Nord Gold majority owner of Northquest
CEO expects takeover bid from Russian company
Karen K. Ho
Northern News Services
Monday, November 30, 2015
TIKIRARJUAQ/WHALE COVE
A Russian company has become the majority shareholder of Northquest Ltd, the Toronto-based gold exploration company behind the Pistol Bay gold project in Nunavut.
Northquest president and CEO Jon North confirmed to Nunavut News/North that the majority shareholder of his company is now Nord Gold, a gold mining company headquartered in Moscow.
The move comes after an announcement on Nov. 26 stating the Russian company's ownership stake of Northquest increased to 52.9 per cent after it had exercised its ability to purchase shares at a predetermined price through warrants.
The total proceeds of the 17.5 million warrants, which allowed for the purchase of Northquest shares varying between 24, 27 and 30 cents per share, was slightly more than $5 million.
Prior to this move, Nord Gold's stake in the Canadian company through issued and outstanding common shares was 42.9 per cent.
Northquest president and CEO Jon North confirmed that by doing so, Nord Gold has also triggered a clause in a previously made subscription agreement that states the Russian company now has to make a takeover bid due to this increased ownership position.
"We had an agreement that if they went over 50 per cent they had to make a formal takeover offer for the minority shareholders, at a price which was the greater of 25 cents a share or the 20-day view," he told Nunavut News/North.
North also said that there was no time limit to this term of the agreement.
The Pistol Bay gold project is located near Whale Cove.
The day the deal was announced, shares of Northquest on the Toronto Venture Exchange (TSX-V: NQ) closed at 25 cents per share, up 5 cents or 25 per cent.
Even though Nunavut is expected to have the highest amount of exploration spending among the three territories, North said the money being spent is primarily due to two other companies.
"That's because of TMAC (Resources) and Agnico Eagle," he said on Nov. 25 in the Capitol Theatre during this year's Yellowknife Geoscience Forum. "They're drilling tens of thousands of metres of exploration drilling every year, that's millions and millions of dollars."
North said his company spent $4 million, which led to the company's latest results published last week from its Pistol Bay Gold project in the territory.
While there is some nervousness about investing due to the current low commodity prices, North said long-term thinkers are less focused on what's going on right now and what companies like his are doing in the future.
"We're not going to produce gold tomorrow from Pistol Bay, TMAC is not going to produce gold tomorrow from Hope Bay and Meadowbank's total cash costs are $600 to $700 an ounce, that's still a profitable mine," he said, adding that commodity prices and investor sentiment, while currently low, are cyclical in nature. "Long-term thinkers will win. We'll be fine."
As for the next six to 12 months, North said his company has already completed next year's sealift shipments.
"We could go into camp right now, start the generator and helicopters," he said.
North said Northquest has to finish publishing more results from its drilling over the next six months.
"We also have to interpret results," he said. "Technical results like that aren't really understood (he snaps his fingers) like that, by everybody."
Last week, Northquest announced it had found a second gold-bearing point at its Vickers Zone at the Pistol Bay project. The results show 39 metres of drilled rock with a grading of 2.7 grams of gold per tonne.
In the news release, North stated the drill holes extended the strike length of the Vickers gold zone by 150 metres, for a total strike length of 600 metres. This means the length and direction of a previously noted gold zone was increased by 33 per cent from the company's latest drilling results. North said a newly discovered area containing visible gold was intersected in all four drill holes in the eastern extension of the Vickers gold zone.
The president of Northquest said knows his latest news release about the results from 18 drill holes is really difficult understand. One day after the drilling results were released to the public, North said he'd already received many calls asking him what exactly the measurements mean for the future of the company.
Things such as hiring and additional work also heavily depend on North's ability to raise money. He said he's open to different methods of fundraising approximately $5 to $10 million for next year. But he has to finish publishing those results from Pistol Bay first.
"You can't raise money while you're in possession of information," he said. "I think we'll have all of them published by Christmas and then in January we'll start marketing for the next financing."
