Noront closes placement Toronto-based Noront said Thursday that it has closed a private placement of 6.5 million security units for C$26 million. The units, which were sold at C$4 apiece and comprise one common share and one-half of one common share purchase warrant bearing a strike price of C$5 and an two-year maturity, were sold to six investors. The investors consist of investment companies Rosseau Asset Management, Pinetree Capital Ltd., Sprott Asset Management and Northfield Capital Corp., as well as mining players Robert McEwen of Evanachan Ltd. and U.S. Gold Corp. and
Pierre Lassonde of Franco-Nevada Corp.
IBK Capital Corp was the agent for the deal and JP Morgan was the financial advisor for Noront.
Noront stock (TSX: NOT) closed at C$4.37 on Thursday, up by C$0.14 or 3.31%.
“This financing will provide Noront with the financial strength to develop its assets independent of near-term market fluctuations,” Noront president Richard Nemis said in a press release.
In a research note written for Wasserman Morris shortly after the financing deal was announced, Montecito Capital Management managing partner Kipley J. Lytel highlighted that recent surveys suggested that Noront was sitting on property with “immense potential.”
“We believe the catalyst for further share price appreciation will be based on the release of results from additional drill holes, which will likely extend the zone of mineralization to depth,” Lytel wrote in the notes. “One also cannot discount the possibility that the company could be a take-over target of an integrated base mineral mining company.”
Lytel, who has a speculative buy recommendation on the stock, told Prospect News in a separate interview that he does not foresee a buyout by a private equity group or an asset management firm, but rather a transaction with a mining major after the resource potential is firmed.
“Noront is not geared to move from exploration to commercial production,” he said. “There are several majors operating in the Double Eagle region. Also, Noront is sitting on many other high priority geophysical targets.”
Lytel expects that the current financing will last Noront for the year.
“Even with the two new drills, we view Noront’s approximately $45-50 million in cash resources sufficient to meet exploration & resource calculation objectives for calendar year 2008,” he said. “They will also likely establish further shared funding arrangements similar to the recently announced option with Intrinsic Minerals