The Canadian gold explorer Sitka Gold (WKN A2JG70 / TSXV SIG) has had a remarkable run over the past 12 months. Both the ongoing gold price rally and the company’s consistently strong drilling results have contributed to this. Due to the successful work on the RC Gold Project in the Yukon, Sitka has now begun a drilling program that is larger than all previous ones combined. The company has long since secured the funds for this. Now, however, they are securing an additional 10 million CAD for long-term exploration of the project or to accelerate ongoing activities.
Specifically, as Sitka just announced, they are raising the fresh capital through a so-called bought deal. This means that a brokerage house / bank or a consortium of banks or brokers secures all 14,705,882 shares that Sitka is issuing, pays out the company, and then sells the shares afterwards. In our view, this is a good sign and a vote of confidence for Sitka – especially since such bought deals have hardly been observed in the market for resource explorers for a long time.
In Sitka Gold’s case, Beacon Securities has taken the lead of the consortium and will acquire the shares at 0.68 CAD per share. However, these are so-called flow-through shares, the proceeds of which can only be used for exploration and which provide a tax advantage to the buyers (exclusively Canadian). In any case, Sitka will receive gross proceeds of 10 million CAD from this financing, so that the cash box, which already contained more than 14 million CAD, is now well filled.
Greatly Increased Interest in the RC Gold Project
As Sitka CEO Cor Coe explains, interest in the company’s RC Gold Project has increased even further after the successful start – Sitka reported visible gold in 130 (!) locations in the first hole of the new 30,000-meter program. They are now taking the opportunity to provide the company with funds for long-term exploration of the promising project with its resource of already 2.8 million ounces of gold through the placement announced today – or the possibility to further expand or accelerate planned activities. The financing announced today is expected to close on or around April 16.
Sitka had last completed a flow-through financing in November 2024. At that time, the company had issued 9,802,000 flow-through shares at 0.51 CAD per share, raising approximately 5 million CAD gross. While the current bought deal of course also means further dilution, unlike many other explorers, this is now happening at a significantly higher price.
