www.scminerals.com
Sacre-Coeur Minerals Ltd. (TSX-V: SCM) is a Canadian Junior Mining company engaged in the acquisition, exploration and production of gold and other metals in South America. The company is currently focused on its gold properties in Guyana, a miner-friendly country with a stable government where the Company holds 100% interest in approximately 978 square kilometers of mineral concessions.
Sacre Coeur to raise $2.2m to jumpstart drilling after Severstal deal falls through
Sacre Coeur Minerals (CVE:SCM) announced today that it will raise up to C$2.2 million through a private placement offering - a source of much needed capital after the company's takeover offer from Russia's largest steel producer Severstal (LON:SVST)(RT:CHMF) was terminated last week.
As a result Severstal's cancellation, South-America focused Sacre Coeur was forced to undergo a review of all aspects of its operations, as the protracted deal (delayed several times by Severstal) exhausted the company's liquid assets.
Sacre Coeur's stock has plummeted from its $1.11 close last Thursday, the day before the cancellation, to its current level of $0.58.
On a conference call last night, Sacre Coeur chairman Irwin Olian stressed that the financing was of "critical importance" at this time in order to meet the goals set out for 2011.
In the notice received from Severstal last Friday, the Russian company cited "failure of due diligence to their satisfaction" as the reason for the cancellation of the $77million acquisition.
The conditional agreement between the two companies, signed back in September, was originally supposed to close in November. Earlier this month, Sacre Coeur granted Severstal a two week extension to complete due diligence. Allegedly, Severstal said that the large-scale potential of Sacre Coeur's operations was not sufficient at the time to lend enough value-add to the large company.
Severstal had been planning an IPO on the London Stock Exchange, but the listing was cancelled a day before the notice to Sacre Coeur was received.
With the new proceeds from the planned offering, expected to close within two weeks, Olian said his company plans on kick starting an aggressive exploration campaign on its Million Mountain property in Guyana, with 15,000 metres of drilling anticipated in the next seven to eight months.
Geophysical surveys on the property conducted last fall identified three prime target areas adjacent to the current resource body, hoped to "exponentially" increase resources in a planned updated estimate.
Under the terms of the proposed financing, Sacre Coeur will offer 4 million units at C$0.55 per unit. Each unit will consist of one common share, and one half warrant, with each whole warrant allowing the subscriber to purchase one additional share at C$0.75 for a period of two years from closing. The private placement deal also includes an option to increase the size of the offering by up to 20% to a maximum of 4.8 million units.
Olian stressed that the offering was for a relatively minimal amount of shares so as to protect share capitalization.
"We are prepared to move ahead on all fronts without Severstal. What appears to be a disappointment may actually prove to be a very positive development in the long term," he said.
Severstal was actually an existing shareholder at the time it made the unsolicited offer for Sacre Coeur, but it is not known whether it is still a stakeholder. Sacre Coeur said that it remains open to discussion with other prospective partners that could add shareholder value.
