Financially stricken miner NovaGold Resources Inc. (TSX: NG) has secured a US$60 million lifeline that would make a New York-based private company its largest shareholder and likely save it from being dropped from the Toronto Stock Exchange.
The Vancouver company said it closed the private placement with Electrum Strategic Resources LLC, selling 46.1 million units at US$1.30 each.
Each unit consists of a NovaGold common share and one purchase warrant that would enable Electrum to buy additional shares at US$1.50 for the next four years.
As of January 23, NovaGold shares were trading at $2.57, up from a 52-week low of $0.47 last November.
The company said it plans to use part of the financing proceeds, including an additional US$15 million from a separate private placement, to pay off its debts and for exploration and development at its work sites in Alaska and in B.C., where its huge Galore Creek copper-gold mine project was put on hold at the end of 2007 after the cost to build it more than doubled.
NovaGold will also consider re-activating its sole revenue generator, the Rock Creek mine in Alaska, the operations of which were suspended in November just two months after its start up after failing to meet certain regulatory requirements.
NovaGold's financial challenges recently triggered a TSX de-listing review, but the company said its latest private placement would substantially improve its financial position.
Meantime, Vancouver-based Red Back Mining Inc. (TSX:RBI) said Friday it would sell 20 million of its shares at $7.50 each for aggregate gross proceeds of $150 million.
The underwriting syndicate is co-led by Cormark Securities Inc., BMO Capital Markets, GMP Securities LP and includes Scotia Capital Inc.