Continental rights offering expected to raise $2 million

To raise money for exploration on its diamond properties in Northern Ontario and Arkansas, Continental Precious Minerals (ME) has made a rights offering of one million units to its shareholders.

Under the offering, each shareholder will receive one right for each common share held. In exchange for four rights, shareholders will be able to purchase a unit consisting of one common share and one common share purchase warrant.

If the offering is fully subscribed and all the warrants are exercised, Continental’s issued and outstanding common shares would increase from 4.1 million to 6.1 million. Purchase prices for the rights and warrants have yet to be determined, but President Ed Godin said the company is aiming for gross proceeds of about $2 million.

The Big Trout “area of interest” is about 150 miles south of James Bay. More than $11 million has been spent on the property, mostly by Continental’s former partner BP Canada (TSE), which recently opted out of the mining business. The extensive geophysical and geochemical work identified 17 targets stretching from south of James Bay to the Manitoba border, Godin says. He notes that Continental is currently staking one of the targets, a 90-acre geophysical anomaly, and will spend about 44% of the net proceeds of the offering to test the area further.

Another 28% of the net proceeds will be used to test the Crater of Diamonds project in Arkansas. As part of a consortium of companies that includes Kennecott, Continental has doubled preliminary reserve figures for the pipe to 90 million tons, Godin says.