VANCOUVER (miningweekly.com) – The TSX-V-listed stock of North America-focused exploration firm Redstar Gold spiked by as much as 30% on Tuesday, after precious-metals heavyweight investor Eric Sprott agreed to take a 12.1% stake in the company.
Sprott (71), a renowned and respected leader in the investment community, is one of the world's best gold and silver investors, and his C$3-million endorsement prompted the Redstar stock to rise four cents to C$0.17 apiece in intraday trading.
Sprott has agreed to acquire 30-million Redstar common shares at C$0.10 apiece as part of a financing of up to 41-million common shares, to be conducted in two tranches.
The first tranche comprises 20.4-million shares issued at C$0.10 each and is expected to close this week. The second tranche of up to 20.6-million shares at the same price, or C$2.06-million, is expected to close on, or before, August 31.
Redstar president and CEO Peter Ball stated that the proceeds of the financing would be used to start its next drilling programme on the high-grade Shumagin gold zone, at its 100%-controlled Unga project, in Alaska.
According to Redstar, the Shumagin prospect is characterised by multi-episodic gold-silver bearing quartz-adularia-rhodochrosite breccia bodies that occur within structurally controlled dilation zones along the more than 1 200-m-long Shumagin Scarp. High-grade gold/silver mineralisation is open at depth within the main breccia body at Shumagin. Multiple dilation zones and coincident gold-silver bearing breccia bodies exist along strike of the Shumagin Scarp and remain to be fully drill tested, the company said.
In Nevada, Redstar is seeking suitable partners to advance its portfolio of 11 fully owned properties located along and within many of the major gold producing trends. Redstar also owns 30% of the Newman Todd gold project, in Red Lake, Ontario, which is a high-grade gold discovery along a 1.8 km corridor within the Newman Todd Structure.