Benchmark Metals Inc. [BNCH-TSXV; CYRTF-OTCQB; 87CA-FSE] is raising $7.5 million from a brokered private placement that will leave Bay Street financier Eric Sprott with up to a 19.98% stake in the company.
News of the financing comes after Benchmark said recently it is stepping up drilling activity at its Lawyers property in northern British Columbia, which contains a former gold-silver mine that operated from 1989 to 1992, producing 171,000 ounce of gold and 3.6 million ounces of silver.
Benchmark said it has struck a deal with Sprott Capital Partners LP in connection with an offering that will consist of 18.3 million units at 30 cents per unit, raising gross proceeds of $5.5 million. The offering will also include up to 5.0 million flow-through shares at an offering price of 40 cents per share, raising an additional $2.0 million. Each unit will consist of one common share of the company and one-half of a share purchase warrant. Each whole warrant is good to buy one additional share at an exercise price of 40 cents for two years from the date of closing.
The company said Eric Sprott has agreed to purchase 13.3 million units of the offering, leaving him with 14.3% of Benchmark’s issued and outstanding shares, based on the current 70.1 million common shares outstanding and assuming the offering is fully subscribed, and 6.7 million warrants.
Upon closing of the maximum offering, if Sprott were to exercise all of his warrants, he would hold a 19.8% stake in Benchmark.
Net proceeds will be used to financing further exploration at the Lawyers property where the company recently increased its drilling activity by adding a second drill rig.
On Friday, Benchmark shares eased 1.2% or $0.005 to 40.5 cents. The shares are currently trading in a 52-week range of 16 cents and 40.5 cents.
The Lawyers property is located in the Toodoggone region of the Omineca Mining Division of B.C. a littlke east of the Golden Triangle and consists of 37 contiguous mineral claims. The claims cover 127 km2 of land that encompasses the Lawyers group of prospects, including the former Lawyers underground gold-silver mine and the Silver Pond group of prospects, and includes over 16 gold-silver mineral occurrences.
The property is situated 45 km northwest of Centerra Gold Inc.’s [CG-TSX, CAGDF-OTC] Kemess Copper-Gold mine, where underground development and construction is under way.
Exploration in the area began in the late 1960s and peaked in the 1980s, identifying numerous showings, prospects and deposits culminating in the development of the Lawyers gold-silver mine.
Five underground developments remain in place, in addition to historical resources and new targets.
Benchmark said the Lawyers project is exhibiting geological similarities to world-class low sulphidation epithermal gold-silver mines located in the Patagonia region of Argentina.
When the company recently announced a proposed 2019 exploration program at Lawyers, it said drilling will focus on infill, step-out and deeper drilling to expand the current resources at [the] Cliff Creek and Dukes Ridge [zones] and establish new resources at the Phoenix and AGB zones. The aim is to facilitate a new resource estimate by 2020.
The program was expected to include 14,000 to 25,000 metres of drilling, 2,000 to 3,500 soil samples, 600 to 1,000 rock samples, mapping and ground geophysics.
The company has said drilling this year has demonstrated success by intersecting broad zones of alteration and mineralization in almost every hole (16 out of 17 drill holes)
The company said drill No. 2 will focus on step-out drilling along strike at 50-to-100 metre intervals from known zones at the core of the Lawyers trend (Cliff Creek, Dukes Ridge, Phoenix and ABG zones).
The most recent step-out hole intersected over 140 metres of intense alteration and multiphase veining and extended the Cliff Creek to strike length of over one kilometre.
Meanwhile, the company anticipates that drilling will continue into the first week of October and it will disseminate drill results as they are received from laboratory and interpreted.