After being halted most of July, shares of Benton Resources (BEX, TSX-V) started trading again this past Monday morning.  Immediately, the stock ran higher, from 6 to 11 cents, on huge volume.  A good sign that some speculators are enthusiastic about Benton’s BIG plan to acquire high-grade PGM projects from Rio Tinto and Panoramic Resources.  The stock closed the week at 6.5 cents.

This deal, if concluded, will transform Benton from a “boring” project generator into North America’s newest Platinum-Palladium company.  More than $100 million has been spent (+500 drill holes) on Escape Lake and Thunder Bay North to date (highly complimentary properties that were part of a JV agreement between Rio Tinto and Panoramic).

Can the Benton team pull this off?

Pay particular attention to point #3 on this slide:

Some of the individual drill holes are quite spectacular – 10.1 g/t Platinum+Palladium+Gold and 1.6% Copper+Nickel over 46.6 m and 2.5 g/t Pt+Pd+Au and 0.86% Cu+Ni over 121 m.

In addition to being strategically located near North American Palladium’s Lac des Lles mine, Escape Lake and Thunder Bay North are only 40 km from Lundin’s Eagle mine via barge.

For a company Benton’s size, with a $5 million market cap, this is clearly a BIG bold move!

Naturally, the question becomes: “How are they going to pay for it?”

From the day the deals were signed (July 2), CEO Stephen Stares and Benton have 90 days to raise $15 million.  They had $5 million worth of cash and investments on hand, leaving a difference of about $10 million.  Doable, and Stares tells me he’s getting a lot of great feedback and interest from the investment community, but how to do it without diluting BEX to smithereens?

It’s a viable concern.  And I’d guess that’s partly why BEX gave back all the gains it made Monday morning.

I’d also guess many people are wondering how the heck Stares worked Benton into this BIG opportunity in the first place (I was!).

The answer to how this all came together boils down to Stares being the first person in line (if Rio Tinto ever wanted to sell he made his interest for buying known!).  Benton already had an existing relationship with Rio Tinto via a JV on another project, so they know some of Rio Tinto’s geologists (they had an “in”!).  Also, Thunder Bay North is only about 50 km from Benton’s office in Thunder Bay (these projects are in Stares’ backyard, so he has been watching closely!).

Benton and Stares could walk away from the table, of course, but it doesn’t sound like he will.  Stares seems adamant about getting this deal done.  He wants to own these projects and sees this as a once-in-a-lifetime opportunity.  He along with Rio Tinto geologists believe Escape Lake is going to be a mine one day.  Much of Stares’ wealth is riding on BEX, so I don’t suspect he’s going to fund the $10 million balance by selling stock at 6 cents per share (even if this deal is GREAT that would be a bad move in my view, way too much dilution).  Rather, Stares is keen to do a mixture of equity/JV/project financing.

BEX is an interesting bet under 8 cents (lots of leverage to Platinum and Palladium!).  Stares has several levers he can pull and there’s a chance he really surprise people positively by how little dilution is necessary to get this deal done (JV opportunities abound?).