VANCOUVER (miningweekly.com) – Intermediate precious metal royalty company Osisko Gold Royalties has taken a 19.9% stake in Minera Alamos through a C$3.3-million private placement, giving it access to near-term gold production at the La Fortuna project and future opportunities in Mexico.
Osisko has agreed to buy 22.5-million Minera Alamos shares at C$0.15 a share.
In parallel with the Osisko placement, Minera Alamos also announced that it has appointed Haywood Securities as lead agent on behalf of a syndicate of agents to sell, on a best efforts private placement basis, up to 23.33-million common shares at the same price, for further gross proceeds of up to C$3.5-million. The agents also have an overallotment option to sell up to a further 20% of the brokered offering in common shares at the issue price, for a period of 48 hours before the offering closes.
The brokered offering is expected to close on or about June 29.
“This is a transformative announcement for Minera Alamos and marks the beginning of the next phase of our Mexican production and growth strategy. We look forward to working with Osisko to fast-track La Fortuna toward production and expand our presence in Mexico organically and through additional acquisitions,” Minera Alamos president Darren Koningen said in a statement Tuesday.
Under terms of the investment agreement, Osisko will have nondilution rights to any future financing activity Minera Alamos might undertake, if it maintains at least 10% ownership of the company, up to a maximum of 20%. For as long as Osisko maintains a 10% interest, it will have the right to nominate two directors to the Minera Alamos board. It has put forward the current chief geologist of Talisker Exploration Services Ruben Padilla with immediate effect.
Further, Osisko will have the right to buy up to a 4% net smelter return royalty (NSR) for C$9-million, and have a participation right on any future royalties and streams granted by the company. Osisko also has the right to participate in half of any buybacks of existing La Fortuna royalties, and the right to acquire a 2% NSR on any property acquired within a 250-km radius of La Fortuna.
Minera Alamos advised that it will use the proceeds from the financings to develop La Fortuna and for working capital and corporate purposes.
The La Fortuna gold project includes the historic La Fortuna mine, together with the surrounding concessions, totalling 994 ha. The property is in the north-western corner of Durango state, about 70 km northeast of the city of Culiacan, Sinaloa.
The project has a current resource block model that produced a measured and indicated resource of 4.8-million grading 2 g/t gold, for 308 000 contained ounces, at a 0.5 g/t gold cutoff grade.
Meanwhile, Minera Alamos announced the resignation of director and CEO Chris Frostad on May 31, who will be replaced by current president Koningen.