Foran unveils proposed $200 million Teachers investment
Foran Mining Corp. [FOM-TSXV] shares rallied Monday after the company announced details of a proposed investment of up to $200 million from the Ontario Teachers Pension Plan Board.
The company said it has entered into a non-binding term sheet with Ontario Teachers that contemplates a transaction that, if completed, would have Ontario Teachers invest up to $200 million in the company’s McIlvenna Bay VMS (volcanogenic massive sulphide) project in east-central Saskatchewan.
The aim is to fund development towards commercial production.
The shares advanced on the news, rising 16.3% or 37 cents to $2.64 on volume of 174,950. The shares are currently trading in a 52-week range of $3.09 and $1.85.
Foran Mining is a copper-zinc-gold-silver exploration and development company, which is planning to build the first mine in Canada designed to be carbon neutral from day one.
McIlvenna Bay is a copper-zinc-gold-silver-rich VMS deposit that is intended to be the centre of a new mining camp in a prolific district that is already been producing for 100 years.
A feasibility study envisions a state-of-the art, and re-designed mine plan to accommodate a larger production base at 4,200 tonnes per day, which will serve as a starter-plant and is designed to accommodate future expansions.
The study outlines an 18.4-year mine life and is based on probable mineral reserves of 25.7 million tonnes of grade 2.51% CuEq (copper equivalent). The initial capital cost is forecast at $368 million.
The proposed investment will consist of a $180 million convertible secured instrument, whereby draws will be made contingent on and pro-rata with a senior secured credit facility.
It will be conditional on and subordinated to the senior secured credit facility and will be converted, upon achieving agreed upon commercial production and permitting thresholds and the satisfactory achievements of certain other conditions, into a 19.9% equity interest in an operating subsidiary of Foran which holds the McIlvenna Bay project.
The proposed investment will also consist of an additional $20 million of contingent consideration, which becomes payable once McIlvenna Bay reaches a production threshold of 90 million pounds of copper or copper equivalent annually on a run-rate basis of 60 consecutive days.
Closing is subject to Foran obtaining a binding commitment for the senior secured credit facility.
McIlvenna Bay has been the subject of significant exploration by a number of different operators since the 1960s, predominantly focused on drilling electromagnetic (EM) conductors generated by both airborne and ground-based systems.
The Bigstone copper-zinc deposit, in the southern part of the property and holds great potential to serve as additional feed for a central mill at McIlvenna Bay, the company has said.
Foran owns a 100% interest in the McIlvenna Bay property, subject to a 1% NSR held by Cameco Corp. [CCO-TSX, CCJ-NYSE] and BHP Billiton Ltd. [BHP-NYSE, BHPLF-OTCPK].