The Conversation (0)
The gold price is no doubt keeping gold bugs happier these days, and it’s looking to be a good start to 2015 for miners as well. On Tuesday, both Richmont Mines and Asanko Gold announced multi-million dollar bought-deal financing agreements.
Update: On Wednesday morning, Richmont announced it had increased its private placement to C$34 million.
The gold price is no doubt keeping gold bugs happier these days, and it’s looking to be a good start to 2015 for miners as well. On Tuesday, both Richmont Mines (TSX:RIC,NYSEMKT:RIC) and Asanko Gold (TSX:AKG,NYSEMKT:AKG) announced multi-million dollar bought-deal financing agreements.
Canadian producer Richmont secured a deal for C$30 million, while Africa-focused Asanko reported a C$40-million agreement. Both offerings are expected to close around February 11.
Richmont is planning to use proceeds from the financing for an accelerated development plan for the high-grade Deep C zone at its Island gold mine in Ontario. Located directly below the existing resource at the Island gold mine, Deep C holds about 1.1 million ounces at roughly 10 grams per tonne gold in inferred resources. The zone provided plenty of excitement around Richmont’s stock last year, contributing to its rank as the top-performing stock on the TSX from the resource sector in 2014.
The company outlined its accelerated development plans in a news release last week, stating that it will extend the main access ramp at the mine to a minimum depth of 750 meters while extending the eastern ramp to 570 meters. Richmont also intends to conduct extensive exploration drilling to upgrade and expand the resource.
All in all, Richmont is planning for $56.3 million in capital expenditures for 2015, with $48.3 million of that focused on the Island gold mine. While that’s no doubt a big investment, Richmont definitely thinks it’s what’s best — and with today’s announcement, a large chunk of that total has already been taken care of.
“It is important to note that we will be laying the groundwork for Island Gold’s future in 2015, and this will involve extensive development and drilling and therefore a sizeable investment this year,” said Richmont President and CEO Renaud Adams in the company’s January 15 release. “Once completed, however, we expect to have numerous years of established mine life at lower costs ahead of us, and we will be very well-positioned for growth.”
For its part, Asanko will use its funds for working capital and corporate purposes to “further enhance” its balance sheet. With US$230 million in cash on hand as of December 31, undrawn project debt facilities of US$70 million and a US$20-million cost-overrun facility, the company already has the funding it needs for the first phase of construction at its Asanko gold mine in Ghana — it expects to complete that phase of the project within its US$295-million capital expenditure budget.
Asanko is expecting first gold in Q1 2016, and will target 190,000 ounces per year of steady state production by the following quarter. It’s also anticipating the release of a prefeasibility study for Phase 2 development at the mine near the end of this quarter.
Certainly, it was a tough financing environment for juniors and developers last year, and it’s encouraging to see 2015 getting off to such a strong start.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Richmont Mines is a client of the Investing News Network. This article is not paid-for content.
