Following a seemingly quiet second half of 2017, mining-focused cash shell Pembridge Resources (LSE:PERE) has bounced back today with the acquisition of a copper-gold-silver mine. Pembridge will buy the Minto Cooper-Gold-Silver Mine from Capstone Mining Corporation for a cash payment of $37.5m and a share payment which will total 9.9pc of the issued share capital, post completion of the deal. The size of this deal has taken the market by surprise and Pembridge has now gone into suspension to enable it to complete this Reverse Takeover.
In order to finance the acquisition, Pembridge will seek to raise approximately $50m through debt and equity, which will also provide it with working and resource development capital. Its shares will remain suspended while it prepares and publishes a prospectus and competent persons report for the deal.
Minto Mine
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.
The acquisition will establish Pembridge as a cash flow generating copper producer, with Capstone’s plan for the mine supporting annual production of around 50,000 tonnes of copper concentrate containing 18,000 tonnes of copper.
Pembridge said the mine will also produce gold and silver as by-products and is capable of generating positive EBITDA and cash flow over the next four years. At today’s copper price of $6,962/t, this resource could generate $125.3m a year..
Furthermore, the firm said its management has identified several near-term initiatives to reduce production costs and extend the mine life. Pembridge believes that Minto has further exploration potential property-wide, including multiple open pits and underground exploration target located in close proximity to existing operations.
David Linsley, the chief executive officer of Pembridge, said: ‘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.
‘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.’
Good call
As we reported in December, Pembridge was trading at a notable discount to the price it raised money at when is re-listed on the Standard List of the London Stock Exchange last August.
It re-listed as part of a placement and subscription to raise up to £2.5m at 1.6p a share. The placing was accessible to private investors through the Teathers App, who also received warrants exercisable at 3.2p a share before August 2019..
Although Pembridge’s share price declined in the following months, we argued that with Linsley and his fellow directors promising to receive no salary until Pembridge completed a deal, investors could be heavily rewarded if the company put its money to work. Shareholders now need to see the final detail of the deal in the prospectus, but given the size of the transaction and the potential revenue it could generate it looks like their patience is about to be richly rewarded.