Chakana Copper financing backed by Gold Fields, Rick Rule

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Chakana Copper Corp [PERU-TSXV, 1ZX-FSE) said Monday it has raised $3.0 million from an upsized financing with investments from Gold Fields Ltd. [GFI-NYSE, GFI] and financier Rick Rule, after completing the final tranche of a non-brokered private placement.

Based in Johannesburg, Gold Fields is one of the world’s largest gold mining firms. Rule is director, President and CEO of Sprott US Holdings Inc., and a regular speaker on the mining investment conference circuit.

“We are excited to see such strong support in this upsized financing to fund the next exploration phase of the Soledad project in Peru,’’ said Chakana Copper President and CEO David Kelley.  “We especially appreciate additional investment from Gold Fields and Rick Rule after completing a thorough geological review of the project and its potential,’’ he said.

“The primary use of the proceeds will be to drill several untested targets on the south half of the project, including the Mega-Gold porphyry target defined by extensive anomalous gold-molybdenum in soil, pervasive phyllic and advanced argillic alteration, and strong induced polarization chargeability responses.

The Soledad Project is located in the Ancash region of Peru and is notable for the high-grade copper-gold-silver mineralization that is hosted in tourmaline breccia pipes and other intrusive-related mineralization. Two years ago, an initial inferred resource was announced, with 6.73 million tonnes, containing 191,000 ounces of gold, 11.7 million ounces of silver and 130 million pounds of copper.

In addition, extensive multidisciplinary exploration has defined 154 exploration targets, 28 of which (18%) have been tested to date, confirming that Soledad is a large, well-endowed mineral system with strong exploration upside.

On Monday, Chakana shares were priced at $0.07 and currently trade in a 52-week range of 11.5 cents and $0.035.

The second tranche consisted of 54.4 million units priced at $0.04 per unit, generating gross proceeds of $2.17 million. Each unit consists of one common share and one common share purchase warrant, each of which entitles the holder to buy one additional share for $0.06 for two years from the closing date.

The company may accelerate the expiry of the warrants in the event that for any consecutive trading days, the closing price of the shares is greater than $0.09. When combined with the first tranches, the private placement has raised gross proceeds of just over $3.0 million via the issuance of 75 million units.

Under an agreement between the company and Gold Fields Nazca Holdings Inc., a unit of Gold Fields Ltd., Gold Fields has exercised its participation right to purchase 15.4 million units of the private placement for $618,000, a move that takes Gold Fields from an equity position of 17.4% to 18.4%.

In addition, directors and officers of the company bought 3.58 million private placement units for $143,434.

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