Pembridge Resources has signed a Share Purchase Agreement dated February 14, 2018 (the SPA) with Capstone Mining Corp to acquire 100% of Minto Explorations Ltd. The consideration for the Proposed Acquisition is comprised of $37.5 million in cash plus new ordinary shares of nominal value 1 pence each in the capital of Pembridge, such that, subsequent to the completion of the Proposed Acquisition and concurrent Financing, Capstone will own 9.9% of the issued Ordinary Share capital of Pembridge as enlarged by the Proposed Acquisition.
• Acquisition of Minto establishes Pembridge as a cash flow generating copper producer
• Minto is located in the mining friendly Yukon territory in Canada and has a 10 year production history with all key infrastructure, facilities and operating teams in place
• Current Capstone plan supports annual production averaging approximately 50,000 t of high quality copper concentrate containing 18,000 t of copper, with gold and silver as by-products, capable of generating positive EBITDA and cash flow over the next four years
• Significant existing copper resource base with a history of reserve and resource replacement and growth
• Exploration potential property-wide including multiple open pit and underground exploration targets located in close proximity to existing operations
• Capstone to retain a material ownership stake in Pembridge with key members of Capstone’s management team facilitating the transition through an advisory arrangement
• Pembridge management have identified several near-term initiatives with the potential to significantly extend mine life, enhance mine economics and improve margins
• Pembridge will undertake a financing to raise approximately $50 million in connection with the Proposed Acquisition
David Linsley, Chief Executive Officer of Pembridge: “The acquisition of Minto represents a transformational opportunity for Pembridge and its shareholders. Minto fits perfectly with the company’s stated goal to acquire a producing and profitable mining operation to which our team can add further value. This acquisition will represent a core asset to Pembridge and will be used as a platform for future growth.
“We believe Minto is an exceptional opportunity with the potential to benefit not only our shareholders but also the local and wider community for many years to come. We look forward to engaging with and working closely alongside the Selkirk First Nation, the various local communities, the Yukon Government and the substantial workforce at the mine.
“Pembridge is guided by its board, management and technical team, who have a range of experience in mining operations and finance. In addition, two of our board members have prior connections to the Minto mine. Their experience, complemented by the rest of the team, will be instrumental in seeking out efficiencies and delineating the surrounding area’s potential.”
Minto is an open pit and underground copper-gold-silver mine located in central Yukon, some 240 km north of the capital Whitehorse along the Klondike Highway. The Minto mine has been in continuous production since 2007 and is presently the only operating mine in Yukon territory. In excess of $350 million of capital expenditure has been invested into Minto since site construction began some 12 years ago.
Minto started as an open pit mining operation utilising conventional truck and shovel mining. Concurrent underground operations commenced in 2014 using a combination of room and pillar and long-hole stoping retreat mining methods. Ore is transported to a processing plant with a capacity of 4,000 t/d, which produces a high quality concentrate averaging 35-40% contained copper.
In 2017, Minto produced 16,332 t of copper, 170,809 oz of silver and 25,205 oz of gold. Production guidance from Capstone for 2018 is 19,000 t of copper. C1 cash costs are forecast by Capstone to be $2.35 to $2.45/lb with all-in sustaining costs of $2.55 to S$2.65/lb.
Pembridge management has identified a number of potential operating efficiencies that it believes could significantly lower operating costs.
Currently, all silver ounces and up to 30,000 oz of gold production per annum is subject to a precious metal purchase agreement with Wheaton Precious Metals Corp.
The existing Minto mine plan, prepared by Capstone, contemplates the continuation of operations through to mid-2021. This is based on the mining of certain of the open-pit and underground deposits comprising a portion of the existing resource base. Between 2008 and 2012, Capstone invested approximately $24 million in exploration and added over 500,000 t of contained copper resource. No exploration activities have been undertaken on the property since. However, a number of prospective exploration targets have been identified and will require drilling.
Immediately following the completion of the Proposed Acquisition, Pembridge management will implement a number of strategies to seek to significantly extend the current four year mine plan.
