Detour Gold returns to the market

Talk about a blot on its copybook.

For about three and a half years ended mid-2012, Detour Gold Corp. could do no wrong in the eyes of its employees who were beavering away on building what is slated to be the country’s largest gold mine located in northeastern Ontario.

Detour’s investors were also more than happy over the same time period as their investments continued to grow in value.

And so were the investment bankers who during that period, helped the company continue to finance at higher prices: from $12.10 a share for an equity issue in mid-2009, it subsequently raised capital at $14.25 (October 2009); $24 (June 2010); $29.75 (July 2011); $28 (January 2012) and $26.50 (November 2012)

Then came the end of the commodity boom, or talk about the end of the commodity boom, the free fall in the price of gold – and the hard times for its owners. The workers are still beavering away.

The stock has since fallen to levels not seen since late 2008.

On Tuesday Detour Gold returned to the market with a $153-million offering via the sale of 17.5 million shares a $8.75 a share.

At $8.75 the shares were priced at a healthy discount to the then trading price of $9.23. The financing was organized a few days after the stock hit a six-month low.

In a release, Detour said that it “intends to use the net proceeds of the offering for working capital during the ramp-up of the Detour Lake mine and for general corporate purposes.”

Similar language was used in early January when Detour raised $113.95-million. Back then Detour said that “the company intends to use the net proceeds of the offering for working capital during the ramp-up of the Detour Lake mine and for general corporate purposes.”

Between that financing and Tuesday’s, Detour also closed a $135-million senior secured credit facility made up of a $90-million revolver and a $45-million letter of credit facility. At the time, Detour said that the facility is “for a tenor of three years and is available for working capital during the ramp-up period, financial assurance and general corporate purposes.”

Accordingly about $400-million has been raised for activities all of which include the ramp-up period.