Cash-strapped Gabriel Resources Ltd. plans to raise up to US$20 million in a nonbrokered private placement to help fund its international arbitration fight with the Romanian government over the Rosia Montana gold project.
The company said Dec. 13 that it plans to issue up to 106,425,846 units at 24.75 Canadian cents apiece, with each unit comprising a common share and a warrant exercisable at 49 cents per share for five years.
Assuming the offering is fully subscribed and all warrants are exercised, the new shares would represent about 55.4% of the company's nondiluted issued and outstanding shares, it said. The financing is expected to close around Dec. 31, subject to approvals.
Company insiders are expected to subscribe to up to 55,213,059 units, or a little over half of the placement, the company said, without disclosing the identity of the insiders.
"We're not talking about who's involved at this point," Chief Commercial Officer Richard Brown told S&P Global Market Intelligence Dec. 13. Brown also confirmed that the financing would not create new controlling shareholders of the company.
Gabriel Resources said it needs funds to cover costs related to international arbitration where, through the World Bank's International Centre for Settlement of Investment Disputes, it is seeking US$5.7 billion in compensation from the Romanian government for halting development of the Rosia Montana project.
It is a costly battle for Gabriel Resources, accounting for a large share of its spending. For the nine months ended Sept. 30, Gabriel Resources reported C$16.5 million in costs related to the international arbitration.
Brown declined to comment on how 2019 legal costs would compare to 2018 legal costs.
Arbitration hearings are set to take place between Dec. 2, 2019, and Dec. 13, 2019, Gabriel Resources said in a recent filing.