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After being halted for a couple of days, Mason Graphite (LLG:TSXV) got a nice surprise.  The company, which was running low on cash, announced an initial $8 million bought deal (which was subsequently raised to $10 million with an additional $1.5 million green shoe) with Ressources Quebec, a subsidiary of Investissement Quebec coming in for $3 million of it.

The deal was led by Macquarie Capital Markets who sold units at $0.65 (small discount to market) with a 2-year 1/2 warrant at $0.85.

About Ressources Quebec, Investissement Quebec says on their website: This Investissement Québec subsidiary develops strategic partnerships with companies that undertake projects involving resource exploration, development and processing in Québec. It supports foreign investors that present major projects and provides a range of business solutions to aid in their implementation. Ressources Québec also offers financing solutions and manages the Capital Mines Hydrocarbures fund.

Lac Gueret is one of the highest grade graphite projects being developed (Source: Mason Graphite)

Lac Gueret is one of the highest grade graphite projects being developed (Source: Mason Graphite)

With this mandate, I would expect this backing to help the company in their capital raise for the full-scale construction of the Lac Gueret mine which is currently estimated to cost $80 million.

As part of the release, the company also indicated they are working on an additional $4 million strategic investment by one or multiple institutions.  They are working to finalize this.

Overall, the company is now fully financed to proceed through the next phase of development on their high-grade Lac Gueret project; primarily the completion of a feasibility study and environmental baseline studies.

They expect to complete the Environmental Social Impact Assessment by Q2/2014 and to have their Certificate of Authorization by Q1/2015.

With the completion of the feasibility study they will have to pay Cliffs Natural (who they acquired Lac Gueret from) a $2.5 million cash payment.  There is an additional $5 million payment due upon commercial production.  After that they will own 100% of the project with no other legacy costs or royalties.

Read: Mason Graphite Announces Increase to Bought Deal Private Placement Offering

 

Disclaimer: Please read Mason Graphite's cautionary note regarding forward looking statements carefully, which can be found on slide two of their corporate presentation. I own shares in Mason Graphite and they are a client which makes me biased. This is not investment or professional advice and you are responsible for your own trades. Please see our full disclaimer. Thank you.