“We are pleased to be able to improve the company’s cash liquidity,” Gil Clausen, the company’s president and stated in a press release. “Our expansion plans at the Copper Mountain mine are expected to be fully funded by cash on hand and free cash flow.”
The company expects to make a construction decision on its Eva project before the end of this year
According to Clausen, the company’s “vision is to triple copper production from 2020 production levels within five years and do so in a low risk, financially sound manner.”
The Copper Mountain mine is located near Princeton, B.C., 300 km east of Vancouver, and is 75% owned by the company (the remainder is held by Mitsubishi Materials). The open pit, truck and shovel operation produced 77.6 million lbs of copper, 29,227 oz. gold and 392,494 oz. silver last year. The company estimates 2021 production will increase to 85-95 million lbs. copper, 25,000-35,000 oz. gold and 500,000-550,000 silver.
The company expects to make a construction decision on its Eva project before the end of this year. The development stage project in northwestern Queensland is envisioned as an open pit mine and has measured and indicated resources of 261 million tonnes grading 0.42% copper for 2.4 million lb. of copper.
Rene Cartier, who covers the company for BMO Capital Markets, said the $250 million bond offering “provides a cleaner, simpler and much more flexible balance sheet.”
“Following the offering, CMMC will now be able to access 100% of the excess free cash flow from the mine,” he wrote in a research note to clients. “CMMC plans to advance a US$260M senior secured loan to the subsidiary that holds the Copper Mountain mine; CMMC will thus be entitled to 100% of mine cash flow until the loan has been repaid, and then reverting to 75%.”
Cartier has an outperform rating on the company and a target price on the stock of $3.25 per share.
(This article first appeared in The Northern Miner)
