in the past few months, natural resource companies have been able to raise $42 billion:

How Heavyweights Get Financed

Kinross Gold Corp. (KGC), the world’s fourth-largest gold producer, has also proven itself to be one of the shrewdest players, especially in recent months. Its first coup was the acquisition of Aurelian Resources Inc., in mid-2008, an all-share offer that transferred to Kinross Aurelian’s major gold deposit of 13 million ounces in Ecuador.

Then, this past February, as the broader U.S. stock indices were beginning another downward leg down toward multi-year lows, Kinross completed a “bought deal” offering, raising $400 million. And it didn’t even need the money. Or perhaps did, as Kinross recently announced a $150 million purchase of 20% of Harry Winston Diamond Corp. (HWD), to gain access to Winston’s Diavik diamond mine in northern Canada.

In a bought-deal offering, an underwriter (an investment bank, or a syndicate) buys securities from an issuer (in this case Kinross), before then selling the securities to the public. The advantage, during normal times, is that Kinross gets to avoid the so-called “financing risk” of the deal getting done only at a deep discount to the actual market price of its shares. And in a troubled market such as the current one, a conventional deal probably wouldn’t even get done.

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