FNX tops up treasury (July 01, 2002)

FNX Mining (FNX-T), formerly Fort Knox Gold Resource, has arranged a bought deal with Dundee Securities, BMO Nesbitt Burns and Griffiths McBurney & Partners to raise $25 million.

Under the deal, FNX will sell 5 million shares to the underwriters at $5 apiece. The underwriters also may purchase up to 750,000 shares at the same price for 60 days after the deal closes and will receive a 6% cash commission.

Concurrently, the underwriters will offer for sale, on a best-efforts basis, 1 million flow-through shares at $6 each. All told, FNX stands to gain $31 million in gross proceeds.

FNX plans to use a portion of the proceeds to advance its five Sudbury joint-venture properties. The company and partner Dynatec (DY-T) are in the midst of an 80,000-metre surface drill program on the McCreedy West, Levack, Victoria, Kirkwood and Norman properties.

Earlier this month, drilling on the Norman 200 zone cut wide intercepts of high values of copper, nickel, platinum, palladium and gold. Shallow drilling on the Norman North zone returned narrower zones of similar high-grade mineralization.

The best results from the Norman 200 zone were 7.62 metres running 11.4% copper and 0.3% nickel, plus 16.1 grams combined platinum-palladium-gold per tonne and 35.4 metres grading 3.3% copper, 0.6% nickel and 3.1 grams of the precious metals. From the North zone, 3.7 metres averaged 14.2% copper, 0.2% nickel, and 30.8 grams precious metals.

Earlier this year, Inco (N-T) granted FNX the right to earn 100% interests in the properties by spending a total of $20 million by 2006. Dynatec will cover half of the first tranche of exploration expenditures and 25% of the rest.

Inco retains a right of first refusal if any property is sold, and can re-acquire a 51% interest in any new discovery containing more than 2,723 tonnes nickel. The major also retains processing rights, or (in the event of third-party processing) can elect to receive a 2% net smelter return royalty for nickel, copper and cobalt and 2.5-5% for precious metals.

Underground permits are being sought for the McCreedy West and Levack properties to rehabilitate the McCreedy West ramp to the 1,600-ft. level. The company also is seeking approval to begin economic evaluations of near-term production targets.

The offerings have yet to be approved by regulators and are slated to close in mid-July.