Kinross, Central Puerto invest $20 million in AbraSilver

AbraSilver Resources Corp. [ABRA-TSXV, ABBRF-OTC] has announced $20 million in strategic investments by Kinross Gold Corp. (K-TSX, KGC-NYSE) and an affiliate of electrical energy producer Central Puerto SA [CEPU-NYSE] as well as the formation of a regional partnership in Argentina.

AbraSilver said it has entered into subscription agreements with Kinross and Central Puerto in relation to a non-brokered private placement of AbraSilver common shares. Under the agreement, Kinross and Central Puerto will each invest $10 million in AbraSilver, which in turn will issue 50 million common shares at 40 cents per share, leaving Kinross and Central Puerto each owning approximately 4.0% of the outstanding shares of AbraSilver.

Following completion of the private placement, the company plans to consolidate its common shares on the basis of one post consolidation common share for every five pre-consolidation common shares.

Under an investor rights agreement, AbraSilver and Kinross will form a regional partnership to jointly explore for and acquire new projects in Argentina. The focus will be on silver, gold and copper.

AbraSilver shares were active on the news, easing 2.56% or $0.01 to 38 cents on volume of 759,150. The shares trade in a 52-week range of 42 cents and 25 cents.

AbraSilver was in the news recently when the company announced a substantial increase in the mineral resource estimate for its wholly-owned Diablillos property in Salta Province, Argentina.

The 80 square kilometre Diablillos property is located in the Argentina Puna region – the southern extension of the Altiplano of southern Peru, Bolivia and northern Chile. The project was acquired from SSR Mining in 2016.

There are several known mineral zones on the property, with the Oculto zone being the most advanced, with over 90,000 metres drilled to date. Oculto is a high-sulphidation silver-gold deposit derived from remnant hot springs activity.

The measured and indicated resource at Diablillos now stands at 260 million ounces of silver equivalent (AgEq), the company has said. The estimate is based on a cut-off grade of 45 g/t silver (up from 35 g/t).

AbraSilver President and CEO John Miniotis said the transaction with Kinross and Central Puerto leaves AbraSilver with the funds to pursue a dual strategy to aggressively advance the Diablillos project towards a production decision and to accelerate the exploration effort.

Kinross is a senior gold mining company with operations and projects in the U.S., Brazil, Mauritania, Chile and Canada. Upon closing of the private placement, Kinross will be granted by AbraSilver a right of first offer (Rofo) to acquire at least 50% of newly staked or acquired projects in Argentina beyond Diablillos.

For any projects which Kinross elects to exercise its ROFO, Kinross and AbraSilver will establish an exploration program and budget, and enter into a joint venture agreement with standard funding and dilution mechanisms.