TORONTO (miningweekly.com) – Northern Shield Resources soared 16% higher on the TSX-V on Thursday, after the Ottawa-based junior announced HudBay Minerals agreed to buy a near-10% stake in the company.
That is the second deal it has struck with a large mining firm in as many weeks, after Northern Shield signed a letter of intent to allow South Africa’s Impala Platinum, the second-biggest producer of the metal, to earn a 50% interest in First Point’s Idefix prospect in northern Quebec.
The junior said HudBay would buy 11.3-million units for $0.22 apiece, or a total $2.5-million.
Each unit comprises one share and one half of one common share purchase warrant. Each warrant allows HudBay to purchase a share for C$0.40 for 24 months after the deal closes.
At closing, HudBay will own 9.9% of Northern Shield, which goes up to 14.2% if the Toronto-based company were to exercise all its options.
Northern Shield said it would use the deal’s proceeds to explore at its Wabassi and Storm polymetallic properties in north-west Ontario.
“The investment by HudBay in Northern Shield is a very strong endorsement of the significant results attained to date from the Wabassi and Storm properties and the prospectivity thereof," CEO Ian Bliss said in a statement.
HudBay has a strategy to take minority positions in early stage exploration companies, and to buy them out at a later stage if the project shows enough promise.
Edited by: Creamer Media Reporter
EMAIL THIS ARTICLE