In the junior resource world there is a model where a company takes a piece of ground, works on sampling, mapping and drilling and then sells the ground at a profit. It is a great model but it is rare for a company to actually be able to execute. Nicole Brewster, CEO of Renforth Resources (V.RFR), got the job done with the sale of Renforth’s New Alger project to Radisson Mining Resources (V.RDS).
It is an interesting deal. It combines two properties on the Cadillac Break creating the sort of scale which will appeal to a producer. It puts cash in Renforth’s till and it provides Renforth’s shareholders with an ongoing exposure to the upside of New Alger through both performance related additional payments and 12 million shares of Radisson which will be issued to Renforth.
Nicole puts the deal in perspective in one of her wonderful letters to shareholders which you can read here.
“This is a partnership. I understand it is a bit unusual in terms of deals, maybe not one you have seen before, but is an exciting and efficient way of doing things. It is in our best interest to be helpful to each other. For Renforth that means exposure to Radisson’s network of shareholders, contacts and relationships. Broadening the awareness of Renforth. A good thing. Employing new, innovative business practices in the mining sector – an even better thing!”
For Renforth shareholders the deal means that it will be a long time before Renforth will need to go back to the market for money which means no dilution. It also means that Renforth can focus on bringing its other properties along. Next up, drills will be turning at the Parbec project.