Tintina Mines (TSXV: TTS) has secured a C$91 million investment backed by Japan’s Sumitomo Corporation and the Gignac family to fund the development of its key copper and gold assets as well as consolidate ownership of the project.
In a statement on Tuesday, the Chile-focused startup said the parties will be among investors participating in a private placement of subscription receipts at C$0.68 each. Receipts will be offered in two tranches, each of a different type. The first—worth a total of $62 million—contains common stock and warrants of Tintina, while the second consists of only common stock totaling $29 million.
Up to approximately C$82 million of additional capital could be available upon full exercise of the warrants attached to the first tranche receipts, Tintina said.
Tintina Mines shares more than doubled on the news, rising as much as 150% to a new high of $1.70 per share. The Toronto-based company trades at a market cap of $216.3 million.
Important deal
According to Tintina, Sumitomo and the Gignac family are expected to create a new investment vehicle to equally fund the purchase of receipts worth $48 million, all in the first tranche. When the receipts are perfected and converted into shares, they will own 25% of the company’s shares (or 38% after exercise of the warrants).
Juan Enrique Rasmus, Chairman and CEO of Tintina, is expected to own 47% of the company. Its stake could fall to 36% if the outstanding warrants are exercised.
The remaining $43 million will be sourced by a broader investor group, including C$14 million from its anchor investor Franco Nevada, as well as investors linked to G Mining Capital (GMC), the Canadian mining investment platform backed by the Gignac family and Sumitomo.
According to Claude Dufresne, CEO of GMC, the platform was created as a “business creation and development platform for Sumitomo and G Mining Services,” a Canadian mining consulting firm led by Louis Gignac Sr. and his three sons.
He said the platform was “charged with sourcing and evaluating high-quality copper opportunities and, once identified, leveraging broader internal capabilities to advance them through development and production.”
Of the proceeds of $91 million, about $55 million will be allocated to the development of the Domeyko Sulphuros project towards a final investment decision (FID), while the remaining $36 million will be used to buy out the project’s minority shareholders, who currently hold a 26.25% stake, Tintina said. This gives the Domico Sulfurous project an initial valuation of C$138 million, she added.
Rasmus, who controls the entities with minority ownership in the project, said the deal provides the capital needed to advance the Domico Sulfurus project to DFID and brings together a partnership “with a proven track record of delivering large-scale mining projects on time and on budget.”
Development opportunity
The Domico Sulfurus project, located in the Atacama region of northern Chile, represents a brownfield site with former oxide operations. The copper-gold porphyry deposit currently has an estimated resource of 100.8 million measured and indicated tons grading 0.35% copper and 0.28 grams per tonne gold, and 256.3 million inferred tons grading 0.34% copper and 0.24 g/t gold.
Earlier this year, Tintina released a preliminary economic assessment of the project, outlining a potential 25-year open pit mine operation to produce 37,000 tons of copper and 57,000 oz. of gold in concentration annually. The net present value after tax (at an 8% discount) was estimated at US$328 million, compared to an initial capital requirement of US$1.28 billion.
“Domeyko Sulphuros is exactly the type of opportunity the Gignac family was looking for, a copper-gold porphyry deposit, with a clear path for development,” said Matthew Gignac, President of G Mining Services. “More importantly, the size and complexity of the project is squarely within the scope of the assets we have successfully developed, financed, built and operated.”
Founded in 2016, G Mining Services provides a full range of services essential for mining project development, from exploration and feasibility studies to construction, commissioning and commissioning.
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