American Eagle Gold (TSXV: AE) has received a major vote of confidence from Australia-based South32 (ASX: S32), which is a spinout from BHP Billiton focused on diversified metals and mining. The mining major has agreed to make a strategic investment into American Eagle, following the success it has seen at its NAK project in British Columbia.
The arrangement will see South32 take a 19.9% stake in American Eagle, investing $29.16 million in the explorer at a price of $0.875 per common share, a 15% premium to the five day volume weighted average price. The investment will see South32 obtain 33.3 million common shares, with no warrant attached to the financing.
Funds from the investment are to be used to continue to explore the NAK project, with American Eagle now holding $37 million in cash. The company has indicated it is now funded for “substantial” drill program expansions in 2025 and 2026, with American Eagle indicating that the 2025 program will consist of three drill rigs that will drill over 25,000 metres in aggregate. In comparison, 31,000 metres have been drill at the project across the last three drill seasons.
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As part of the investment, South32 will have the right to nominate one director to American Eagle’s board, so long as its interest remains about 10%. The company has also obtained participation and top-up rights to allow South32 to maintain its pro-rata ownership interest.
American Eagle has also indicated that the offering may expand, with Teck Resources, who holds a 15.2% interest in the explorer on a post-financing basis, potentially exercising a top up right as part of the financing.
American Eagle Gold last traded at $0.82 on the TSX Venture.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
