A $50-million bought-deal financing led by National Bank Financial will give Aurizon Mines (ARZ-T, AZK-X) some cash for its existing operations and potential acquisitions.
Aurizon, owner of the Casa Berardi gold mine north of La Sarre in Quebec’s Abitibi region, will issue 9.7 million shares at $5.15 apiece — 49¢ below the closing price the day before the deal was announced.
Aurizon shares sunk 51¢, or 9%, on the announcement to close at $5.13 on a trading volume of 783,000 shares.
After the deal closes, around the end of April, the syndicate of underwriters will have a 30-day option to buy up to an additional 15% of the offering at the issue price to cover overallotments.
The company reported earnings of $4.9 million in 2008 after producing 158,830 oz. gold, and was left with cash and equivalents totalling $34 million. Long-term debt was $9.4 million at the end of the year — $8.2 million of which is project debt and $1.2 million is refundable by government assistance.
Aurizon expects to produce up to 155,000 oz. gold at Casa Berardi in 2009, achieving an average grade of 7.2 grams gold per tonne at its 1,800- tonne-per-day operation. Cash costs are anticipated to be about US$390 per oz. while onsite mining, milling and administration costs are projected to be $108 per tonne — similar to 2008.
The mine has proven and probable reserves of 3.8 million tonnes grading 7.8 grams gold for 956,000 oz. gold.
The company will spend $13 million in sustaining capital at Casa Berardi to further develop Zone 113 and the Lower Inter Zone at the mine. Another $6.9 million will be spent on infrastructure and equipment improvements.
A total of $8.5 million will be spent in the early part of the year at Casa Berardi — $4.5 million on underground development and $5 million on 35,000 metres of underground drilling.
The company will also complete a feasibility study on mining the crown pillar of the East mine and a preliminary technical assessment on mining the upper portion of the Principal zones, both by open pit.
High levels of arsenic in the soil at Casa Berardi have forced the company to increase its asset retirement obligations to $20.9 million from $2.6 million.
A prefeasibility study should be finished for the Joanna property near Rouyn-Noranda by the third quarter. Aurizon plans to spend $1.5 million on 10,000 metres of drilling there.
The company is also exploring the Kipawa gold-uranium property 100 km south of Rouyn-Noranda. Follow-up exploration plans will be made once the company has finished interpreting results from 2008’s field program.
In late March, Aurizon was added to the S&P/TSX composite index.
At presstime, Aurizon shares traded at $4.91.
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