Otis Gold Corp (CVE:OOO) shares price rocketed nearly 20% on Friday after Agnico Eagle Mines Ltd. (NYSE:AEM) agreed to acquire, by way of private placement, 14.42mln common shares of Otis. at a price of 35 cents per common share for proceeds of $5,047,000.
Shares were up 19.35% at C$0.37 on Friday.
On closing of the transaction, Agnico will own approximately 9.95% of the issued and outstanding common shares on a non-diluted basis (after giving effect to the transaction, but otherwise assuming that the number of issued and outstanding common shares as at the date hereof remains unchanged).
The proceeds from the transaction shall be primarily used for exploration at the Kilgore gold project located in Clark county, Idaho, as well as working capital and general corporate purposes.
“We are very excited to welcome Agnico as a strategic investor in Otis. Agnico is an experienced global leader in the precious metals sector with a successful track record of identifying and building quality assets,” said Otis’s chief executive officer, Craig Lindsay.
“We believe the transaction serves to recognize the strong potential for growth at Kilgore. This investment will allow Otis to aggressively pursue its goal of defining an economic gold deposit close to infrastructure in an emerging gold district. We look forward to working with Agnico, and we thank the Agnico team for their confidence in Otis.”
On closing of the transaction, Agnico and Otis will enter into an investor rights agreement, pursuant to which Agnico will have the right to participate in certain equity financings by Otis in order to maintain its interest of up to 9.95% in Otis.
The common shares issued under this transaction will be subject to a hold period of four months and one day from the closing date of the transaction in accordance with applicable Canadian securities laws. The closing of the offering is expected to occur on or about Feb. 28, and is subject to receipt of all necessary regulatory approvals and certain other conditions.
Story by ProactiveInvestors