Capstone, Orion arranges $374 million bought deal

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Capstone Copper Corp. [CS-TSX] and Orion Mine Finance have arranged a $374 million bought deal financing. Net proceeds received by Capstone will be used to advance near term growth initiatives in Chile, notably the Mantoverde Development Project (MVDP) where commissioning activities are under way.

Capstone said an underwriting syndicate has pledged to purchase 59.52 million Capstone common shares for $6.30 per share under an agreement with Capstone, Orion Fund JV Ltd, Orion Mine Finance 11 LP, and Orion Mine Finance (Master) Fund 1-A LP (collectively Orion or the selling shareholders).

Capstone has granted the underwriters an option to purchase up to an additional 8.93 million common shares at the offering price. That option can be exercised at any time for 30 days after the offering closes, likely on February 8, 2024. If that option is exercised, it would raise the gross proceeds of the offering to $431 million.

In connection with the offering, Capstone will issue 47.62 million common shares, generating gross proceeds of $300 million. The selling shareholders will receive gross proceeds of $74.9 million from the secondary sale of 11.9 million shares.

The selling shareholders currently hold 164.8 million common shares of Capstone, representing a 23.7% interest. After the offering closes, the selling shareholders will see that interest drop to 20.6%. If the overallotment option is exercised, the selling shareholders will continue to hold 20.6%.

On Friday, Capstone shares eased 3.9% or 26 cents to $6.41. The shares are trading in a 52-week range of $7.25 and $4.40.

Capstone is a Canadian base metals mining company with a focus on copper.

Its portfolio includes the Pinto Valley copper mine in Arizona, and the Cozamin copper-silver mine in Zacatecas, Mexico, the Mantos Blancos copper-silver mine in Chile and 70% of the Mantoverde copper-gold mine. In addition, Capstone holds a 70% interest in Santo Domingo, a large scale, fully-permitted, copper-iron-gold project, in partnership with Korea Resources Corp.

The company recently said commissioning activities are underway at its Mantoverde Development Project (MVDP), an asset that is expected to increase the company’s consolidated copper production by over 40% with a significant decease in unit operating costs.

“The project is on-time and we reaffirm our $870 million total capital cost guidance,’’ said Capstone CEO John MacKenzie. “This marks an exciting time for Capstone, MVDP is transformational four our business and provides the based for incredible growth in the Mantoverde-Santo Domingo District.”

First ore was introduced to the new concentrator on November 29, 2023. The sulphide copper project is on track to reach nameplate capacity of 32,000 tonnes per day by mid-2024. Mantoverde is expected to produce total copper (concentrates plus cathode) of 98,000 tonnes at a cash cost of US$2.41 a pound in 2024.

Capstone has previously outlined its asset integration and synergy study plan for Mantoverde and the undeveloped Santo Domingo copper-iron-gold projects, which are located 35 kilometres apart in the Atacama region of Chile.

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