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DAILY NEWS Feb 3, 2012 4:37 PM - 0 comments

Salazar gains on Lundin's investment

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Salazar Resources (SRL-V) climbed 18% on news that Lundin Mining (LUN-T) acquired a 15.4% stake in the company by buying over 80% of Salazar's $3-million private placement, consisting of 6 million units priced at 50¢ apiece.

The financing, which was announced on Jan. 30, closed today, pushing Salazar's shares up to 75¢ before settling at 66¢.

Each unit comprises of one share and half a non-transferable warrant, with a full warrant allowing a holder to buy another share within two years at 65¢ apiece.

The company gave Lundin a non-dilutive right so it can maintain its 15.4% ownership by taking part in Salazar's future financing.

Salazar's other key shareholder, Silvercorp Metals (SVM-T), also took part in the recent non-brokered private placement to maintain its pro-rata interest at 10.7%.

"Salazar management believes that the new interest and investment by Lundin, as well as Silvercorp's continued investment and support is a testament to the quality and potential of the El Domo project," the company's chief executive Fredy Salazar said in a statement.

In mid-January the company almost doubled resources at its volcanogenic massive sulphide El Domo deposit on the Curipamba project in Ecuador. Indicated resources stand at 5.53 million tonnes grading 2.4% copper, 2.5% zinc, 0.3% lead, 2.8 grams gold and 48.4 grams silver per tonne. It has another 1.46 million tonnes grading 1.9% copper, 2.8% zinc, 0.3% lead, 2.4 grams gold and 52.2 grams silver in inferred.

Since the cut-off date for the resource estimate, the company's CEO says 7,000 metres have been drilled, which continue to show intriguing results.

The proceeds from the private placement will go mainly towards funding the company's exploration properties.

Lundin is a diversified base metals miner with copper, zinc, nickel and lead projects in Portugal, Sweden, Spain and Ireland. It has an equity stake in the Tenke Fungurume copper-cobalt mine in the Democratic Republic of the Congo, and is currently working on expanding the Neves-Corvo copper-zinc mine in Portugal. 

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