TIDMPERE
RNS Number : 9363E
Pembridge Resources plc
15 February 2018
February 15(th) , 2018
Acquisition of Minto Copper-Gold-Silver Mine from Capstone
Mining Corp and Suspension of Trading
THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS DEEMED BY THE
COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE EU
MARKET ABUSE REGULATION (596/2014). UPON PUBLICATION OF THE
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION
IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
London, United Kingdom - Pembridge Resources plc (LSE:PERE)
("Pembridge" or the "Company"), a mining-focused special purpose
acquisition company ("SPAC") admitted to listing on the standard
segment of the Official List by the United Kingdom Financial
Conduct Authority (the "FCA") and to listing on the main market for
listed securities of the London Stock Exchange plc, is pleased to
announce that it has signed a Share Purchase Agreement dated
February 14(th) , 2018 (the "SPA") with Capstone Mining Corp.
("Capstone") to acquire 100% of Minto Explorations Ltd. ("Minto")
(the "Proposed Acquisition").
The consideration for the Proposed Acquisition is comprised of
US$37.5 million in cash plus new ordinary shares of nominal value 1
pence each (each, an "Ordinary Share") in the capital of Pembridge
(the "Consideration Shares"), such that, subsequent to the
completion of the Proposed Acquisition and concurrent Financing
(defined below), Capstone will own 9.9% of the issued Ordinary
Share capital of Pembridge as enlarged by the Proposed
Acquisition.
Key highlights
-- 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 tonnes of highly quality copper concentrate
containing 18,000 tonnes 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
US$50 million in connection with the Proposed Acquisition
David Linsley, Chief Executive Officer of Pembridge stated: "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 mine overview
Minto is an open pit and underground copper-gold-silver mine
located in central Yukon, approximately 240 kilometres 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 US$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 tonnes per day, which
produces a high quality concentrate averaging 35-40% contained
copper.
In 2017, Minto produced 16,332 tonnes of copper, 170,809 ounces
of silver and 25,205 ounces of gold. Production guidance from
Capstone for 2018 is 19,000 tonnes of copper. C1 cash costs are
forecast by Capstone to be US$2.35 to US$2.45 per pound with all-in
sustaining costs of US$2.55 to US$2.65 per pound.
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 ounces 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 US$24 million in
exploration and added over 500,000 tonnes 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.
Mineral Reserves and Mineral Resources for Minto are prepared in
accordance with Canada's National Instrument 43-101 - Standards of
Disclosure for Mineral Projects and have, in the past, been
annually stated by Capstone. A Mineral Reserve and Mineral Resource
Report to the financial year ended 2017 will be prepared by the
Company in conjunction with Capstone (the "Competent Persons
Report") and will be included in a prospectus (the "Prospectus") to
be filed by the Company in accordance with the Listing Rules and
Prospectus Rules of the FCA.
Transaction
Under the terms of the SPA, Pembridge will acquire a 100%
interest in Minto through the acquisition of Capstone's 100%
interest in Minto Explorations Ltd. The purchase price for the
Minto mine will be comprised of a cash consideration of US$37.5
million and the issuance of Consideration Shares such that Capstone
will own 9.9% of the issued share capital of Pembridge as enlarged
by the Proposed Acquisition. The Proposed Acquisition is structured
on the basis that Minto is being acquired on a debt free, cash free
basis with normalised working capital.
The Proposed Acquisition constitutes a reverse takeover for the
purposes of the Listing Rules of the FCA, and accordingly the
Company requested that the FCA suspend the listing of Pembridge's
Ordinary Shares with immediate effect. The Company will proceed to
prepare and publish a Prospectus in the coming weeks which will
include the Competent Persons Report on the assets of the Company
as enlarged by the Proposed Acquisition.
The Company and Capstone have entered into a lock-in and orderly
market agreement (the "Lock-in"). The Lock-in will provide that (i)
Capstone will agree not to sell any of the Consideration Shares for
a period of one year from the date of Admission and, (ii) Capstone
will have the right to participate in future equity offerings in
order to maintain its pro rata ownership.
Completion of the Proposed Acquisition is subject to customary
closing conditions, including shareholder and regulatory approvals.
Pembridge currently expects the Proposed Acquisition to close in
April 2018.
Financing
In connection with the Proposed Acquisition, Pembridge will
undertake a financing to raise approximately US$50,000,000 (the
"Financing") to fund the acquisition price together and working and
resource development capital. Pembridge is actively engaged with a
number of potential capital providers and is currently reviewing
available financing options. It is currently anticipated that the
Financing will be funded through an equity placement (the
"Placing"). GMP Securities L.P. and Arden Partners plc have been
engaged by the Company to act as brokers and bookrunners in
connection with the Placing.
The person who arranged for the release of this announcement on
behalf of the Company was David Linsley, Chief Executive
Officer.
Pembridge Resources plc: +44 20 7917 2968 (UK) / +1 236 333 5134
(Canada)
David Linsley, Chief Executive Officer
Thomas Horton, VP Project Development
Joint Brokers and Bookrunners
GMP Securities L.P. - Canada: +1 416 367 8600
Arden Partners - United Kingdom: +44 20 7614 5900
Fraser Marshall
SI Capital - United Kingdom: +44 14 8341 3500
Nick Emerson
Financial Public Relations
Tavistock Communications: +44 20 7920 3150
Jos Simson
Charles Vivian
About Pembridge Resources plc
Pembridge Resources is a mining focused SPAC listed on the main
market for listed securities of the London Stock Exchange plc. The
Company's management is composed of a team of senior leaders with
experience in various board and executive positions with a
complementary mix of expertise in geology, engineering, project
appraisal, and commercial development across a wide range of
commodity groups and mining jurisdictions.
The company news service from the London Stock Exchange
END
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