52 LEXPERT MAGAZINE
|
MARCH 2017
| MINING |
Corporate Finance
Fred Pletcher of Borden Ladner Gervais
LLP said, "e good news on the legal front
is that there were more equity financing
windows during 2016 than in the previous
couple of years, particularly for precious
metals producers."
For example, in anticipation of Presi-
dent Trump's ultimate approval, Northern
Dynasty completed a financing in early
2017, with a view to developing its Pebble
gold project in Alaska. It had been under
Environmental Protection Agency review
because of its proximity to sockeye salmon
fisheries. Its stock continued to climb as
of late January, once President Trump's
"blessing" came through.
Not every project is obtaining financing
these days, however; investors are much
more discriminating than they used to be.
George Dubé of McMillan LLP told Lex-
pert, when it comes to investing in mining
entities, "investors on the street are much
more adamant. ey are investing in pro-
duction companies, pre-production com-
panies, provided they have good manage-
ment teams." is may sound axiomatic,
but mining investors have been looser with
purse strings in the past, willing to take
risks across the board, hedging the bets
across the sector. Now, says Dubé, "what
distinguishes companies is the people."
Quentin Markin, co-head of Stikeman
Elliott LLP's Global Mining Group, con-
curred: investors are looking for strategic
and resilient leaders for challenging times.
arrangement in which all of the issued and
outstanding common shares of Reservoir
were exchanged on the basis of two com-
mon shares of Nevsun and $2 in cash per
share. Additionally, on April 24, 2016, the
companies entered into a funding transac-
tion comprised of a private placement for
19.99 per cent of Reservoir's outstanding
common shares and a loan transaction.
Pursuant to the private placement, Nev-
sun subscribed for 12,174,928 common
shares of Reservoir at a price of $9.40 per
share, for a total subscription price of
$114,444,323 (US$90,296,571). Pursuant
to the loan transaction, Nevsun provided
an unsecured cash loan of US$44,703,429
to Reservoir. e combined funding trans-
action provided US$135,000,000 in fi-
nancing to enable a wholly owned subsid-
iary of Reservoir to exercise its right of first
offer (ROFO) to acquire 100 per cent of the
interest of Freeport-McMoran in the upper
IPO Market
Superior Gold Inc. became the second
initial public offering of 2017 in Canada.
According to a National Post report, it
marketed "its offering of regular common
shares this week" aer having "formed last
July and acquired the Plutonic gold opera-
tions from Australia's Northern Star Re-
sources last October, [and] has more mod-
est ambitions: it is seeking between $13.5
million and $14.5 million from the sale of
shares that are expected to be priced at $1.
In addition, it plans to list the shares on the
TSX Venture Exchange."
M&A Activity
As previously reported in Lexpert, in June
2016, Nevsun Resources Ltd. completed
its acquisition of Reservoir Minerals Inc.,
a TSX-V listed company, for approximate-
ly US$440 million. e acquisition was
completed pursuant to a statutory plan of
JOHN TURNER
FASKEN MARTINEAU
DUMOULIN LLP
"With mining
companies having
worked hard to improve
their balance sheets
over the past few
years, shareholders
have little appetite to
see companies repeat
the value destructive
acquisitions we saw
during the super cycle."
PHOTO:
SHUTTERSTOCK
