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Gold glitters for Sprott
By Barry Critchley
Financial Post / National Post, Toronto
Saturday, Sept. 18, 2010
http://www.financialpost.com/opinion/columnists/Gold+glitters+Sprott/354...
The price of gold is at record levels, yet investors still believe it is set to move higher. That's the only logical interpretation to draw from the news that Sprott Physical Gold Trust, formed this year to hold bullion, has rounded up at least $280 million of new investment dollars in its latest financing. (The other interpretation: The lemmings theory is at work.)
That financing, done by way of an overnight marketed deal, was announced after the markets closed on Thursday and priced before the markets opened yesterday.
The result: The issuer sold 24.5 million trust units at $11.37 per unit. The units were sold at a 10-cent discount to the closing price the day the deal was announced. The issuer has a rule that the "net proceeds of the offering will be greater than 100 percent of the most recently calculated net asset value per unit of the trust prior to the pricing of the offering."
... Dispatch continues below ...
Sona Resources Expects Positive Cash Flow from Blackdome,
Plans Aggressive Exploration of Elizabeth Gold Property
On May 18, 2010, Sona Resources Corp. (TSXV: SYS, Frankfurt: QS7) announced the release of a preliminary economic assessment for gold production at its flagship Blackdome and Elizabeth properties in British Columbia.
Sona Executive Chairman Nick Ferris says: "We view this as a baseline scenario for gold production. The project is highly sensitive to the price of gold. A conservative valuation of gold at $1,093 per ounce would result in a pre-tax cash flow of $54 million. The assessment indicates that underground mining at the two sites would recover 183,600 ounces of gold and 62,500 ounces of silver. Permitting and infrastructure are already in place for processing ore at the Blackdome mill, with a 200-tonne per day throughput over an eight-year mine life. Our near-term goal is to continue aggressive exploration at Elizabeth and develop a million-plus-ounce gold resource, commencing production in 2013."
For complete information on Sona Resources Corp. please visit: www.SonaResources.com
According to its website, the fund's NAV was $10.87, which means the units traded at a premium. The underwriters -- RBC Capital Markets and Morgan Stanley -- were given the option to sell another 3.675 million units. The units closed yesterday at $11.30.
That gold continues to rise is no surprise to Eric Sprott, the founder of Sprott Asset Management. Almost two years ago he said that "in the sea of financial assets and currencies that are being decimated the world over, the one true safe haven continues to be gold." So far that view is working out.
This week's deal is the second since Sprott Physical Gold went public this year. In its IPO, the issuer raised US$442.50 million via the sale of 44.25 million units at US$10 per unit. In May it followed up with a US$279.45 million deal via the sale of 24.84 million units at US$11.25 per unit.
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Sprott isn't the only issuer to gather up investor interest in physical gold.
In May the Central Fund of Canada closed the sale of 25.3 million units at US$14.85 per share, for gross proceeds of US$375.7 million. It too has a pricing rule: It must be non-dilutive and accretive for the existing shareholders.
The issuer invested most of the proceeds "in gold and silver bullion in international banker bar denominations." After that deal it owned 1.5 million fine ounces of gold and 75.2 million ounces of silver.
Last November, it raised US$230.2 million via the sale of units priced at US$13.56 a time. The units closed yesterday at US$16.14. In 2009 Central Fund completed four offerings that raised a total of US$701.6 million.
Central GoldTrust has also been active. In June, it raised US$280.2 million, with all the proceeds being invested in gold bullion. (The company owns 604,676 fine ounces of gold bullion and 6,156 ounces in gold certificates.) As with Central Fund, the price of the units is "non-dilutive and accretive for the existing unitholders."
In 2009 it closed two issues, one for US$38 million in January and another for US$200.2 million in May.
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Prophecy to Become Coal Producer This Year
with 1.5 Billion Tonnes of Resource
Prophecy Resource Corp. (TSX.V: PCY) announced on May 11 that it has entered into a mine services agreement with Leighton Asia Ltd. to begin coal production this year. Production will begin with a 250,000-tonne starter pit as planned in August, with production advancing to 2 million tonnes per year in 2011. Prophecy is fully funded to production and its management team includes John Morganti, Arnold Armstrong, and Rob McEwen.
For Prophecy's complete press release about its production plans, please visit:
http://www.prophecyresource.com/news_2010_may11.php
