Northcliff Resources (TSX: NCF; US-OTC: NCFFF) is enjoying a boost in its share price after securing a financial partner to help advance its $579-million Sisson tungsten-molybdenum project in central New Brunswick, 100 km northwest of Fredericton.
New Zealand-based Todd Minerals has agreed to fund up to $39 million of the feasibility stage project, in exchange for a direct interest in Sisson, plus Northcliff shares. The announcement sent the junior’s shares up 30%, or 9¢, over two days to close Oct. 4 at 37.5¢.
As part of its investment, Todd will complete a $5-million private placement consisting of 13.9 million Northcliff shares at 36¢ apiece. This represents a 20% premium to the Toronto-based firm’s 30-day, volume-weighted average share price before the Oct. 3 announcement.
Once the private placement closes, Todd will become Northcliff’s largest shareholder with a 15% interest. It would also get one seat on Northcliff’s board and the right to participate in any future financings to keep its 15% ownership.
Todd has agreed to hold Northcliff’s shares for at least two years after the private placement concludes.
Todd will enter a limited-partnership agreement with Northcliff to develop and operate the Sisson project. It could acquire an initial 11.5% in the project by providing $14 million over three tranches. The first tranche of $5 million is due on the execution date of the limited-partnership agreement. The last two installments of $5 million and $4 million are due when Sisson reaches agreed-upon milestones, Northcliff says. Todd would lose its interest in the project if it can’t fulfill the $14-million investment.
Northcliff’s new partner holds an option to increase its interest in Sisson by 10% to 21.5% if it invests another $20 million when the junior makes a construction decision. The partners are required to fund their share of Sisson’s development costs.
Chris Zahovskis, Northcliff’s president and CEO, said the initial $19 million from Todd would help fund the environmental work to support the environmental-impact assessment that is underway and advance the design and engineering studies from the January 2013 feasibility study.
The study confirmed that Sisson could be economically mined as a 30,000-tonne-per-day open-pit operation over 27 years. Annual production would average 557,000 metric-tonne units of tungsten trioxide in ammonium paratungstate, and 4.1 million lb. molybdenum in concentrate each year.
The operation is expected to create 300 jobs in the mining-friendly province and up to 500 positions during construction. The Fraser Institute ranked New Brunswick as the best mining jurisdiction in the world in 2012. This year it came in fourth place, behind Finland, Sweden and Alberta.
The financing with Todd should close soon, after regulatory approvals. Todd Minerals is a subsidiary of Todd Corp., a private, New Zealand-based firm with diversified businesses.
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