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Excelsior Mining's Gunnison copper project receives huge boost - with a US$75M financing package

Excelsior's Gunnison copper project is in Arizona...
Excelsior Mining's Gunnison copper project receives huge boost - with a  US$75M financing package
Pictured are workers at the Gunnison project in Arizona

Excelsior Mining Corp (TSE:MIN) revealed its Gunnison copper project in Arizona has received a huge boost - a US$75 million project financing package, sending shares surging.

"In today's challenging mining market, only quality projects are able to secure funding," said Stephen Twyerould, the president and chief executive of  Excelsior.

"This financing delivers superior long-term economics for shareholders and allows us to quickly move into construction this year.

"Excelsior's pathway to achieving producer status is now clear, and we look forward to bringing the USA's next new strategic metal producer online in 2019."

The financing will be provided by Triple Flag Mining Finance Bermuda Ltd (Triple Flag), and consists of a US$65 million copper metal stream and concurrent US$10 million private placing of Excelsior shares.

Excelsior says the funding solution will cover all expenditures and working capital related to the start-up of the mine and is not subject to interest payments, meaning future project debt financing could expand the project production capacity up to the targeted 125 million pounds per year.

The stream element allows Triple Flag to provide a further US$65 million in funding for the second stage expansion of Gunnison, while also preserving the right of Excelsior to buy-down 50% of the stream.

The financing comprises a number of elements including a metals purchase and sale agreement, in which Triple Flag will fund upfront a deposit of US$65 million against the future sale and delivery by Excelsior of a percentage of the refined copper production from the project.

Excelsior will sell to Triple Flag this percentage of refined copper at a price equal to 25% of the copper spot price.

"At full production of 125 million pounds per annum, and using the same US$2.75 copper price from our feasibility study, the stream would add just an additional 7 cents per pound to our industry-leading all-in-sustaining operating costs of US$1.23 per pound," noted  Twyerould.

"With this stream, the Gunnison copper project would still be one of the lowest cost pure copper producers in the United States, and one of the lowest capex per pound copper projects in the industry."

On Excelsior expanding production capacity to an amount equal to or greater than 50 million pounds a year, Triple Flag will have the option to increase its stream participation by paying a further US$65 million.

Notably, Excelsior also has the option to reduce the amount of the stream by 50% by making a buy-down payment to Triple Flag.

In conjunction with the stream, Excelsior will complete the equity placing to raise proceeds of US$10 million, which will consist of issuing to Triple Flag a total of over 13.8 million Excelsior  shares at a total subscription price of US $10 million, or equal to around C$0.95 per share at current exchange rates.

In addition, affiliates of Greenstone Resources  retain a pre-emptive right over the issue of shares and the overall size of the placing may be increased up to $20 million dependent upon Greenstone's decision to exercise its pre-emptive right.

"Triple Flag is excited to partner with Excelsior to finance the Gunnison Copper Project. Our flexible and innovative financing will allow the Gunnison Copper Project to quickly proceed to construction and production over the next year, delivering a new, low-cost source of American copper," said Shaun Usmar, the chief executive at Triple Flag Mining Finance Ltd.

"We congratulate the Excelsior team for its impressive progress in advancing this project to fully funded status."

The Gunnison project is an advanced, low cost, environmentally friendly in-situ recovery copper project and remains on-track to be the next new copper producer in the United States, with initial production scheduled for 2019.

Excelsior shares zoomed up 16% to $1.08. 

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