Talon Metals Corp. (TSX:TLO) announced that it has struck an agreement with a syndicate of underwriters led by TD Securities Inc, following which the underwriters have agreed to buy, on a bought deal basis, 38.20 million common shares at a price of $0.72 per share for gross proceeds of around $27.5 million.
The base metals company said it intends to use the net proceeds from the offering and a co-existing private placement to advance a planned exploration and development program at the Tamarack North project in central Minnesota, and for general working capital purposes. Talon is in a joint venture with Rio Tinto on the high-grade Tamarack nickel-copper-cobalt project.
The Tamarack project comprises a large land position (18 kilometers of strike length) with high-grade intercepts outside the current resource area. Talon has an earn-in right to acquire up to 60% of the Tamarack project, and currently owns 51%.
READ: Talon Metals shares fly after landmark agreement with Tesla to supply nickel concentrate
Meanwhile, Talon has granted the underwriters an over-allotment option to buy up to an additional 5.73 million shares at the issue price, exercisable in whole or in part at any time up to 30 days after the closing of the offering.
Concurrently with the closing of the offering, Talon intends to complete a non-brokered private placement of around $6.4 million of shares at the issue price with Pallinghurst Nickel International Ltd. On closing the private placement, Pallinghurst, will maintain its ownership of around 19% in the corporation.
Talon said that should the over-allotment option be exercised, Pallinghurst shall have the option to buy such additional shares under the private placement as to allow Pallinghurst to maintain around 19% ownership of shares of the corporation following the exercise of the over-allotment option.
The offering and the private placement are expected to close on or about January 31, 2022. Both are subject to standard conditions and require the approval of the Toronto Stock Exchange. Closing the offering is not conditional upon the concurrent closing of the private placement, noted the company.
The securities to be issued under the offering will be offered by way of a prospectus supplement that will be filed in each of the provinces of Canada other than Quebec under Talon’s base shelf prospectus dated December 7, 2021, and may be offered for sale in the US to qualified institutional buyers.
Talon has an agreement with Tesla Inc (NASDAQ:TSLA) to supply it with 75,000 metric tonnes of nickel in concentrate and certain by-products, including cobalt and iron from the Tamarack Nickel project over an estimated six-year period once commercial production is achieved.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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