Los Andes Copper [TSXV: LA] has entered into an agreement with Queen’s Road Capital Investment [TSX: QRC] which will see Queen’s Road investing a further US$5,000,000 in Los Andes by way of an additional convertible debenture. The copper miner said the proceeds received from this capital raise will be allocated towards, expansion drilling at the Vizcachitas copper project in Chile which is expected to commence soon.
Funds will also go towards the completion of the Vizcachitas pre-feasibility study, underway and for general corporate purposes, the company said yesterday afternoon.
“This financing allows us to continue to progress the project and target resource growth while minimizing dilution to shareholders,” said R. Michael Jones, CEO of Los Andes Copper. “These funds will allow us to continue with the exciting expansion drilling of Vizcachitas with up to five rigs and complete our Pre-Feasibility Study, which is anticipated in Q4 this year.”
The PFS has a backdrop of an industry facing a potential large deficit in copper supply, which is anticipated just around the corner.
Who is Queen’s Road Capital?
Queen’s Road Capital is a leading financier to the global resource sector. It is is a resource-focused investment company, making investments in privately held and publicly traded resource companies. It follows a strategy of buying and holding securities for both long-term capital appreciation and short-term gains, with a focus on convertible debt securities and resource projects in advanced development or production located in safe jurisdictions.
Queen’s Road Capital said it saw “a significant opportunity of value recognition” of Los Andes Copper since world class copper assets are increasingly rare. “Recent volatility has not altered the course that copper is the essential ingredient in the world’s drive towards electrification, which is also supported by recent M&A activity in the mining sector,” said Warren Gilman, Chairman and CEO of Queen’s Road Capital.
The Convertible Debenture will have a five-year term, carry an 8% coupon and will be convertible into common shares in the capital of the Los Andes Copper at a share price of C$16.75. The interest is payable quarterly, 5% in cash and 3% in shares (at the election of Los Andes), at the 20-day volume weighted average price prior to the interest payment date.
Closing of the financing is subject to the satisfaction of customary closing conditions, including but not limited to TSX Venture Exchange approval and the completion of definitive documentation. Closing is expected to occur September 2, 2022. Once closed the total investment in convertible debentures by Queens Road into Los Andes copper will total US$14,000,000, representing a total number of shares, if converted, of 1,250,462 shares.
Vizcachitas is a copper-molybdenum porphyry deposit, located 120 km north of Santiago, Chile, in an area of good infrastructure. The project has a post-tax NPV (8% discount rate) of approximately USD$1.8 billion and an IRR of 20.77%, based on a USD$3 per pound copper price. It also has a Measured Resource of 254.4 million tonnes at a grade of 0.439% copper and an Indicated Resource of approximately 1.03 billion tonnes at a grade of 0.385% copper.
