After being fairly quiet for the last couple months, American Eagle Gold (TSX-V:AE, OTC:AMEGF) has delivered a straight flush of news releases for investors this week. On Monday morning, American Eagle announced an investment by Teck Resources (NYSE: TECK) via a structured flow-through financing on a private placement basis. American Eagle will issue 14.4 million shares on a flow-through basis at $.205 per share, and Teck will acquire the back end at $.13 per share. This is a charity flow-through financing that will make Teck a 15% shareholder of American Eagle.
The Teck financing news is decidedly positive for American Eagle as the company will now be able to expand its summer drill program at the NAK Project to a minimum of 6,000 meters. In addition, Teck is a strong shareholder that is unlikely to be looking to exit its investment any time soon. The fact that American Eagle was able to secure a nearly 100% premium, with no warrants for finders fees speaks volume to the quality of the NAK property. I suspect Teck wasn’t the only company looking to strategically invest in American Eagle.
This morning, American Eagle followed up with an announcement that it has received its drill permit for the NAK Copper-Gold Project in north-central British Columbia, Canada. The permit will be in effect for five years with a provisional expiry date of March 31, 2028. American Eagle expects the 2023 drill program at NAK to commence in the coming weeks.
The main objectives of AE’s 2023 drilling will be:
- Follow up the 2022 drill program via east-west step-out drilling and begin to delineate the true size of this potential deposit
- Expand and better define the orientation and distribution of the higher-grade zones of dyke-hosted bornite mineralization
- Expand the known footprint of the high-grade at-surface south gold zone
- Step out and investigate the highly prospective southern margin of the main Babine stock porphyry
In an interview with Proactive Investors earlier this week, American Eagle CEO Anthony Moreau highlighted Teck’s due diligence process and the focus on the copper-rich bornite-bearing dykes that Moreau says is the key to add scale at NAK:
The market has begun to take notice of the Teck news while also appreciating the potential of this summer’s drilling at NAK, AE shares are up ~50% so far this week:
The overall market turmoil in March (banking crisis), in combination with the market’s concern that AE would require additional financing for summer drilling, resulted in a fantastic opportunity to pick up AE shares on the cheap. Financing has now been solidified, drill targets at NAK have been optimized, and drilling is expected to commence by the beginning of June.
It is important to note that American Eagle had C$1.5 million in cash on hand before the financing. With Teck’s investment, American Eagle has the flexibility to increase the 2023 exploration program beyond the current C$2.5 million budget. I believe that AE shares offer an attractive drill play speculation, based on the anticipation of 2023 drilling at NAK and the removal of near term financing uncertainty.
Disclosure: Author owns AE.V shares at the time of publishing and may choose to buy or sell at any time without notice.
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