Formation Metals gets C$10 million; Contact wraps first tranche; Reunion Gold eyes C$5 million

By Stephanie N. Rotondo

Portland, Ore., May 7 - Mining and resource companies dominated Friday's PIPE market, as some deals got done and others just started.

Among completed transactions, Formation Metals Inc. said it pocketed C$10 million from a private placement of units and a convertible debenture. The debt was sold to a single investor.

Meanwhile, Contact Exploration Inc. settled the first tranche of a C$3.5 million private placement of units. The company raised more than C$2 million in the first closing.

In new deals, Reunion Gold Corp. announced a plan to raise C$5 million via a private placement of units. The company is seeking the funding to strengthen its financial position.

Foundation Resources Inc. also brought a new deal, a C$3.52 million private placement of units. The company will conduct the financing in two parts, a brokered and non-brokered portion.

And GoldStone Resources Ltd. said it wanted to raise £2.13 million from a private placement of equity. The company has secured one investor for the deal.

Formation raises C$10 million

Formation Metals wrapped a C$10 million private placement of units and unsecured convertible debentures, according to a press release.

Formation sold the debentures to Coalcorp Mining Inc. The 18-month 12% debenture is convertible into common stock at an initial conversion price of C$1.50.

And, the company also issued 1.33 million units at C$1.50 each. The units held one common share and one half-share warrant. Whole warrants are exercisable at C$1.60 until May 6, 2012.

"We are pleased to be able to conclude this interim financing," stated Mari-Ann Green, chief executive officer, in the release. "With stage 1 timber clearing recently completed at the Idaho Cobalt Project we are eager to continue with stage 2 construction. These funds will provide capital to further prepare the mine site and provide working capital as we continue to evaluate the most favorable project construction financing options."

Formation's equity (Toronto: FCO) gained a cent, or 0.81%, to C$1.25. Market capitalization is C$42.8 million.

Formation Metals is a Vancouver, B.C.-based metals mining and refining company.

Contact wraps first tranche

Contact Exploration closed on the first tranche of its previously announced C$3.5 million private placement of units, the company said in a press release, taking in C$2.24 million.

The non-brokered deal originally priced April 13.

The Calgary, Alta.-based company is selling 43.75 million units - 27.99 million of which were issued in the first closing - at C$0.08 each. The units consist of one common share and one warrant, which is exercisable at C$0.12 for two years.

The company expects one or more closings to occur before May 11.

Proceeds will be used for the development of the Stoney Creek oil field in New Brunswick, as well as for continued exploration and development.

The company could not be reached for comment on Friday.

Contact's stock (TSX Venture: CEX) closed unchanged at C$0.13. Market capitalization is C$8.16 million.

Reunion seeks C$5 million

Reunion Gold intends to raise C$5 million via a non-brokered private placement of units.

The company will issue 50 million units at C$0.10 apiece. Each unit will hold one common share and one warrant.

The warrants are exercisable at C$0.20 for two years.

"The board of directors believes that the financing is in the best interest of the company," reunion said in a statement. "The financing will allow the company to strengthen its financial position and provide the company with the financial capability to pursue different opportunities. The company intends to apply the net proceeds raised from the financing for general working capital including but not limited to funding the company's general and administrative expenses, and providing a reserve for asset acquisition and exploration work. The company will also repay a $250,000 loan and accumulated interest."

Settlement is expected before the end of May.

Reunion's shares (TSX Venture: RGD) were steady at C$0.10. Market capitalization is C$4.9 million.

Reunion Gold is a Lonqueuil, Quebec-based acquirer and explorer of mineral properties.

Foundation brings two-part financing

Foundation Resources announced a C$3.52 million private placement of units.

The deal will be broken into two parts, a brokered and non-brokered tranche.

In the brokered offering, the company will sell approximately 4.76 million flow-through units at C$0.42 each, generating proceeds of C$2 million. The units will contain one flow-through common share and one half-share warrant.

The company will also sell 2.9 million common share units at C$0.35 each for proceeds of C$1.02 million. The units will hold one common share and one warrant.

Warrants from each unit sale will be exercisable at C$0.50 for 18 months.

In the non-brokered portion, Foundation will sell a combination of the units for C$500,000.

Proceeds will be used for exploration work at the company's Coldstream Property in Ontario, as well as for working capital. Settlement is expected by June 3.

Foundation's equity (TSX Venture: FDN) improved a cent, or 1.22%, to C$0.42. Market capitalization is C$4.3 million.

Foundation Resources is a Vancouver, B.C.-based mineral exploration company.

GoldStone secures Bendigo as investor

Constantia, United Kingdom-based GoldStone Resources brought a £2.13 million private placement of stock to market.

The company will issue approximately 32.7 million ordinary shares at 6.5p per share.

Bendigo Mining Ltd. is the investor. Upon completion of the financing, Bendigo will own a 20% equity stake in GoldStone.

The price per share represents a 45% premium to the closing share price as of May 6.

Also, Bendigo will receive two tranches of warrants. The first tranche will include warrants equal to approximately 10.9 million shares, exercisable at 8.5p for up to 30 months. The second tranche will include the same number of warrants, exercisable at 11.5p for up to three years.

"We are extremely pleased that through this transaction GoldStone has gained a mid-tier miner with a strong balance sheet as a long term investor who is prepared to make a significant investment in the company at a material premium to the market price," remarked Jurie Wessels, CEO, in a press release.

"We believe that Bendigo shares the optimism we have for our West African assets and that the alliance will add considerable value as we endeavor to advance our exploration projects into open cast or underground mining operations."

GoldStone's stock (London: GRL) closed at 5.2p. Market capitalization is £5.85 million.

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