Friedland Finds $150M for DRC Developments and Answers Capital Concerns

POSTED ON May 20, 2014 BY Tommy Humphreys
CATEGORY Ivanhoe Mines, Robert Friedland, Stories,

(Today's financing represents a 9% discount to the close and a 25% discount to the last financing)

Only a few days after Robert Friedland's Ivanhoe Mines (IVN:TSX) released their first quarter 2014 report which drew concerns from reporters, investors and analysts, alike about an apparent capital crunch; the company announced today that it has secured a $125 million bought deal financing with an additional $25 million investment coming from Mr. Friedland, himself.

However, the money doesn't come cheap.

The financing is being led by BMO Capital Markets, CIBC and Macquarie and is being offered at $1.50 per unit or a 9% discount to today's close and a 25% discount to the last raise done in October 2013 at $2.00. Each unit comes with an 18 month, $1.80 full warrant. Mr. Friedland has committed to $25 million under the same terms, and has the option to participate up to 15% in the bought deal.

Given the price and the warrant, I'm sure BMO et al will not have an issue selling the shares.

For investors that have been waiting to get into this story...this could be the chance you've been waiting for.

The money will be used for Ivanhoe's development plans at Kipushi and Kamoa, their two giant and high-grade base metals projects, both located in the DRC. According to their most recent quarterly, Ivanhoe plans to use the money to develop the underground mine-access decline at the Kamoa copper project and for an underground drilling program at the Kipushi zinc project.

Ivanhoe's Platreef project was financed with a $2.9 billion valuation in 2011 with a Japanese consortium taking 10% of the project for $290 million. Note, at $1.50 per share, Ivanhoe's market capitalization equates to roughly $865 million (30% of the value the consortium put on Platreef alone). Of the investment, $145 million remains and is restricted for the Platreef project.

Expect weakness tomorrow as shares slide towards or below issue, although long-term investors are likely to add on this weakness.

Oh, and in case you forgot, this is only one of Ivanhoe's three world-class assets:

Read: Ivanhoe Mines Announces C$150 Million Equity Financing

Tommy Humphreys

Tommy Humphreys, 30, is an entrepreneur, investor and writer from Vancouver, Canada. He founded CEO.CA, a popular junior mining and Canadian finance blog, in 2012. He has been the president of Pacific Website Company Inc., a private marketing and web development company, since 2007. Tommy has authored articles for Globe and Mail, Financial Post and others. He speaks at select conferences. Reach him by email: tommy@ceo.ca. Follow him on Twitter: @TommyHump More →

Twitter: @tommyhump

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Tommy Humphreys

Twitter: @tommyhump

tommyhump@gmail.com

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