Hard-hit miner Detour Gold to raise C$150 million in bought deal

Tue Feb 18, 2014 4:38pm EST
 
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Feb 18 (Reuters) - Detour Gold Corp said on Tuesday it would raise about C$150 million ($136.91 million) in a bought deal to reduce its short-term debt and for working capital purposes.

The news came on the same day that Detour, a small Canadian gold miner, announced a new chief executive and chief financial officer.

Detour's shares are down some 53 percent in the past year on concerns about high costs at its Detour Lake gold project, its only mine, a slump in the gold price and concerns that the miner could run short of cash.

Detour said that a group of underwriters led by BMO Capital Markets and RBC Capital Markets had agreed to buy 16.2 million of its shares at a price of C$9.25 a share.

Detour's shares closed at C$9.92 on the Toronto Stock Exchange on Tuesday.

A bought deal occurs when an investment bank commits to buying an entire stock offering from a client company. As a result the financing risk is eliminated for the company but it will often get a lower price for the issued stock.

A 28-percent slump in the gold price last year and several high-profile cost blowouts on development projects has left the global gold sector out of favor with investors, making it difficult for miners, especially small ones, to raise funds.

The appointment of Paul Martin as Detour CEO comes after the company's former CEO Gerald Panneton resigned last November. Martin, who was Detour's chief financial officer, was appointed interim CEO at the time.