Mines Ltd.

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Premier Gold Mines Ltd. [PG-TSX; PIRGF-OTC] said Wednesday February 12 that it is raising $38 million from a share offering, marking an increase of $5 million compared to the previous target.

Due to strong demand, the size of the previously announced offering has been raised to 25.3 million common shares at $1.50 a share, generating gross proceeds of $38 million, the company said in a press release. The proceeds could be higher if the underwriting syndicate exercises a green shoe option to purchase an additional 3.8 million shares to cover over-allotments.

Premier Gold shares were down 5% or $0.08 to $1.51 on volume of 1.2 million on Wednesday. The shares are trading in a 52-week range of $1.41 and $2.55.

Premier Gold is a gold producer as well as an exploration and development company with a focus on properties in Canada, the United States and Mexico. Premier is aiming to emerge as a low-cost, mid-tier gold producer via its two Mexican gold mines, South Arturo and Mercedes, and through future mine development opportunities at Hardrock and McCoy-Cove in Nevada.

On Wednesday, the company said net proceeds of the offering are expected to be used for development, expansion and working capital requirements of the Mercedes and South Arturo mines and the McCoy-Cove Project. Part of the proceeds are also earmarked for general corporate purposes and may be used to reduce the company’s debt under Premier’s revolving term credit facility. The offering is expected to close on February 28, 2020.

Premier recently said a challenging year at its Mercedes Mine in Sonora, Mexico, prevented the company from achieving its production targets in 2019.

After producing 67,427 ounces of gold and 192,829 ounces of silver in 2019, which was below guidance of between 75,000 and 85,000 gold ounces, the company is currently working on initiatives to ensure increased and more reliable production for 2020 and beyond.

Mercedes is a 2,000 tonne-per-day underground gold-silver mine located in Sonora State in northern Mexico, about 250 km northeast of Hermosillo. As of December 31, 2019, proven and probable gold reserves stood at 395,000 ounces at a grade of 3.63 g/t.

The project also hosts proven and probable silver reserves of 2.72 million ounces grading 25.05 g/t.

In 2019, Mercedes produced 59,901 ounces of gold and 191,306 ounces of silver.

At Mercedes, excessive dilution led to lower than planned grades and therefore fewer than planned gold ounces produced during the year.  However, the company said it identified several factors contributing to the lower than planned grades and is working on initiatives to ensure increased and more reliable production for 2020 and beyond.

“We believe our continued exploration successes at Mercedes and the resumption of mining at South Arturo will contribute to production for years to come and provide a platform four our company’s growth,’’ said Premier Gold President and CEO Ewan Downie.

Premier is completing a 42,000-metre exploration and delineation core drilling program at Mercedes. The aim is to delineate new mineral resources in the Lupita Extension area as well as confirming potentially important discoveries at the San Martin and Neo areas.

The company has said commercial production was declared more than three months ahead of schedule at South Arturo’s El Nino Mine. Ore tonnes mined during the fourth quarter were considerably above plan the company said.

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