Highland Copper unveils asset sale, $26 million private placement plan
Highland Copper Co. Inc. [HI-TSXV, HDRSF-OTCQB] on Monday announced the sale of non-core assets to Sweetwater Royalties and a $26 million private placement.
Sweetwater Royalties is a privately-held base metals and industrial metals royalty company owned by Orion Mine Finance. Sweetwater owns significant surface and mineral acreage in Wyoming, Utah and Colorado.
On Monday, Highland said it has agreed to sell is UPX properties, which are located in the Upper Peninsula of Michigan state for $3 million in cash, and the assumption by Sweetwater of the US$15 million principal amount owing under a promissory note.
UPX Minerals holds a land package consisting of mineral rights and real properties acquired form Rio Tinto Nickel Co. and Kennecott Exploration Co. in 2017. The transaction will result in Sweetwater controlling approximately 447,842 acres in the Upper Michigan area.
The company also said it intends to complete a non-brokered private placement of approximately 260 million units at 10 cents per unit, to raise $26 million. Orion, already a 30% shareholder of the company has agreed to subscribe for approximately 62.3 million units under the offering for US$5 million cash.
Each unit will consist of one common share and one half of one common share purchase warrant. Each warrant can be used to acquire one common share at 18 cents for up to 24 months following the closing of the offering.
Closing is conditional on the company having raised US$12.5 million in the offering, including Orion’s US$5 million subscription.
Both closings are expected to occur in the third quarter of 2021.
Highland Copper shares eased 4.2% or $0.005 to 11.5 cents on volume of 194,430. The shares are currently trading in a 52-week range of 14.5 cents and $0.035.
Highland said Orion’s participation in the offering is conditional on the completion of the transaction.  Assuming the offering is fully subscribed, Orion’s stake in Highland will be approximately 28%. Highland also said it has agreed with Orion that it will take steps to add qualified independent directors to its board of directors.
The company said it plans to increase its board to seven members, of which the majority are expected to be independent members.
Highland said it intends to use the proceeds of the transaction and offering to settle all of the company’s liabilities, including a loan due to Osisko Gold Royalties Ltd. (OR-TSX, OR-NYSE) and Greenstone Resources LP to advance the development of the Copperwood and White Pine North projects and for general working capital purposes.
The 100%-owned Copperwood Project is located in Michigan’s Upper Peninsula. Based on a 2018 feasibility study, the project could be developed into a 28,000 tonnes per year (payable copper) mining operation with a 10.7-year lifespan. The project CAPEX is estimated at US$244.6 million.
The White Pine copper deposit is located in the Western Upper Peninsula, Michigan. A preliminary economic assessment was completed in September, 2019. The project is an extension of the historical White Pine mine, which operated from 1953 to 1995.
Initial capital expenditures for a proposed mine are estimated at US$457 million, net of pre-production revenue of US$56 million.