Dallas, Texas 02/21/2014 (FINANCIALSTRENDS) – The $381 million market capped Canadian gold mining firm Rubicon Minerals Corp. (USA) (NYSEMKT:RBY) disclosed on 19th February that it has managed to raise close to $100 million Canadian dollars through a “bought deal” it has negotiated with a consortium of trading firms led by TD Securities and BMO capital. As part of the leveraged deal, the consortium will buy 64.5 million shares of the firm’s share at a purchase price of $1.55 Canadian dollar. The price agreed upon represented a big discount on its trading price of $1.68 when trading started on 18th February.
This promoted the investors to stampede to get out of the stock, resulting in a 20 percent dip in Rubicon Minerals Corp. (USA) (NYSEMKT:RBY) market value during trading on 19th February. At current price points, the stock is trading at $1.32 per share, which is 50 percent below its 52 week high price point of $2.65 per share.
The $100 million Canadian dollars being raised is to be used as capital expenditure to further develop and bring into production the under development Phoenix Gold Project. Under the purchase agreement, the underwriters also have a 30 day option to purchase an additional 9.69 million units of the stock on offer. The units can be used only as warrants and will carry a four year time warranty. In the event of an overallotment, the gold mining firm is likely to earn additional $15 million Canadian dollars.
Each Unit of share being offered for sale to the underwriters is made up of a single share of common stock in addition to warrant which would entitle the holder to ½ share of common stock. The warrant will grant right on the holder to Buy one additional Share of common stock at a price off $2.00 Canadian dollar per share. The time limit for this warrant exercise has been set at 1 year from the date of closing of the offer.