Guanajuato Silver to raise $31M for Mexican mine operations

[Redator]

Guanajuato Silver Company (TSXV: GSVR) is looking to raise as much as C$43 million ($31 million) in a bought deal public offering to support its Mexican mine operations. However, its shares dropped nearly 15% on the news.

The company initially announced that it planned to raise C$30 million through the sale of 60 million units priced at C$0.50 each, but later increased the offering to C$43 million (87 million units) due to strong demand.

The units each carry one common share and one-half of a common share purchase warrant, with each whole warrant exercisable at C$0.65 per share for three years.

Guanajuato Silver’s stock traded at C$0.46 with a market capitalization of C$253.7 million ($182 million) by midday Wednesday following the financing announcement, having closed the previous session at C$0.54 a share.

In its press release, the Vancouver-based company said the proceeds will go towards sustaining and development capital for its four operating mines in Mexico. It currently produces silver and gold concentrates from the El Cubo, Valenciana and San Ignacio mines located in the state of Guanajuato, as well as silver, gold, lead and zinc concentrates from the Topia mine in northwestern Durango.

In August, Guanajuato closed an C$18 million private placement, issuing units at C$0.30 apiece. The funds, it said, would be used to upgrade its underground mining fleet and three processing facilities. Last month, the company announced the planned upgrades at the El Cubo mine and the Valenciana complex.