Loading ...RED EAGLE MINING ANNOUNCES RIGHTS OFFERING
June 26, 2017 – Red Eagle Mining Corporation (TSX: R, BVL: R, OTCQX: RDEMF) provides an operational update and announces an equity Rights Offering. Gold grades in the production headings have been in line with feasibility study estimates, averaging 5.5 grams per tonne gold during May 2017. However, challenging ground conditions have led to unacceptable dilution and gold losses using the current mining method. Consequently, to get the mine on a firm footing, management has deemed it prudent to halt stope production and move to a new mining method that will require the construction of a paste backfill plant. Once in place, there will be both better grade control and in particular gold losses will be minimized. This temporary suspension of mining high grade stopes ensures that gold production from these areas will be maximized.
While the paste backfill plant is constructed, production crews will be diverted to underground mine development. This will ensure greater operational flexibility once the paste backfill plant is in operation. In order to fund the paste backfill plant and to provide working capital before gold production resumes, Red Eagle Mining is undertaking a Rights Offering.
A Rights Offering was chosen to give the opportunity to all existing shareholders to participate. Major shareholders have informed Red Eagle Mining that they intend to fully exercise their Rights.
Rights Offering
Red Eagle Mining has filed a rights offering circular (the “Rights Offering Circular”) with the securities regulatory authorities in each of the provinces and territories of Canada in connection with an offering (the “Rights Offering”) of rights (“Rights”) to acquire units of Red Eagle Mining (a “Unit”) for gross proceeds of up to approximately C $46 million. Pursuant to the Rights Offering, each eligible registered holder of common shares of Red Eagle Mining (“Common Shares”) as at the close of business on July 5, 2017 (the “Record Date”) will receive one Right for each Common Share held. For each two Rights the holder will be entitled to subscribe for one Unit at a subscription price of C$0.35 per Unit. Each Unit will consist of:
•One Common Share of Red Eagle Mining; and
•One transferable common share purchase warrant (a “Warrant”) exercisable into one Common Share of Red Eagle Mining at a purchase price of C $0.50 per Common Share for a period of five years from the issue date. The Warrants will be listed for trading on the TSX subject to fulfilling the TSX minimum listing conditions.