This may set more minds at ease. Much like we thought, deal was struck when the stock was low! Could give us a boost on monday?

Junior miner's discount deal sparks anger
Private Placement; Units sold at 40¢ each as shares close at 84¢
Grant Surridge, Financial Post
Published: Saturday, October 27, 2007
A $10-million private placement unveiled yesterday by MacDonald Mines Exploration Ltd. that involves some of the biggest names in mining has some investors fuming at the discount the new stakeholders received.

The junior miner sold a total of 25-million units at 40¢ each to investors that included

Sheldon Inwentash, chief executive of Pinetree Capital Ltd.; Robert McEwen, chief executive of US Gold Corp.; Pierre Lassonde, chairman of Franco-Nevada Corp.; and Randall Oliphant, chairman of Western Gold Fields Inc. The shares closed on the TSX Venture Exchange at 86¢ the day before the deal was announced.

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Font:****"This is craziness. Does Warren Buffett get a 50% discount when he buys companies?" asked one Bay Street money manager who holds a major stake in the company. "This deal should be repriced closer to market value."

The money manager, who did not want to be identified, was also angry that MacDonald offered investors twice as many warrants as normal in deals of this nature, and that IBK Capital Corp., which acted as an agent, will receive a cash fee of about $700,000.

However, IBK played down the hullabaloo yesterday, and said that the issue was priced when the stock was trading at around 28¢.

"We're getting phone calls all day, and I understand people's reaction," said Mike White, vice-president of IBK. "Once we explain it to them the situation they are very good about it. They understand."

MacDonald executives declined to be interviewed yesterday.

MacDonald owns several plots of land near James Bay in Northern Ontario near an area mining companies rushed to in August when Noront Resources Inc. revealed it found very high-grade nickel and copper sulphides there. That announcement set off a wild staking rush as juniors snapped up land around the discovery.

John Kaiser, who publishes the popular Bottom Fish report on junior miners, said yesterday he was initially shocked when he heard the details of the placement.

"How come as a minority shareholder I have to buy this stock at 85¢ in the market and these big shots get plugged in at 40¢?" he said.

But he said he was satisfied after speaking with MacDonald's management yesterday, when he was able to confirm the deal was cut when the stock was trading in the mid-20¢ range. He believes having the high-profile new investors on board is positive for the company and will eventually help add value for all shareholders.

Trading in MacDonald shares was halted in the morning yesterday. They closed down about 2% to 84¢ on the TSX Venture Exchange.

gsurridge@nationalpost.com

© National Post 2007