Northgate strikes financing deal
Allan Robinson
Northgate Exploration Ltd. said yesterday a group of underwriters has agreed to raise up to $125-million in cash, bringing the value of its share deals during the past six months to $290-million.
The most recent financing follows a $25-million equity deal earlier this year and the issuance of $140-million in common and preferred shares in late 2001.
The recent surge in demand for gold mining shares has helped Vancouver-based Northgate clean up its balance sheet since it agreed to acquire a 95-per-cent interest in the Kemess gold and copper mine from bankrupt Royal Oak Mines Inc. in 1999.
In the most recent financing, the underwriters led by Griffiths McBurney & Partners, have agreed to buy $85-million in units at $2.05 each, consisting of shares and warrants and they have an option to acquire an additional $40-million in units.
The cash will be used to pay down debt, to reduce the gold hedge positions and for working capital, Northgate said.
As a result of the financings, Northgate estimates it will have reduced its long-term debt by $170-million (U.S.) to $45-million.
Northgate owns the Kemess South mine in north-central British Columbia, which is expected to produce 295,000 ounces of gold and 84 million pounds of copper this year. The mine is located about 430 kilometres northwest of Prince George.
The number of outstanding common shares, which currently totals 69.8 million, will increase by about 61 million shares if the latest financing is totally subscribed for, as the company expects.
Northgate also said yesterday that another 59.6 million common shares will be issued as a result of the conversion of $90-million (Canadian) in preferred shares, bringing the number of common shares outstanding to 190.4 million.
Based on the number of shares outstanding, Northgate's market capitalization is $365.6-million, which excludes $68.9-million in long-term debt, for a total value of $434-million.
Royal Oak ran out of money as a result of cost overruns at the mine, which cost about $470-million to build.
The shares of Northgate fell 11 cents or 5.4 per cent yesterday to $1.92 on the Toronto Stock Exchange. They traded at a 52-week low of 85 cents a share on August 28.
Northgate said its working capital deficit, which currently stands at $26.2-million (U.S.), will be reduced by between $10-million and $12-million.
Terry Lyons, chairman, and Ken Stowe, president and chief executive officer, have been on the road meeting with institutional investors and were not available for comment, a spokesman for Northgate said.
The two were in Montreal yesterday, Northgate director Peter Gordon said. |
