Chinese fail to complete financing with Acadian Mining
An $8.1 million financing appears to have fallen through for Acadian Mining as China Metallurgical Exploration misses a July 17 deadline.
Author: Kip Keen
Posted: Monday , 20 Jun 2011
HALIFAX, NS - -
Junior Acadian Mining (TSX: ADA) had expected a C$8.1 million cash infusion by June 17, 2011, from China Metallurgical Exploration (CME), the Canadian subsidiary of Chinese state-owned Zhengyuan International Mining. But the financing appears to have hit a serious snag as Acadian Mining, a Nova Scotia-focused gold explorer, reported it had not received proceeds by deadline and that, for the time being at least, all bets were off.
Acadian stated: "The parties may elect to initiate new discussions with regard to an investment by CME in Acadian in the future, but at the current time no agreement is in place."
Details as to why the financing had not come through were scant, and, as of presstime, inquiries by telephone and email Monday morning had gone unanswered. Acadian Mining said while CME had completed due diligence it "was not able to complete the remainder of the conditions precedent to the proposed private placement by June 17, 2011."
Acadian Mining and CME struck the deal in February and had slated the end of April for it to close, by which time CME was to finish its due diligence process, put together formal documentation and receive regulatory approval from the Chinese government.
The deal appeared on track in early May when Acadian Mining said CME had completed due diligence "activities to its satisfaction." Passed the deadline as it was, Acadian Mining announced the two companies had agreed to extend the April deadline to June 17.
Now with the private placement agreement dead in the water Acadian Mining will have to do without the anticipated $8.1 million, but the effect on its treasury does not appear to be dire. At the end of May it paid off an outstanding debt to a supplier and at the beginning of June Acadian Mining closed on the $10 million sale of its ScoZinc project to Selwyn Resources for C$10 million.
The private placement would have also led to a major change in Acadian Mining's ownership structure as, warrants aside, CME would have ended up with about 25 percent of the company and seats at the board table. The agreement had been for 18 million units at $0.45, with each unit comprising one share and half a warrant.
It would have been the biggest change to Acadian Mining's ownership since Golden River Resources, headed up by Joseph Gutnick, a well-known Australian mining and exploration financier, swooped in to take a 68 percent stake in the company for C$10 million in 2009. In subsequent financings Golden River's ownership has tipped over the 70 percent mark.
Golden River came on board after Acadian Mining, which blamed lead and zinc prices, had a difficult time making a go of lead and zinc production at ScoZinc. Since then the focus has increasingly turned to Acadian Mining's gold properties, where so far indicated resources stand at 625,000 ounce
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