Buenaventura, which operated a number of mines in Peru, is taking nearly 66 million shares of Vancouver-based Tinka at C$0.243 per share, netting Tinka C$16 million in proceeds.
The funds will go towards the development of Tinka’s flagship Ayawilca property in the zinc-lead-silver belt of central Peru.
READ: Tinka Resources reaches major permit milestone for Ayawilca project; drills more high-grade zinc
Buenaventura paid an 83% premium on top of Tinka’s three-month volume-weighted average price (VWAP) and a 45% premium on its six-month VWAP.
"We are thrilled to welcome Buenaventura as a strategic investor in Tinka and to have them join our share register, which includes long-term supportive shareholders such as Sentient (Global Resources Fund IV LP),” Tinka CEO Dr Graham Carman said in a statement.
“The investment by Buenaventura, which is at a significant premium to market price, is a strong endorsement of the Ayawilca project and our management team.”
Upon closing, Buenaventura will hold about 19.9% of Tinka’s shares, subject to the exercise of pre-existing pre-emptive rights. The miner also agreed to a 24-month equity lockup on shares as well as certain standstill provisions.
Buenaventura CEO Victor Gobitz said the company was pleased to come on board as a strategic investor in the Peruvian junior.
“We believe that the Ayawilca project is an attractive development project that may benefit from synergies with some of our existing operations in Peru, such as Uchucchacua, El Brocal and Yumpag, as well as offering potential for additional mineral resource growth and new discoveries,” Gobitz said.
Buenaventura will also be able to nominate someone to sit on Tinka’s board as long as the miner keeps a 5% or more stake in the company on a partially diluted basis. It will also have the right to nominate a second member if it owns 20% or more shares of Tinka on a partially diluted basis.
Tinka also announced Thursday that another strategic investor, Sentient, has exercised its rights to subscribe for nearly 10.3 million shares at the issue price, netting the explorer another C$2.5 million. Upon closing of the placement, Sentient will hold just over 74 million shares of Tinka or around 21,7% of the company.
Sentient’s additional placement means that Buenaventura is expected to hold 19.3% of Tinka upon closing of the placement, which is expected by January 7, 2020.
Contact Angela at email@example.com
Follow her on Twitter @AHarmantas