New Found Gold finances $205M for Queensway

New Found Gold (TSXV: NFG; US-NYSE-A: NFGC) says it has locked down $205 million in equity and debt financing for its Queensway development in Newfoundland.

The mining company structured the package around a $100-million bought deal equity financing alongside a $105-million senior secured credit facility, New Found said on Monday. EdgePoint Investment Group Inc. led both components, while longtime backer Eric Sprott anchored the equity portion.

“We are pleased to announce this comprehensive finance package, consisting of an at-market equity bought deal financing and a senior secured credit facility at superior terms to those previously contemplated,” New Found Gold CEO Keith Boyle said in a statement.

“We have secured funding for the initial capital expenditures required to bring our flagship Queensway gold project-phase I into production, in line with our development schedule.”

The announcement means New Found Gold will abandon its previously announced arrangement with Nebari Natural Resources Credit Fund II. It involved a $75-million secured loan facility for about $3.6 million in warrants as outlined in a March 5 release.

Equity component

BMO Capital Markets and SCP Resource Finance will co-lead the bought deal financing, working with a syndicate of underwriters to purchase 33.8 million common shares at $2.96 each. The underwriters received a 15% over-allotment option exercisable within 30 days of closing.

The deal requires regulatory approval from both the TSX Venture Exchange and NYSE American, with closing targeted for April 27.

Queensway, near Gander, is envisioned as a 15-year mine that would produce 1.5 million oz. at all-in sustaining costs of US$1,256 per oz., according to a preliminary economic assessment issued last July. The plan calls for a $155-million capex stage one output averaging 69,300 oz. annually in the first four years, followed by a $442-million stage two expansion to about 172,200 oz. per year.

The project has a base-case after-tax net present value at a 5% discount rate of $743 million and an internal rate of return of 56% at US$2,500 per oz. gold, according to the July study. At a higher gold price assumption of US$3,300 per oz., the after-tax NPV rises to $1.45 billion with an IRR of 197%.

In September, New Found acquired Martime Resources in a deal valued at about $292 million for the Hammerdown project in the same region. The two assets, 180 km apart, are expected to benefit from shared infrastructure including Maritime’s Pine Cove mill and the Nugget Pond hydrometallurgical plant. Hammerdown poured first gold in November.