As we discussed in Northern Star: Smart or crazy on 28 Jan 14 (Speculative Buy - $0.88), the onetime tiny miner has launched a share purchase plan (SPP) to finance the purchase of three new mines from troubled giant Barrick.
If you were a shareholder on January 22, you can subscribe for a maximum of $15,000 worth of new shares at $0.86 a share from today, with applications closing on February 19. As a maximum of $15m is sought and the institutional placement was oversubscribed, a scale back is likely. The cash will be used to fund the mine purchases and to keep Northern Star within its debt covenants, which require the company to retain a cash balance of $20m. This is a good deal for shareholders. If you are eligible and within our recommended portfolio limit of 2%, we recommend you subscribe. The Northern Star share price has risen marginally since 28 Jan 14 and although it hovers around our maximum buy price, we’re not about to quibble with a few cents. It remains a SPECULATIVE BUY.