Nordgold Enters into Agreements to Acquire Stake in Canadian Junior Exploration Company Northquest Ltd.
Nord Gold N.V. ("Nordgold" or the "Company", LSE: NORD), an internationally diversified pure-play gold producer, is pleased to announce that it has entered into agreements with Northquest Ltd. (TSX-V:NQ) ("Northquest") to acquire an aggregate of 12,777,777 newly issued Northquest shares and warrants to acquire up to an additional 6,388,889 Northquest common shares for total proceeds of CAD 2.5 million in two tranches through a non-brokered private placement (the "Offering"). The transaction will give Nordgold a 22.3% holding in Northquest (on a non-diluted basis).
Northquest is the 100% owner of the Pistol Bay Gold Project (the "Project"), a high grade exploration project located in Nunavut Territory, the northern Canada, on the west coast of Hudson Bay.
The Pistol Bay property consists of 860 square kilometers of mineral rights within the underexplored Rankin-Ennadai greenstone belt. An operating mine at Meadowbank and a development project at Meliadine of Canadian gold producer Agnico Eagle Mines Ltd. are located in the same belt as Pistol Bay.
Northquest has spent CAD 7.8 million on the project since 2011 and has drilled 48 holes (9,110 meters) with 24 drill holes (5,600 meters) completed at the Vickers Target, the most advanced gold zone of the Project.
Within Arctic Canada, the Project is favorably located. It is accessible by air or by sea with about 5 months navigation period from southern Canada. There is a village, port and airstrip within ten kilometres of the property and an all season road in the eastern part of the project provides access to the Pistol Bay camp and to most of the known gold occurrences.
Nikolai Zelenski, Chief Executive Officer of Nordgold, said:
"We continue to look for projects that complement and enhance our existing reserves base and we believe we have found in Pistol Bay a very promising asset with real potential. The Pistol Bay project meets our strict investment criteria - namely a potentially high grade deposit with a local partner, which has strong geological expertise in the region. Nordgold has a proven ability to develop new projects from scratch and we look forward to working with Northquest to progress this exciting project."
Structure of the deal
Pursuant to the first tranche of the Offering (the "First Tranche"), Northquest has agreed to issue to Nordgold an aggregate of 2,777,777 units of Northquest (the "First Tranche Units") at a price of CAD 0.18 per First Tranche Unit. Each First Tranche Unit will consist of: (i) one common Northquest share ("Common Share"); and (ii) one-half of one common share purchase warrant (each whole such warrant, a "First Tranche Warrant"). Each First Tranche Warrant shall entitle the holder to acquire one additional Common Share at an exercise price of CAD 0.24 for a period of 24 months from the date of issuance thereof, provided that if, at any time after the date which is four months and one day following the issuance thereof, the volume weighted average price of the Common Shares on the principal stock exchange upon which the Common Shares are listed (the "Exchange") is equal to or exceeds CAD 0.50 for 20 consecutive trading days, then Northquest may accelerate the expiry date of the First Tranche Warrants, in which event the First Tranche Warrants will expire upon the date (the "Accelerated Expiry Date") which is 30 days following the dissemination of a press release by the Northquest announcing the Accelerated Expiry Date. Other subscribers (some or all of whom may be insiders of Northquest) may purchase up to 1,000,000 First Tranche Units in the First Tranche for additional gross proceeds of up to CAD 200,000 (the "Additional Units").
Pursuant to the second tranche of the Offering (the "Second Tranche"), Northquest has agreed to issue 10,000,000 units of Northquest (the "Second Tranche Units") to Nordgold or its nominee at a price of CAD 0.20 per Second Tranche Unit. Each Second Tranche Unit will consist of: (i) one Common Share; and (ii) one-half of one common share purchase warrant (each whole such warrant, a "Second Tranche Warrant"). Each Second Tranche Warrant shall entitle the holder to acquire one additional Common Share at an exercise price of CAD 0.27 for a period of 24 months from the date of issuance thereof, provided that if, at any time after the date which is four months and one day following the issuance thereof, the volume weighted average price of the Common Shares on the Exchange is equal to or exceeds CAD 0.50 for 20 consecutive trading days, then Northquest may accelerate the expiry date of the Second Tranche Warrants, in which event the Second Tranche Warrants will expire upon the date (the "Second Accelerated Expiry Date") which is 30 days following the dissemination of a press release by Northquest announcing the Second Accelerated Expiry Date.
Concurrently with the closing of the Second Tranche, Nordgold will have the right to appoint one representative to Northquest's board of directors and the right to participate pro rata in all equity issuances by Northquest, subject to certain conditions.
The First Tranche is subject to certain conditions, including the approval of the TSX Venture Exchange (the "TSXV"). The Second Tranche is also subject to certain conditions, including the approval of the TSXV, a satisfactory site visit completed by Nordgold, the completion of legal and technical due diligence, the approval of Northquest's shareholders and the issuance of 2,777,777 First Tranche Units to Nordgold pursuant to the First Tranche.
Northquest intends to use the gross proceeds of Offering for further exploration of its Pistol Bay property and for general and administrative expenses.
The closing of the First Tranche is expected to occur in one or more closings, the first of which is expected to occur on or about June 12, 2014 and the closing of the Second Tranche is expected to occur on or about July 14, 2014 or such later date as may be agreed between the parties.
Assuming that the Additional Units are issued and no other changes to Northquest's issued and outstanding Common Shares, following the closing of the Second Tranche, Nordgold will hold 12,777,777 Common Shares (representing 22.3% of the issued and outstanding Common Shares on a non-diluted basis based on the number of Common Shares issued and outstanding as of the date hereof) and First Tranche Warrants and Second Tranche Warrants to acquire up to an additional 6,388,889 Common Shares.