Carpathian Gold (TSE:CPN) managed to rake in the cash it said in June it needed to complete construction if its 100% owned Riacho dos Machados gold mine in Brazil.
Given the tough financing environment for juniors, those developing gold projects in particular, for Carpathian to secure the final $19 million to start pouring as early as next month seemed like something of a victory.
But the details of the deal and investors' reaction to it show just how harsh the realities of junior mining has become.
All the bad news were supposed to have been baked into Carpathian's stock price already.
The Toronto company in June let the market know costs are going up and expected production for this year is going down and was duly punished for it.
Yesterday's deal saw the counter take another gap down on very heavy volumes crashing 26%.
Not entirely surprising considering the bought deal financing was concluded at a price that much below the ruling price.
Comparing yesterday's private placement with a similar deal done in November 2011 which was led by the same parties – Cormark Securities and Macquarie Capital Markets – shows just how much things have changed.
Now: $16 million plus $3.4 million option at 14c vs 19c the day before the announcement.
Then: $46 million at 40c vs 46c before the announcement.
The discount has doubled.
It's not as if RDM is not an attractive asset. $176 million gets you 100,000oz for eight years at cash costs of $560 according to the company.
But these days that just isn't good enough.
As an aside, in July 2011, Carpathian also raised $20 million from none other than Barrick Gold for a project in Romania. Barrick stumped 52c per Carpathian share at the time.
But those were very different days indeed, especially for Barrick.