This has been quite a week for Compass Gold. Our small team has worked flat out to complete a major financing that will significantly boost our ability to accelerate our Small Mine Strategy, not just at Massala, but at other top priority targets across our huge holdings of drill-tested gold targets.
The financing, a brokered LIFE Offering, led by Canaccord Genuity, adds financial strength as well as bringing in high-quality new investors. A significant portion of the Canaccord book included five institutional investments from resource funds operating in Canada and the US.
The original target of $5 million was expanded, in part due to the strong demand from our existing shareholders. Most of our largest shareholders participated, as well as many who had been contributing over the last few offerings.
Going forward, we plan to work with Canaccord to build greater awareness and participation throughout the full Canaccord network in Canada, the UK and Australia. There are a number of events and opportunities we are reviewing to share our news and updates in a way that can increase demand and trading liquidity. But rest assured, our primary focus will be on the ground in Mali. Our objective is clear: to receive our Small Mine Permit, get our Massala project up and running and most importantly, generate free cash flow as quickly as possible.
We now have more than $5 million in the bank. Our entire team is anxious to advance our objectives using the funds carefully but effectively to achieve the best possible results at Massala and beyond.
One final word about some recent share trading. While it is not our practice to provide market analysis, I have received several inquiries from Compass shareholders regarding recent volume. Rather than providing individual responses, I will provide everyone with the same information. We do not have direct access to who sells or buys shares in the open market, or their reasons for doing so. What I can say is that in the days following our Financing announcement on February 3rd, our shares traded in the 18-20 cents range, a strong positive response to the news.
However, earlier this week, there seemed to be a significant number of shares being traded. We see this as a positive development and a reflection of the enhanced market interest in the Compass story by the general public. Investors see buying-in at current share prices as a solid capital appreciation strategy. And, as we heard recently at VRIC, strong industry voices (including Rick Rule) have advocated for retail investors to take some profits in a strong gold market. Many commentators have weighed in on the positive prospects of junior exploration companies, and indeed, I’ve heard from shareholders who are buying on the open market, including one shareholder who added well over a million shares over the past 10 trading days. We know that investors choose to move in or out of their positions based on a variety of factors: some will take a portion of their initial capital off the table to redeploy into other opportunities, which could partly explain the enhanced liquidity our shares have seen. What we know with certainty is that our largest shareholders participated in the LIFE offering and continue to support our direction.
I also received some questions about some coverage in the Globe and Mail about the creation of a Malian State-owned mining company, which was intended to manage Mali’s equity interests in gold mining companies. There may be some confusion about this new structure. This, in our view, is not a threat to our Small Mine Permit or strategy. The purpose of the State-owned company is simply to consolidate the existing Malian equity interests in the large operating mines. This company, which is led by a former Barrick employee, should produce efficient, expert management. Based on our Iamgold operating experience at Sadiola over nearly twenty years, we view this as a benefit for a large mine. It has no application to Small Mine operators. The new Mining Code is crystal clear—the State does not hold any equity interest. We will work with a simple production royalty, paid on export of the gold produced, and regular corporate tax applied to any company operating in Mali. Some of these provisions can be confusing, and we often see media reporting that adds to that confusion.
Finally, regarding our Massala Small Mine Permit, we remain confident about the timing we have reported: end of Q1 this year. I also want to make clear that our application follows our rights pursuant to the large, underlying exploration permit we have held and explored for several years. We have met our obligations under that exploration permit, so only Compass Gold has the rights to move from exploration to mining in this large defined area. This same system applies to all of our Compass permit areas, consisting of more than 1,000 square kilometres. These rights to ‘develop what you discover’ is an essential term of all Exploration permits and are fundamental to maintaining a healthy gold mining industry in Mali or any other country.
As we proceed, there will be lots of news to share with you and the broader market. We will work to provide clear, accurate updates as we progress towards our objectives.
As always, I welcome your questions and comments, and appreciate your interest and support.
Best regards
Larry Phillips