Financing of the Sanchez mine project in southeastern Arizona is one step closer to completion following an agreement between owner Azco Mining (TSE) and Magma Copper (NYSE).
Magma agreed to buy a 15% interest in the proposed solvent extraction-electrowinning project for US$10 million. It paid Azco an advance of US$450,000 and will pay a further US$4.5 million on signing, followed by US$5.5 million at the start of construction.
Barclays Bank of Canada and Barclays Bank PLC of London have already agreed to underwrite up to US$60 million in debt-financing for the project. The capital cost to bring Sanchez into production is estimated at US$75 million. Azco recently completed a $7.2-million financing through a special warrant issue at $2.25 per share.
It plans to raise an additional US$15-20 million in equity, said President Alan Lindsay. Besides providing a financial cushion, the equity will fund feasibility work on the Piedras Verdes project in Sonora, Mexico. Sanchez hosts about 168 million tons grading 0.34% copper at a strip ratio of about 1.08-to-1. Based on a 12-million-ton-per-year leaching operation, the project should produce about 56 million lb. copper per year at a cash cost of about US50 cents per lb.
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