Rubicon Minerals Corp. (TSE:RMX) (AMEX:RBY) got traders excited today with an announcement of a significant private placement agreement.
RMX gapped up 24% in the morning after the company announced $70 million strategic investment is at hand. The stock price continued to go up for half the trading session, adjusting the market price to account for would be improvement in fundamentals, but also hitting price levels which are slightly too high under the current situation.
The investment will be made by Agnico-Eagle Mines Limited under terms of non-brokered private placement agreement which is already signed. Eagle will purchase 21.7 million common shares at $3.23 each. That will make them owners of 9.2% of Rubicon Minerals outstanding common shares. Furthermore Agnico will be allowed to purchase shares on additional issues to maintain their percentage ownership intact.
The investment deal was made at a favorable time for Agnico, when RMX share price was at the lowest point for one year period. Assuming the investment was made under sophisticated calculations for the per share price, it shouldn’t drift very far away from $3.23 on the market as well. Despite the strong intraday action it is very likely the price will be returning back down in a short while.
