True Gold Mining Finds Alternate Sources of Cash

Mark O’Dea | BCBusiness
Mark O’Dea, executive chair

In the midst of a financing drought in equity markets, one Vancouver junior bucks the trend, raising more than $30 million in three months.

2013 has not been kind to B.C. junior miners seeking cash on the equity markets. The first half of 2013 spawned just 28 financings worth about $800 million on major Canadian stock exchanges, compared to 82 deals worth $1.6 billion in the first half of 2012.

But not everyone is singing the blues. Over the last three months, Vancouver’s True Gold Mining Inc. has raised over $30 million, most of it for its Burkina Faso-based Karma Gold project, where a completed feasibility study is expected by end of year.

In May, the company raised $10 million through a private placement with Teck Resources Ltd., followed in July by a $23.5-million investment by Liberty Metals & Mining Holdings LLC, a subsidiary of Boston-based Liberty Mutual Insurance. The latter is being made through a private placement of $17.4 million that will give Liberty Metals a 20-per-cent stake in True Gold, and the sale of a two-per-cent smelter return royalty on Karma.

Mark O’Dea, executive chair of True Gold, says the courtship with LMM lasted about 18 months, and was a case of perfect timing for the Karma project. “We’re at a critical juncture in the evolution of this company, going from an exploration company to one that’s on the cusp of development, and this is exactly when you need capital to finance that transition.”

O’Dea says the money will allow True Gold to complete the feasibility study, and get through permitting and into financing, depending on the outcome of the feasibility study. “Rather than having to go back to the market at a difficult time, we’ve bought ourselves some insurance through this phase.”

True Gold is not the only beneficiary of LMM’s investments in recent months: the group has also struck deals with Vancouver miners Pretium Resources Inc., and Alderon Iron Ore Corp.

O’Dea says money is out there for worthy projects and companies, but it takes a lot more work and time to get it. “The lesson learned is that securing funding in this environment is a much longer-term process than it was a couple of years ago,” he says. “Putting the work into developing and maintaining these relationships, and getting potential investors comfortable with your business plan and team takes time. But it still pays off in the end.”