American Eagle (NYSE:AEO) Gold Corp. exercised its option under a Call Option Agreement to re-acquire a 20% interest in the NAK copper-gold porphyry project from Orecap Invest Corp., as announced by Orecap's CEO Stephen Stewart. In return for the stake, American Eagle issued approximately 7 million shares valued at $1.5 million to Orecap.
The exercise of the call option comes after a year of financial strategy and exploration work. Throughout 2023, American Eagle conducted three funding rounds, including two with Teck Resources (NYSE:TECK) Limited, leading to a substantial share price increase. This financial strategy was lauded by CEO Anthony Moreau as a creative financing approach that has benefited shareholders following the discovery at NAK.
The Call Option Agreement was originally signed on October 11, 2022, between American Eagle and Orecap. This agreement facilitated Orecap's acquisition of a 20% interest in NAK upon completion of $1 million in exploration work obligations. To fund this initial drilling and avoid high dilution, American Eagle sold Orecap the 20% stake option in NAK when shares were valued at $0.025.
Following the completion of the drill program in December 2022, Orecap acquired the interest in NAK under an agreement dated December 10, 2021. A month before announcing NAK's significant discovery hole, NAK22-01, an option was predetermined for American Eagle to repurchase the 20% stake at $1.5 million as part of a financing arrangement.
On October 19, 2023, American Eagle obtained shareholder approval to repurchase the 20% NAK project interest from Orecap with a cap on the number of common shares issued for this repurchase. Today's exercise of the call option marks the culmination of this strategic financial maneuver.
InvestingPro Insights
The financial trajectory of American Eagle Gold Corp. can be better understood with the help of real-time data from InvestingPro. The company has shown a strong return over the last year and the last three months, a positive sign for potential investors. Furthermore, American Eagle's shares are trading near their 52-week high, reflecting the company's strong performance.
InvestingPro Tips reveal that the company's strong earnings should allow management to continue dividend payments, a noteworthy point for income-focused investors. In addition, American Eagle has maintained dividend payments for 20 consecutive years, indicating a consistent return to shareholders.
Moreover, the company's liquid assets exceed its short-term obligations, suggesting a healthy financial position. This is particularly relevant given the recent financial maneuvers involving the NAK copper-gold porphyry project.
InvestingPro offers over 10 additional tips for American Eagle Gold Corp. which can provide further insights into the company's performance and potential investment opportunities.
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