Kodiak, Teck to create Arizona copper explorer

Kodiak Copper (TSXV: KDK) is teaming up with Teck Resources (TSX: TECK.A/TECK.B; NYSE: ) to create a new listed explorer to advance two early-stage projects in Arizona.

Kay Copper, a unlisted reporting issuer, plans to list its shares on the TSX Venture Exchange and complete two separate financing, the companies said Wednesday. One capital raising would use subscription receipts at 25¢ per share for $4 million, and the other is an $830,000 private placement of shares priced at 10¢ apiece.

As part of the agreement, Kodiak and Teck would sell their respective Mohave and Copper Hill projects to Kay Copper, and in return receive 20 million shares of Kay Copper at a deemed price of 25¢ per share.

Upon completion, Kay Copper is expected to have about 70.3 million common shares outstanding, with Kodiak and Teck each owning 28%. Existing shareholders of Kay Copper would retain 9% of its equity, while subscribers to the two financings are expected to own 35%.

“We are thrilled to become shareholders in Kay Copper alongside Teck and are confident this new venture has the potential to create substantial long-term shareholder value,” Claudia Tornquist, CEO of Kodiak Copper, said in a release.

Drill-ready

Both Mohave and Copper Hill represent exploration-stage, drill-ready projects within Arizona’s prolific mining districts.

Mohave covers a 17-sq.-km land package that includes two small-scale historical mines that operated in the 1950s and ’60s. The property was last drilled in 2011, and there are currently multiple soil/rock geochemical targets and geophysical anomalies that remain untested.

Copper Hill is a 35-sq.-km land package within a porphyry district near a producing mining cluster. The project saw limited historic exploration in the 1960s and ’70s, during which three large porphyry centres were identified. Recent work by Teck highlights multiple under-explored targets on the property.

For Kodiak, its focus remains the MPD copper-gold porphyry project in south-central British Columbia. This year, the company plans to follow up on its initial resource estimate published in December, which outlined 519 million lb. copper and 390,000 oz. gold indicated and 1.8 billion lb. copper and 1.2 million oz. gold inferred.

Shares of Kodiak Copper fell 2.2% on Wednesday afternoon in Toronto for a market capitalization of $86.3 million. They’ve traded in a 52-week range of 42¢ to $1.28.