Eagle Hill Gets The Cash It Needs To Survive (September 21, 2009)

Eagle Hill Exploration (EAG-V, EHECF-O) will soon have the funds it needs to shore up its recent acquisition of Noront Resources’ (NOT-V, NOSOF-O) Windfall Lake gold project in Quebec’s Chibougamau mining camp.

The company has closed a private placement that will bring $3.2 million into its coffers. That’s good news for the Vancouver-based company, which had been in dire need of financing to acquire a “qualifying property” to keep its listing on the TSX Venture Exchange.

The situation arose after the company was reduced to just a 3.5% stake in the MAC property when the project was sold by its majority interest owner War Eagle Mining (WAR-V, WARGF-O) to VM Exploration in mid-August.

But with an option to earn up to a 100% interest in Windfall Lake — subject to a 2% net smelter return royalty — the company will be able to meet the Venture Exchange’s requirements.

The bulk of the new funds will come from an issuance of units — $1.5 million from units at 10¢ apiece made up of one share and one warrant with a strike price of 20¢. Another $1.5 million will come from the sale of flow-through units priced at 15¢ per unit and made up of one flow-through share and a warrant with a 20¢ strike price.

The company has already closed the first tranche of its financing by issuing 1.75 million units and raising $175,000.

Money from the first tranche will go towards working capital, while the remaining $3 million will fund acquisition and development of Windfall Lake — which is now the company’s flagship property.

The deal, which was announced in late July, stipulated that Eagle Hill had to have an equity financing done for at least $1.5 million by mid-October and pay Noront $400,000.

There is also a series of exploration spending targets that must be met over the next two years at the project.

Windfall Lake proved to be a bit of an enigma for Noront. While the site returned some standout intercepts, overall results were inconclusive, keeping Noront from completing a resource estimate.

In all, the project has seen 330 historic holes drilled and comes with a 1.4-km underground ramp.

In Toronto on news of the financing’s close, Eagle Hill’s shares were off half a penny to 14¢ on 178,000 shares traded.