International Tower Hill Mines (TSX: ITH; NYSE-AM: THM) plans to raise US$10.3 million in support of a prefeasibility study on its Livengood gold deposit, 110 km north of Fairbanks, Alaska.
In July, the Vancouver-based company announced it had finalized the key contracts to complete a prefeasibility study on the large, low-grade Livengood project, with an expected release date of October 2021.
The three largest shareholders of the company have already taken their pro-rata share of the at-the-market offering - 5.7 million shares (or 3% of shares outstanding) at a closing market price of US$1.40 per share on Sept. 1. for a total of US$7.9 million.
Following the offering, Paulson & Co. will own 31.8% of Tower Hill's shares, with Sprott Asset Management holding 15.1% and Electrum Strategic Opportunities Fund II 14.2%.
The remainder of the offering - US$2.4 million - will be made through B. Riley as the sales agent, at its discretion. Shares will not be offered through the Toronto Stock Exchange.
"This capital raise was designed with shareholder interests in mind with minimal dilution (~4% of market cap) and being done at-market and not at a punitive discount," Marcelo Kim, the company's chairman, wrote in an email to The Northern Miner.
"This capital raise will help ITH fund the previously announced prefeasibility study and provide ample runway thereafter to continue to move the project forward. Despite the strong performance year-t0-date in ITH's stock price, ITH represents one of the most undervalued gold investment opportunities in North America. At current market prices, ITH trades at only $30 per reserve ounce and at only 37% of NAV at current gold prices."
At press time in Toronto, International Tower Hill was trading at $1.95 per share within a 52-week range of 42 ? and $3.07.
The project contains measured and indicated resources of 525.38 million tonnes grading 0.68 gram gold per tonne for 11.5 million oz. gold. The resource figure includes proven and probable reserves of 391.7 million tonnes grading 0.71 gram gold per tonne for 9 million oz. gold.
Livengood has had a number of economic studies, most recently a prefeasibility study in April 2017, which projected a $1.8-billion initial capex for a mine producing an average of 294,100 oz. gold per year over a 23-year life.
However, the project was not economic at the US$1,250 per oz. base case gold price. At that gold price, the study projected a net present value (NPV) of -$552 million at a 5% discount rate, an after-tax internal rate of return of 0.5%, and a payback period of 22.1 years.
- A version of this article first appeared in the Canadian Mining Journal.