OMF Fund IV SPV C LLC, which is managed by Orion, purchased 6,666,667 shares of Dakota Gold common stock at US$2.55 per share and owns about 7.78% of the company.
Dakota Gold is exploring the 46,000 acres it has acquired and consolidated over the past decade surrounding the Homestake Mine. Industry giant Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) also backs the company.
Once called the "Richest 100 Square Miles" on Earth, the Homestake Mine was discovered in 1876 and consolidated by George Hearst. Over 126 years, miners extracted 41 million ounces gold (Moz Au) and 9 Moz silver (Ag) from the site.
But much of the land owned by Dakota Gold has not been explored in nearly 30 years, leading some to hope there's still room for a major discovery there.
Last summer, the company announced that partial assay results had extended its JB Gold Zone discovery at Maitland by 171 meters.
The Catalyst: Ledges Could Lead to Riches
The JB Gold Zone could be the company's "most significant discovery to date," Canaccord Genuity analyst Peter Bell noted.
Assay results there "suggest a thickened zone of mineralized iron formation, similar to the 'ledges' mined in the old Homestake Mine," Bell wrote. "If additional drilling demonstrates JB is a new ledge, we believe Dakota could quickly advance it from initial discovery to a substantial, high-grade deposit."
Dakota Gold Vice President Exploration James Berry called the grades "analogous with the mineralization encountered at the Homestake Mine."
"With every new intercept, we have increased confidence that we have identified another Homestake Ledge system at Maitland," he said.
Some analysts believed finding the ledges would open the system to more large returns.
"Once high-grade mineralization was found in a hinge (or ledge), the miners were able to follow it down plunge, extracting material amounts of gold," wrote Canaccord Genuity analyst Michael Fairbairn about the old Homestake Mine.
Up to US$300M Financing
Orion has agreed to provide up to US$300 million of financing support to Dakota Gold for construction and development, following certain milestones or to acquire new assets.
Orion shall be granted a right to match the terms of future financing undertaken by Dakota Gold, according to the terms.
This does not include any equity or convertible debt offering conducted by the company on a non-brokered basis or conducted by banks or brokers with aggregate proceeds of up to US$200 million (of which no more than US$50 million may be in the form of unsecured convertible debt), including equity issuances from Dakota Gold's at-the-market offering program.
The two companies also will enter into an agreement for a 1% net smelter returns royalty over certain parts of Dakota Gold's public land administered by the U.S. Forest Service or Bureau of Land Management. The royalty excludes the company's private land, including its Maitland and Richmond Hill projects, Dakota Gold said.
Dakota Gold will receive a total consideration of US$1 million for the royalty, with US$75,000 paid at closing and the remaining US$925,000 paid by Orion based upon the achievement of certain development milestones.
"Robert Quartermain, Dakota Gold's Co-Chair, and I have worked with Orion previously, and we welcome the opportunity to continue our relationship with Orion, a respected investor and lender in the mining industry," said Dakota Gold President, Chief Executive Officer and Director Jonathan Awde.
More than 1 Mile in Strike Length
At Dakota's Richmond Hill project, recent assay results extended the mineralization of the system, already described as more than 1 mile in strike length.
Drill hole RH23C-016 intersected 3.5 grams per tonne gold (g/t Au) over 23.7 meters. When length was weighted, it had an average grade of 0.95 g/t Au over the 306.9-meter drill hole.
What do those numbers mean? According to Stockhead, 1 g/t Au can make an open-cut project viable, while anything over 5 g/t Au is considered high-grade.
"A tip for investors, therefore, is to consider a company's average grades and look for drill cores that 'start and end in mineralization' rather than buying shares on just one excellent drill core result," the website noted.
Streetwise Ownership Overview*
Ownership and Share Structure
According to the company, approximately 25% of its shares are with management and insiders.
Out of management, Co-Chairman Robert Quartermain holds the most shares at 8.5% or 7.34 million shares, Reuters said. President and CEO Jonathan Awde is next at 6.8%, with 5.93 million, while COO Jerry Aberle holds 4.8%, with 4.2 million. The remainder of the 25% is held by other members of management and the board of directors.
About 26% of the shares are with institutional investors, according to Yahoo Finance. A few of the top institutional holders include Van Eck Associates with 3.4%, Blackrock Institutional Trust Co. with 3.4%, CI Investments, Inc. with 3.0%, The Vanguard Group Inc. with 2.9%, Fidelity Management and Research Co. LLC with 2.9%, and 1832 Asset Management LP with 1.6%.
About 16.5% is with strategic investors, including Orion Mine Finance, which owns 7.7%, Marin Katusa and KCR LL who together own 4.2%, Barrick Gold Corp., which owns 2.5%. The rest is retail.
Dakota Gold has a market cap of US$235 million, with 86.7 million shares outstanding. It trades in a 52-week range of US$4.03 and US$2.36.
- Dakota Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Dakota Gold Corp. and Barrick Gold Corp.
- Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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