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The financing window is open for Canadian gold miners, and they are rushing through it at a frantic pace before it shuts.
Six companies have announced bought deal offerings since Tuesday evening: Romarco Minerals Inc., Detour Gold Corp., Osisko Gold Royalties Ltd., Primero Mining Corp., Asanko Gold Inc., and Richmont Mines Corp. Between them, they are raising a whopping $789.8 milllion. Last week, Yamana Gold Inc. unveiled a $260.2-million equity deal of its own, and Lydian International Ltd. tapped the market for $16.5 million.
The flood of financings coincides with a significant jump in the gold price that has reignited investor enthusiasm for the sector. Bullion is up almost 10% this month and topped US$1,300 an ounce on Wednesday for the first time since August.
Gold has been out of favour with investors for most of the past two years, so the opportunities for most miners to raise capital have been few and far between. Not surprisingly, they are keen to push these deals through quickly while sentiment remains positive and gold equities are performing very well.
“We see it over and over again. These windows open so quickly and might be so short,” said Jay Kellerman, managing partner at Stikeman Elliott LLP. “Who would have imagined this [financing wave] a week ago?”
Indeed, it did not seem likely last week that the financing window would open to such a huge degree. The price of gold traded as low as US$1,224 an ounce, and investors were focused on a disappointing production report and writedown from Goldcorp Inc. But then gold rallied and the equities shot up again at a faster pace than the gold price.
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