Vancouver junior surges after Goldcorp injection

Shares in Auryn Resources Inc (TSE:AUG) jumped more than 15% on Monday, after the company announced an investment agreement with Goldcorp which will see the Vancouver-based giant take a 12.5% stake in Auryn for C$41.2 million (roughly US$31 million).

During lunchtime trade the Vancouver-based junior was exchanging hands at $3.56 a share, up 16.7% on the TSX exchange in heavier than usual volumes. Auryn is now worth $240 million in Toronto where it listed in October last year. gaining 20.3% year to date.

The 2017 program will include a planned 55,000 meters of exploration drilling across six projects in Canada and Peru

In a statement, Auryn said that the companies have also "entered into an Investor Rights and Obligations Agreement whereby, as long as Goldcorp maintains a 5% or greater equity ownership interest in Auryn":

  • Goldcorp will have the right to participate in future Auryn equity issues in the amount necessary to maintain up to a 12.5% interest;
  • Goldcorp will have a right to match certain non-equity financings; and
  • If Goldcorp chooses to sell more than 2% of Auryn’s shares, Auryn will have the right to designate buyers and Goldcorp will vote its shares to elect the Auryn recommended director nominees.

An aggregate of 4,590,818 common shares will be issued to third party investors through a brokered private placement offering conducted by a syndicate of agents led by Beacon Securities Limited as flow-through shares at a price C$5.01 per flow-through share, the terms of which provide that Auryn will renounce the income tax benefits of the Canadian Exploration Expense related to the expenditure of the proceeds of those shares to those third party investors. Accordingly, gross proceeds to be received by Auryn will be C$41,158,911.46 consisting of C$18,172,313.28 in direct share subscriptions and C$22,999,998.19 in flow-through dollars through third parties. Goldcorp’s cost of the 9,542,402 common shares will be C$35,020,615.34.

Shawn Wallace, President and CEO af Auryn said the deal is expected to close this month and Auyrun "is now fully funded to complete one of the most extensive, globally significant exploration programs in 2017. The program will include a planned 55,000 meters of exploration drilling across six projects in Canada and Peru".

Wallace and Executive Chairman Ivan Bebek formed Auryn in 2013 with a technical and executive team drawn from Asanko Gold (formerly Keegan Resources) which brought its 190koz-a-year mine in Ghana to commercial production in April last year and Cayden Resources, sold to Agnico Eagle in 2014 for $205 million.