Renforth Powers Ahead Following Successful Sale of New Alger
The deal to vend the New Alger property reported by Renforth Resources Inc. (CA:RFR – $0.07 & US:RFHRF – $0.05 & GER:9RR – €0.04) in August represented one of the milestone achievements in a year of significant events for the Company. The transaction created a partnership with Radisson Mining Resources Inc., a very respected exploration entity active in Quebec. New Alger was assembled into the larger O’Brien Project. The ongoing exploration at O’Brien may now advance systematically to include the New Alger extension to the west.
This week, Renforth confirmed that the transaction has closed. The Company has now been paid $500,000 in cash plus 12 million shares of Radisson (valued at $4,260,000) as per the terms of the deal. This ensures that Renforth shareholders retain leverage to further success as exploration continues at the consolidated property.
The second phase of the agreement is now in process, as Radisson subscribes for a private placement of Renforth flow-through shares valued at $3,249,000. This amounts to 24 million shares of Renforth at a deemed price of 13.5 cents per share (92% above today’s closing price). Consequently, one may assume that Renforth’s current share price is a bargain relative to the value of the transaction.
After the placement has closed, Renforth and Radisson will each control a large minority ownership in shares of each other. Both companies have agreed to refrain from selling these shares unless granted the consent by its partner. Thereafter, notice of a decision to sell must be provided to enable the partner company the opportunity to arrange an orderly transfer. This mutual lock-up restriction will remain in effect for 3 years.
Exploration Drilling to Resume at Flagship Parbec Property
Following the conclusion of the private placement, Renforth will be fully funded with a working capital position of $8,600,000 in cash and securities. This amounts to a war chest to advance further exploration work. The Company has been effective to deliver superb results from much smaller budgeted exploration programs in the past. Last year Renforth spent roughly 90% of the funding it raised directly on exploration activity. Shareholders should note that Renforth, already among the top junior explorers in Canada, may now step up exploration activity.
As expected, Renforth is ready to advance the next phase of work at the Parbec property. A compliant resource has been established with additional areas of mineralization identified. Within the deposit area, an open-pit constrained resource has been delineated that could become a development opportunity for future mining. This factor alone may be a catalyst for another transaction in the future. Parbec is a good fit for the Canadian Malartic gold mine, operating on the southern border of the property.
However, Renforth continues with its own objectives for the project. The Company is advancing to achieve further discovery success at Parbec. A Beep Mat survey was completed for targets along strike from the main deposit area. This has assisted the geologists to plan the next round of drilling work. The drill program is expected to begin next week.
Suite of Property Holdings with Discovery Potential
While the Parbec property remains the focus for Renforth, four other properties are in its portfolio. All are considered highly prospective with the opportunity to create further shareholder value. Sampling was recently completed as part of a fieldwork program at Surimeau and assays are pending. Renforth expects to have the results within two weeks. Prospecting and mapping continues to advance.
Malartic West remains an intriguing exploration prospect with the copper-gold discovery reported earlier by Renforth in play. Spanning an area of 53 square kilometers on the border of the Canadian Malartic mine, this project also shares many similar geological formations that may present attractive gold bearing zones.
The Denain-Pershing Project was consolidated into the larger East Cadillac project and is held under option by O3 Mining Inc. O3 continues active exploration and drilling activity related to its earn-in commitment on the property. Part of the Osisko Group of companies, O3 Mining controls several other advanced properties in Quebec. Osisko is noteworthy as the original exploration story and eventual project developer for the Canadian Malartic gold mine.
The Nixon-Bartleman Property, located in eastern Ontario, has been on the back burner of the property holdings. However an established gold-bearing trend has been mapped on surface for more than 500m along strike. Historic drilling work completed by prior operators also intersected gold alteration. As a wholly owned project Renforth is not obligated to advance exploration in order to maintain its interest. However, the project is attractive such that it could easily be considered the flagship asset of another explorer. It is a testament to the high caliber of the suite of properties controlled by Renforth that Nixon-Bartleman has been overshadowed by other projects so far. The Company hopes to begin preliminary fieldwork as early as this fall.
Perhaps the defining aspect to this Company is the focus to proceed with an urgent pace of exploration work. This is even more admirable given that Renforth is not required to perform with earn-in requirements and spending commitments. Instead, the activity is progressing on the determination to achieve important discoveries and build resource clout. This is the ideal philosophy for a junior explorer and yet so few other companies are able to match this performance.
As the gold bull market gains strength it is also ideal that shareholders may look ahead to steady news flow. A drilling program is about to commence at Parbec, and the other properties will also see renewed exploration activity. In addition, the lavishly funded treasury enables the Company to carry on with this work and not face uncertainty regarding its financial capacity to continue. Shareholders need not worry about additional dilution to the capital structure. Lastly, the mutual lock-up agreement with Radisson ensures that the flow through shares issued will not create a flurry of selling in the months ahead.
The partnership with Radisson also creates an appealing value proposition. Radisson is a serious player in the region. With the acquisition of New Alger, Radisson now controls nearly 6km of strike length of the highly prospective Cadillac Break. Renforth shareholders gain leverage to the ongoing success from Radisson’s exploration programs.
Renforth has a very bullish outlook as the Company participates in Global Mining Symposium later this week. This online conference is available for investors to sign up and view the presentations. Renforth plans to increase promotional activity in the months ahead. This will attract new shareholders and support the share price as the work in the field moves forward. The Company has a good story to communicate and an exciting future. Smallcaps Recommendation: BUY.
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