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Wednesday, 10 October 2012
Kootenay Silver to raise $6 mln to advance Promontorio project
Kootenay Silver (CVE:KTN) says it will raise around $6.0 million in a private placement financing for the advancement of its Promontorio project in Mexico.
The news, which came out late last night, follows the unveiling of an updated resource estimate at Promontorio in August, which saw a near tripling of the resource size.
Thursday, the company said it has agreed with Dundee Securities, on behalf of a syndicate, to offer up 5.72 million units at $1.05 each.
Every unit is made up of one common share and one half of a share purchase warrant, with each whole warrant good for an additional share at a price of $1.30 for a period of two years from closing.
The company has also granted an over-allotment option, which could see it sell up to an additional 2.1 million units - used any time 2 days before the offering closes.
Kootenay said it plans to use the new funds for developing its Promontorio project, as well as for the maintenance of its other assets and for general corporate purposes.
The deal is set to close before October 25, subject to some conditions, including regulatory approvals.
In total, the updated measured and indicated mineral resource at Promontorio contains an estimated 61.679 million ounces of silver equivalent (AgEq), with another 14.469 million ounces of AgEq categorized as inferred.
The significant increase in resources was due to extensive additional drilling of over 37,900 metres to expand the previous resource, as well as define an entirely new area to the northeast of the previous resource.
Kootenay said over 22,000 samples were used in the modeled wireframes compared to just over 3,000 for the previous model.
The resource areas remain open in multiple directions with the next steps being the aggressive expansion of these resources through drilling, Kootenay said, and the advancement of geotechnical, engineering, groundwater and environmental studies for the project.
Last month, the company completed a sensitivity analysis of varying metal prices at 18, 24 and 36-month trailing averages.
"When you apply even the most conservative metal prices observed during the 18 to 36 month period, there is less than a 4 per cent variance in Promontorio’s measured and indicated resource," Kootenay Silver president and CEO James McDonald said in early September.
"This is due to the impact of the high silver grades in the diatreme system, which is also exciting as it has a positive impact on the economic dynamics of the resource."