After more than doubling its stake in the Inmaculada joint venture in Peru with International Minerals yesterday, Hochschild Mining (LSE: HOC) said Thursday it has agreed to sell a part of its shares in Lake Shore Gold (TSX:LSG) for proceeds of around C$392 million.
The move suggests that Hochschild is not actually planning on acquiring Lake Shore as many in the industry had previously thought, as the deal will leave Hochschild with only around 5.7% of the company.
A syndicate including RBC Capital Markets, BMO Capital Markets and CIBC World Markets, will purchase 109 million common shares of Lake Shore from Hochschild at a price of C$3.60 per share, on a bought deal basis, for sale to the public.
The offering is expected to provide Hochschild with funds of C$392.4 million, prior to the payment of expenses and underwriting fees. None of the proceeds will be received by Lake Shore Gold, the company said.
Yesterday, Hochschild more than doubled its stake in the Inmaculada partnership with International Minerals (IMZ) from around 30% to 60% - a possible reason why Hochschild decided to sell its shares in Lake Shore to raise money.
Under the terms of the new Inmaculada agreement, Hochschild is required to pay IMZ US$15 million in cash on closing, and invest another $20 million in IMZ through a private placement. The company also must provide 100% of the initial $100 million of funding required for the development and construction of a mine at the Inmaculada property.
Closing of the Lake Shore sale is expected to take place in early November.
Disclosure: no positions