Leagold (LMC.V) put the icing on its acquisition cake when the company announced today that it had wrapped up a massive subscription receipt offering for aggregate total gross proceeds of $175.0 million.

According to the news release, 63.64 million subscription receipts were issued at $2.75 per receipt in order to partially fund the company’s recently announced acquisition of Goldcorp’s (G.T) Los Filos mine located in Mezcala, Guerrero, Mexico.

Proceeds will be held in escrow pending completion of the acquisition.

Leagold continues to pursue other elements of its financing plan for Los Filos, specifically the US$150.0 million five-year term loan and US$50.0 million equity private placement which is intended to be undertaken at an issue price of $2.75 per common share.

Leagold was created last August to become a leading mid-tier producer utilizing the same “buy and build” strategy employed by Endeavor Mining when it ascended to become a dominate gold producer in West Africa.

To carry out that strategy, Leagold CEO and Director, Neil Woodyer, the very same gentlemen who led Endeavor Mining to success, has surrounded himself with other key members of the Endeavor family.

The Los Filos deal provides a cornerstone from which Woodyer and his team can work their magic, building a strategic portfolio of small and mid-sized dislocated or non-core assets in Latin America.

The transaction also serves both parties well.

Los Filos no longer fits within the Goldcorp portfolio and the $438 million-dollar sale to Leagold will help Goldcorp fill its coffers while still securing a majority interest in Leagold going forward.

David Garofalo, President and CEO of Goldcorp, affirmed, “”The divestiture of Los Filos is consistent with our strategy of focusing on our core camps to drive increasing net asset value per share. We thank the team at Los Filos for their commitment and dedication and we wish them continued success as part of Leagold.  We will work closely with the team at site to ensure a smooth transition and look forward to working with Leagold to continue to add value at Los Filos.”

In Los Filos, Leagold gets the Los Filos open pit mine, the 3rd largest gold mine in Mexico, the El Bermajal open pit mine, as well as an underground mine at Los Filos.

Gold production at Los Filos totalled 272,900 ounces in 2015 and 194,000 ounces have been produced in the first nine months of 2016. With optimization strategies and the possibility of developing an underground mine at Bermejal, those numbers may increase substantially.

The Los Filos open pit mine began commercial production in 2008 and as it stands there is an 8-year mine life at Los Filos which is expected to produce 1.256 Moz gold at an average AISC of US$803 per ounce.

According to a December 2016 report including the Bermejal open pit and underground mine, the Los Filos open pit and underground mine there is a measured and indicated mineral resource total of 422.5Mt at 0.85 g/t containing 11.5 Moz gold.

All that’s left for Leagold is to execute on its plans for Los Filos, but does the company have the commitment to follow through?


Management at Leagold have a considerable interest in seeing this through as the executive team and Board control approximately 32% of the company’s share base.

Since the company put on a voluntary trading halt today before the news came out, we didn’t get to see the impact on SP. I am sure that as trading opens up once again, Leagold shares will probably experience a significant bump.



FULL DISCLOSURE: Goldcorp and Leagold are NOT EQUITY.GURU clients, I just wish they were.





Written By:

Gaalen Engen

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