RE:TD UPDATERidgeback wrote: Calibre Mining Corp. (CXB-T) C$1.81 Financing to Shore Up Funding for Valentine Steven Green, CFA Luke Bertozzi, (Associate)
Event Yesterday after market close, Calibre announced a C$100mm bought deal financing.
Impact: MIXED We believe this financing should not come as significant surprise given the significant capital required for the ongoing construction of Valentine, which is expected to come on-line in H1/25. The deal price of C$1.68 represents 0.75x multiple on our C$2.23/ sh NAV.
C$100mm bought deal financing. The underwriters have agreed to purchase 59.6mm shares of Calibre at C$1.68/share, with the option to purchase an additional 8.94mm shares for total potential gross proceeds of C$115mm. The total offering would increase Calibre's share count by ~9%.
Bolstering their balance sheet while building the newly acquired Valentine Gold project in Newfoundland, Canada. Marathon Gold had estimated that the total cost to complete the project was C$318mm as of Q3/23. We expect Calibre will release an update in the coming weeks which will include a larger capex due to industry-wide inflationary cost pressures (particularly in North America) as well as scope changes aimed at de-risking the project. Our current capital estimate for completion of the project is $365mm ($555m total project).
We believe additional funds were required to continue drawing on the Sprott debt facility. Recall, the financing arrangement was acquired through the Marathon acquisition and Marathon carried the debt funds on the balance sheet as restricted cash. As we understand it, the restricted cash cannot be accessed without Calibre being fully funded to build Valentine.
Capital cost overruns continue to be a risk on new projects. At B2Gold's Back River project, B2 is forecasting total initial capex of C$1,050mm, an increase of 72% compared to Sabina's 2021 technical report. Eldorado also recently increased its capex budget at Skouries by 9% to $920mm (from $845mm).
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Ridgey's long term outlook. It takes a lot more to build anything these days and unlike previous management they are agressive in moving the project to completion. My long term outlook once V.Lake is in production and complimenting all other sites will give CXB a good rerating and in my opinion a reverese split down the road. Perhaps by that time Au values will have also incresed along with the expected production from CXB production locations. Can't get cold feet now with production and resource increases on the horizon!
This actually makes more sense than acquiring Condor. Too bad about the fully funded clause if that's what it is, since Calibre could have otherwise avoided a cap raise.
It also shows why marathon really had little chance of competing the project on their own given sentiment for PM miners.