Dakota Gold Corp. (DC:NYSE American) announced it has entered a binding agreement with Orion Mine Finance for a US$17 million investment in the company and a commitment for future financing.
OMF Fund IV SPV C LLC, which is managed by Orion, has agreed to purchase 6,666,667 shares of Dakota Gold common stock at US$2.55 per share and will own nearly 8% of the company at closing.
"Robert Quartermain, Dakota Gold's Co-Chair, and I have worked with Orion previously, and we welcome the opportunity to continue our relationship with Orion, a respected investor and lender in the mining industry," said Dakota Gold President, Chief Executive Officer and Director Jonathan Awde.
Dakota Gold is exploring the 46,000 acres it has acquired and consolidated over the past decade surrounding the Homestake Mine. Industry giant Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) also backs the company.
"Dakota Gold is now seeking to revitalize this legendary district," Canaccord Genuity analyst Michael Fairbairn wrote.
Much of the land owned by Dakota Gold has not been explored in nearly 30 years, leading some to hope for a large discovery there.
"Dakota Gold is now seeking to revitalize this legendary district," Canaccord Genuity analyst Michael Fairbairn wrote.
Orion's equity investment in Dakota Gold is expected to close on or about October 20, the company said.
Terms of Deal
Following certain milestones or to acquire new assets, Orion has agreed to provide up to US$300 million of financing support to Dakota Gold for construction and development.
Orion shall be granted a right to match the terms of future financing by the Dakota Gold, according to the terms.
The JB Gold Zone could be the company's "most significant discovery to date," Canaccord Genuity analyst Peter Bell noted in an August research note.
This does not include any equity or convertible debt offering conducted by the company on a non-brokered basis or conducted by banks or brokers with aggregate proceeds of up to US$200 million (of which no more than US$50 million may be in the form of unsecured convertible debt), including equity issuances from Dakota Gold's at-the-market offering program.
The two companies also will enter into an agreement for a 1% net smelter returns royalty over certain parts of Dakota Gold's public land administered by the U.S. Forest Service or Bureau of Land Management. The royalty excludes the company's private land, including its Maitland and Richmond Hill projects, Dakota Gold said.
Dakota Gold will receive a total consideration of US$1 million for the royalty, with US$75,000 paid at closing and the remaining US$925,000 paid by Orion based upon the achievement of certain development milestones.
The Catalyst: 'Richest 100 Square Miles' on Earth
Once called the "Richest 100 Square Miles" on Earth, the Homestake Mine was discovered in 1876 and consolidated by George Hearst. Over 126 years, miners extracted 41 million ounces gold (Moz Au) and 9 Moz silver (Ag).
Last summer, the company announced that partial assay results had extended its JB Gold Zone discovery at Maitland by 171 meters.
Drill hole MA23C-022 confirmed that Homestake-style gold mineralization is present 5 kilometers northwest of the old mine, Dakota said. The lower portion of the drill hole intersected 19.55 g/t Au over 5 meters in a step-out drill hole from MA23C-017, which intersected 12.51 g/t Au over 4.7 meters.
The JB Gold Zone could be the company's "most significant discovery to date," Canaccord Genuity analyst Peter Bell noted in an August research note.
"The two holes suggest a thickened zone of mineralized iron formation, similar to the 'ledges' mined in the old Homestake Mine," Bell wrote. "Although much is still to be proven at the drill bit if additional drilling demonstrates JB is a new ledge, we believe Dakota could quickly advance it from initial discovery to a substantial, high-grade deposit."
Dakota Gold Vice President Exploration James Berry called the grades "analogous with the mineralization encountered at the Homestake Mine."
"With every new intercept, we have increased confidence that we have identified another Homestake Ledge system at Maitland," he said.
At its Richmond Hill project, recent assay results extended the mineralization of the system, already described as more than 1 mile in strike length. Drill hole RH23C-016 intersected 3.5 grams per tonne gold (g/t Au) over 23.7 meters. When length weighted, it had an average grade of 0.95 g/t Au over the 306.9-meter drill hole.
How do you interpret all of this? According to Stockhead, 1 g/t Au can make an open-cut project viable, while anything over 5 g/t Au is considered high-grade.
"A tip for investors, therefore, is to consider a company's average grades and look for drill cores that 'start and end in mineralization' rather than buying shares on just one excellent drill core result," the website noted.
Streetwise Ownership Overview*Ownership and Share Structure
According to the company, approximately 30% of its shares are with management and insiders.
Out of management, Co-Chairman Robert Quartermain holds the most shares at 9.32% or 7.34 million shares, Reuters said. President and CEO Jonathan Awde is next at 7.85%, with 6.18 million, while COO Jerry Aberle holds 5.33%, with 4.2 million. The remainder of the 30% is held by other members of management and the board of directors.
About 26.6% of the shares are with institutional investors. According to Reuters, those include Van Eck Associates with 3.74%, The Vanguard Group Inc. with 3.33%, Blackrock Institutional Trust Co. with 3.73%, and Sprott Asset Management LLP with 0.71%.
About 27.4% is with strategic investors, including Barrick Gold Corp., which owns 3%. The rest is retail.
Dakota Gold has a market cap of US$215 million, with 78.76 million shares outstanding and about 59.49 million free-floating. It trades in a 52-week range of US$4.03 and US$2.36.
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Important Disclosures:
- Dakota Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Dakota Gold Corp. and Barrick Gold Corp.
- Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
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