Gold Investing News last checked in with junior explorer Kaminak Gold (TSXV:KAM) back in February, just after the release of the NI 43-101 mineral resource estimate for the company’s Yukon-based Coffee gold project.
The report was notable in part because it prompted Raymond James analyst David Sadowski to recommend that investors “bolster positions in Kaminak” due to “Coffee’s potential to host a low cost, heap leach gold mine.”
Since then, the company has been busy. Among other things, it’s begun a Phase 1 exploration program at Coffee, released a “robust” preliminary economic assessment for the project and signed an exploration communication and cooperation agreement with the White River First Nation.
Kaminak has also entered into a number of private placements, including two in March that were for $10 million and $11.5 million. However, it’s the C$13.5-million private placement that the company announced today that’s really grabbing attention in the gold space. The reason? Two very well-known names are behind it.
Specifically, Ross Beaty — a well-known financier perhaps most famous for founding Pan American Silver (TSX:PAA,NASDAQ:PAAS) — and Zebra Holdings and Investments, which is owned by the trust of the late Adolf H. Lundin, will each be investing $6,760,000 in the company via a non-brokered private placement. When it closes, they will each own 9.98 percent of Kaminak’s outstanding shares “on a partially diluted basis assuming the exercise” of the warrants they acquire. Both investors will also be able to nominate on person to the company’s board of directors and will gain “a pre-emptive right to participate in any future proposed equity offering of the Company in order to maintain its pro rata shareholding, subject to certain exceptions.”
For Kaminak, the main perk is that the private placement’s closure will bring its cash position up to $26.5 million. As President and CEO Eira Thomas explains in today’s press release, that means the company “will now have sufficient funds on hand to undertake a bankable feasibility study and advance the project towards a production decision.”
All of those factors have prompted Sadowski to again recommend that investors “bolster positions in Kaminak,” this time “on a strong vote of confidence from two mining-savvy investors; reduced financing risk going forward with new, strong backers; and further market re-rating potential as Coffee moves down the de-risking path towards a production decision.”
In terms of what’s next, Sadowski states that Kaminak expects to release more results from the drill program at Coffee this quarter. Further off, the company is aiming to release a feasibility study in late 2015.
Shares of Kaminak are currently up about 32 percent, selling for $1.05 each.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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