Rio Novo Gold has withdrawn its latest stock offering, adding another name to the growing list of bought deals that have been pulled after public launch.
Late last night, Rio Novo, led by former investment banker David Beatty, terminated its $20-million bought deal of common shares and warrants. Proceeds from the offering were supposed to be used to develop the company's Brazilian gold properties.
A week ago, the company raised warning signs about the financing, announcing that the deal's closing date had been pushed back in order "to clear comments with securities regulators." Now that the deal has been fully terminated, it appears those issues weren't resolved.
A very similar situation played out a few weeks ago with Extorre Gold Mines, which launched a $50-million offering, only to have the deal withdrawn because of regulatory concerns. After the deal was pulled, Extorre publicly clarified that the British Columbia Securities Commission was worried that investors could too easily mistake Extorre's preliminary economic assessment for a pre-feasibility study that includes inferred mineral resources.
After terminating its original deal, led by TD Securities, Extorre has since come back to the market, offering a $25-million private placement led by Canaccord Genuity on Wednesday morning.
No word yet on whether Rio Novo’s deal, which was led by Canaccord, will come back to market if the regulatory issues are cleared up.