In a July 16 research note, Laurentian Bank Securities analyst Jacques Wortman reported that Troilus Gold Corp. (TLG:TSX; CHXMF:OTCQX) generated about US$11.15 million from a now closed financing with the Quebec government and Fonds de solidarite des travailleurs du Quebec (FTQ).
"We view this investment as important as it: 1) further aligns the government of Quebec with the Troilus project, 2) follows extensive technical, financial and social due diligence, and 3) represents a de-risking milestone as [Investissement Quebec] and other Quebec-based institutional shareholders are defining and establishing project financing options as part of the process," Wortman wrote. The Quebec government now owns an estimated 5.2% of Troilus Gold.
The analyst reviewed the terms of the non-brokered private placement. The financing was done with Investissement Quebec through Fonds Capital Ressources Naturelles et Energie, FTQ and Fonds regionaux de solidarite FTQ, S.E.C.
In this financing, the terms of which were the same as those of the recent bought deal financing, 10,136,359 units were purchased at US$1.10 apiece. Each unit consists of one common share and one-half of one common share purchase warrant. With each full warrant, for 24 months, the holder may purchase one common share for US$1.50.
Wortman noted that Troilus Gold plans to use the proceeds for engineering and feasibility study work on its namesake project, for working capital and for general corporate expenses.
Also, the financing dilutes the net asset value (NAV) Laurentian Bank has on the project and on Troilus Gold, Wortman indicated. However, the fact that it significantly de-risks the project warrants a reduced discount rate. The firm adjusted its model accordingly.
Laurentian has a Buy rating and a CA$3.30 per share target price on Troilus Gold. The stock is now trading at about CA$0.87 per share.
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures from Laurentian Bank Securities, Troilus Gold Corp., July 16, 2021
Laurentian Bank Securities Inc. and/or its officers, directors, representatives, traders, analysts and members of their families may hold positions in the stocks mentioned in this document and may buy and/or sell these stocks on the market or otherwise.
The Research Analyst's compensation is based on various performance and market criteria and is charged as an expense to certain departments of Laurentian Bank Securities (LBS), including investment banking.
Laurentian Bank Securities Inc. may, in exchange for remuneration, act as a financial advisor or tax consultant for, or participate in the financing of companies mentioned in this document.
The analyst(s) certify that (1) the views expressed in this report in connection with securities or issuers they analyze accurately reflect their personal views and (2) no part of their compensation was, is, or will be directly or indirectly, related to the specific recommendations or views expressed by them in this report. The Research Analyst's compensation is based on various performance and market criteria and is charged as an expense to certain departments of Laurentian Bank Securities (LBS), including investment banking.
Within the last 24 months, LBS has undertaken an underwriting liability with respect to equity securities of, or has provided advice for a fee with respect to, this issuer.
The Analyst has visited material operations of this issuer.
This issuer paid a portion of the travel-related expenses incurred by the Analyst to visit material operations of this issuer.
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