Despite a disappointing mineral resource estimate that was announced earlier this year for the Queensway project, New Found Gold Corp (TSXV: NFG) has managed to secure additional funding to continue to move the project forward.
The equity last night announced that it will be conducting a bought deal financing to raise gross process of $49 million, which will occur alongside a $20 million private placement that will see Eric Sprott continue to support the company.
The bought deal financing, to be led by BMO Capital Markets and SCP Resource Finance, will see a total of 21.4 million charity flow through shares sold at a price of $2.29 per each. A 15% over-allotment option has also been granted in connection with the offering.
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The non-brokered private placement meanwhile will see the sale of up to 12.3 million non-flow through common shares at a price of $1.63 per each for gross proceeds of $20 million.
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Eric Sprott has indicated he intends to maintain and expand upon his 19% interest in the company and will be participating in the financing, while also planning to take his ownership beyond the 20% threshold, establishing Sprott as a new control person of the company. The move beyond a 20% interest will require approval from disinterested shareholders, which will need to be obtained before the private placement is closed.
“With a significant lead order by Eric Sprott on both the Offering and the Private Placement, the proceeds from the Financing will allow us to advance the Queensway Gold Project to the development stage,” commented New Found Gold CEO Keith Boyle on Sprott’s investment.
Proceeds from the financing are to be used for the advancement of the Queensway project as well as working capital and general corporate purposes.
Following the announcement last night, New Found saw itself caught up in an after-market squeeze on the NYSE, with the equity shooting up as high as US$2.50 a share, before ultimately coming down. The equity is currently trading down 4 cents in pre-market trading at US$1.26 a share.
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