I-80 raises again as liquidity crunch looms

i-80 Gold has announced its fifth financing over the past 14 months as it faces a liquidity crunch as deliveries under a gold prepay agreement kick in.

The company announced a C$85.6 million bought deal financing of 51.9 million units priced at C$1.65 each, comprising a share and a four-year half warrant. This brings its aggregate raises to US$195 million since February 2023, and possibly more if the over-allotment option is filled.

Production and, therefore, revenue have not been increasing as the company had planned as it works towards developing a hub and spoke operation in Nevada, including the construction of four new mining operations and ultimately producing more than 500,000ozpa. 

In 2021, i-80 acquired the Granite Creek, Lone Tree and Ruby Hill properties to become one of Nevada's largest gold and silver resources holders. The company obtained the ability to process all types of gold mineralisation, including refractory gold, by acquiring the Lone Tree processing complex and interim processing agreements with Nevada Gold Mines. Lone Tree, and its 1Mtpa capacity autoclave, is due to be the hub of i-80's Nevada operations. It added to its package in February 2023 by acquiring Paycore Minerals to consolidate the northern portion of the Eureka district, increasing its Ruby Hill land package by more than 34%.

"The strategy of being the only company in Nevada that can treat refractory material and not have to talk to Barrick Gold is good, but I-80 is very ambitious and trying to do too much at the same time. This raise is not enough to secure their plans and Lone Tree also requires a lot of investment. With declines and underground development at Granite Creek, Cove, and potentially Ruby Hill, the expenditures are going through the roof. It also needs to drill a lot at Cove as if it doesn't drill enough it will never get enough indicated resource to put into a mine plan," an analyst told Mining Journal.

In addition to the current bought deal and Orion gold prepay, I-80 raised C$23 million in February, C$36.8 million in an August 2023 bought deal and $65 million in convertible debenture private placement in February 2023. 

The company ended 2023 with cash and equivalents of $16.3 million, having produced 14,613oz. It entered 2024, facing some $71 million of liabilities, including $27 million under a gold prepay agreement and $17 million under a silver prepay agreement.

The September 2023 amended and restated gold prepay purchase with Orion Mine Finance consisted of $20 million to add to an existing $50 million agreement and included the commitment to deliver 1110oz of gold per quarter for 12 quarters, with the first 1123oz due on March 31. This is a senior secured obligation and involves roughly the same amount of monthly production as the company produced in 2023.

"I was hoping a joint venture deal with Ruby Hill would happen first to get the share price up and be able to do this financing on better terms. I-80 is a levered stock that should be doing better, but everyone knows Ewan [Downey, chief executive] will have to come to market, so they just wait for it. He needs the money now and that is reflected in the terms, such as the four-year half warrant," said the analyst.

Shares in I-80 Gold have been on a downward trend since hitting a high of almost C$4 per share in November 2022 and opened down 12% at C$1.62, valuing the company at C$579 million.