Vancouver – Augusta Resource (AZC-T, AZC-X) has taken another big step towards funding its Rosemont copper-molybdenum project with an infusion of cash from a Korean consortium.
Korea Resources and LG International plan to inject US$176 million into the Arizona-based project in exchange for a 20% joint-venture interest. Of that amount, US$70 million will go to development pre-permitting and the remaining US$106 million will go to construction.
The consortium also gets an off-take agreement on market terms for 30% of copper concentrate and 20% of copper cathode and molybdenum concentrates produced annually from the project.
The US$176 million represents 20% of the US$897 million capital cost of Rosemont. Augusta noted that the financing, combined with an earlier deal with Silver Wheaton (SLW-T, SLW-N), represents roughly half the necessary capital and substantially de-risks the project.
This latest financing comes only weeks after Hudbay Minerals (HBM-T, HBMFF-O) took an 11% stake in the company for $30 million. Hudbay picked up 10.9 million units at $2.75 each, which included one share and a half-warrant exercisable at $3.90 for 18 months.
Before that, Augusta reached a US$43 million loan and off-take agreement with Red Kite Explorer Trust in April. That deal gives Red Kite the right to 16.125% of copper concentrate production per year until roughly 484,000 dry tonnes of concentrate are delivered. That money, however, went largely towards retiring a previous loan agreement with Sumitomo.
In February Augusta updated the value of a gold-silver off-take agreement with Silver Wheaton to US$230 million, which will see Augusta selling silver at US$3.90 per oz. and gold at US$450 per oz. to Silver Wheaton for the mine’s life.
Rosemont is home to a large, open-pittable sulphide deposit hosting copper, molybdenum, silver, and gold as well as an oxide cap that carries just copper. Augusta plans to develop a 75,000-tonne-per-day open-pit mine and sulphide process plant as well as a heap-leach and solvent extraction-electrowinning (SXEW) facility to treat the oxide copper resource.
Augusta expects to produce 221 million lbs. copper, 4.7 million lbs. moly, 2.4 million oz. silver, and 15,000 oz. gold annually over a 20-year mine life from Rosemont.
The company continues to work through a number of permits on the mine, with a draft environmental impact statement expected in the fourth quarter of 2010.
Augusta’s share price was up 24¢or 7.6% on the latest news, only to fall 12¢ or 3.5% the next day to close at $3.30. The company has a 52-week share price range between $1.30 and $3.85 and 133 million shares outstanding.