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Taykwa Tagamou Chief Linda Job receives a ceremonial share certificate from Detour Gold Corp. as part of a joint venture that will see co-operation between the native community and the mining company.

Moe Doiron/Moe Doiron/The Globe and Mail

If you're a miner, you probably don't want to sell shares in a weak commodity market.

And you definitely don't want to issue new stock when your shares are in deep slump.

Yet Detour Gold eschewed both rules late Tuesday, raising $153-million by selling new shares in order to fund the development of its Detour Lake project.

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Here's the market Detour sold into: gold has slumped 17 per cent to date this year, and the company's own stock has plummeted 63 per cent over the time period. Plus, miners like Romarco Minerals Inc. have tried to raise stock, but got shut out by investors.

However, company spokesperson Laurie Gaborit said Detour needed the cash, so it had to bite the bullet. "It's never something you want to do," she said, meaning that you don't want to dilute shareholders at these prices. However, she later added that "there weren't a lot of choices."

Detour already has enough debt, she said, and had they gone the fixed-income route, the company would have had to issue unsecured securities and came with sky high interest payments.

On the bright side, Ms. Gaborit noted that the miner had telegraphed this need for cash. "This was known in the market that our balance sheet was tight," she said. And everyone knows that Detour is on the verge of reaching commercial production at Detour Lake so the company needs funds to keep developing the project.

Plus, Detour's management has said before that they made their budget assuming a $1,600 (U.S.) gold price. Today it's just $1,388.

With all that already -- or at least hopefully -- baked into the stock price, the company figured it simply had to proceed with the equity offering. Because right now the last thing they need is to run out of cash and halt the project's development.

BMO Nesbitt Burns led the underwriting, which was priced at a 5.2 per cent discount to Tuesday's close.

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(Tim Kiladze is a Globe and Mail Reporter.)

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