Vancouver — Chinese smelting group Jinchuan has boosted its interest in aspiring copper producer Continental Minerals (KMK-V, KMKCF-O) to 14% by exercising 8 million of the junior’s warrants for a total investment of $18 million.
Jinchuan Group exercised the warrants at $2.25 apiece — a premium of about 44% above Continental’s recent trading level of $1.56 per share. The company bought 10 million units of Continental earlier this year at $1.80 each. In February, Jinchuan entered an agreement with Continental to provide both equity and capital financing, a concentrate offtake facility and assistance in other mine-building support at the Xietongmen copper-gold deposit in the Tibet Autonomous Region of China.
Jinchuan will also help Continental arrange debt financing for 60% of the capital required for mine development and will contribute 30% of the capital financing.
Xietongmen is currently going through the mine-permitting phase.
Earlier this year, a positive feasibility study modelled an open-pit mining scenario on proven and probable reserves of 182.1 million tonnes of 0.45% copper, 0.62 gram gold per tonne and 4 grams silver at the deposit. The study predicted a waste-to-ore strip ratio of 1.64:1.
Operations will have a production rate of 40,000 tonnes per day (annual throughput of 13.2 million tonnes) for 116 million lbs. (52,600 tonnes) copper, 190,000 oz. gold and 1.73 million oz. silver annually over a 14-year mine life.
Capital costs are estimated at US$476.2 million with payback projected in 5.2 years. Xietongmen is anticipated to have a 16.5% internal rate of return and a US$231.7-million net present value, based on a 7.5% discount rate.
Shares of Continental inched up 11 to close at $1.67 apiece on the news. The stock has a 52-week trading range of $1.25-2.35.