Trio of financings illustrates hot market

Vancouver – A recent series of major financings serves as a good barometer of a frothy mining investment climate. UrAsia Energy (UUU-V, UAEYF-O), New Gold (NGD-T) and Viceroy Exploration (VYE-T, VCRYF-O) are all tapping the market to recharge their collective treasuries to the tune more than $200 million.

Recently-listed uranium producer UrAsia Energy has arranged an underwritten $100-million financing through a syndicate of brokers led by Canaccord, and includes BMO Nesbitt Burns and GMP Securities.

The bought deal will see UrAsia selling 39,225,000 shares at $2.55 apiece for gross proceeds of over $100 million. An underwriter’s option allows the purchase of a further 9.85 million shares at the issue price, resulting in additional gross proceeds of $25 million. Additionally, a “greenshoe option”, or over-subscription allowance, allows the underwriters to purchase yet a further 15% of the total shares offered and could see up to 7,361,250 issued at the offering price. Total potential gross proceeds could reach $144 million and will primarily be allocated towards development of its South Inkai uranium project in Kazakhstan.

UrAsia produces uranium from its 70%-owned Akdala mine, an in-situ leach operation in Kazakhstan. Anticipated 2005 production is 760 tonnes (almost 1.7 million pounds) of U₃O₈ at operating costs in the US$5-to-$7 per pound range. Planned expansion to the 1,000-tonne-per-year level is underway.

The company was listed in the Fall of 2005 with a record TSX-Venture Exchange initial public offering of $504 million.

Dollars for Afton

Aspiring copper producer New Gold has arranged a $50.4 million bought deal financing through a syndicate of underwriters co-led by GMP Securities and BMO Nesbitt Burns. The company will sell 5.6 million units at $9.00 apiece, with each unit comprised of a common share and one-half of a share purchase warrant. Each warrant will be exercisable, at $12, into one share for two years.

New Gold will use the proceeds for ongoing advanced-stage exploration at its New Afton copper-gold project near Kamloops, BC. The past producing mine has a measured and indicated resource of 68.7 million tonnes grading 1.08% copper, 0.85 gram gold per tonne, 2.62 grams silver per tonne and 0.12 gram palladium per tonne that the company is proposing to develop using underground bulk-tonnage methods.

Muchos Pesos para Viceroy

In yet another major underwritten financing, Viceroy Exploration has inked an agreement with a broker syndicate led by Canaccord, and including Orion Securities, National Bank Financial, Paradigm Capital and Haywood Securities, to sell 6.4 million shares at $6.25 per share for gross proceeds of $40 million. The underwriters hold an option for an additional 3.2 million shares at the issue price.

Viceroy will be using the funds on its Gualcamayo gold project in San Juan Province, Argentina. The Quebrada del Diablo (QDD) zone on the project holds a measured and indicated resource of 37.1 million tonnes grading 1.04 grams gold (over 1.2 million contained oz.) plus an additional 11.3 million tonne inferred resource averaging 1.2 grams gold (435,000 contained oz.). The Amelia Ines zone has a 2.1 million tonne measured and indicated resource at 2.8 grams gold (171,000 contained oz.). An inferred resource of 2.5 million tonnes grading 1.9 grams gold (151,000 contained oz.) was reviewed on the Magdalena zone.

An early-2005 preliminary economic assessment on the QDD zone, conducted by AMEC Americas, reviewed potential open pit development with a projected 10-year mine life producing an average of 96,100 oz. of gold annually. Pre-production capital expenditures of US$55.7 million were estimated with average cash costs pegged at US$133 per oz.

A large number of companies, both senior and junior are taking advantage of the strong equity market conditions to recharge their treasuries. A partial roster includes: Eldorado Gold (ELD-T, EGO-X) raising $186 million, UEX (UEX-T) locking down a $53 million financing, Quadra Mining (QUA-T) soon to close a $45.4 million financing, Crystallex International (KRY-T, KRY-X) closing a US$31.3 million unit financing, Sabina Silver (SBB-V, SBBFF-O) looking to boost its flow-through financing to $10 million, and Vannessa Ventures (VVV-V) arranging $5 million in convertible debentures.

The first month of 2006 has seen well over $500 million in mining equity financings already arranged, boding well for an active upcoming year of exploration and development in the sector.