Vancouver — Redcorp Ventures (RDV-T, RDFVF-O) has inked the preliminary short form prospectus paperwork for up to $240 million in financing for development and construction of its planned Tulsequah polymetallic mine in northwestern British Columbia.
The combined brokered debt and equity offering has two series of subscription receipts being put forward.
The debt portion will be series D subscription receipts, each exercisable for one unit comprised of a secured redeemable $1,000 series D note and a number of Redcorp common shares yet to be determined. Notes will bear an interest rate, also yet to be determined, payable semi-annually and are due to mature in five years.
The equity portion sees series E receipts exercisable into units consisting of a Redcorp share plus half a warrant. Full warrants will be exercisable for two years subject to an acceleration clause.
Paradigm Capital is lead agent in the financing syndicate, which includes Canaccord Capital, Dundee Securities, Octagon Capital, Blackmont Capital and MGI Securities. A 15% overallotment option has been granted both series of receipts.
The brokerage firms will get 5.75% of gross proceeds realized from the sale of the series E receipts and 4.25% of series D receipt gross proceeds for the sales effort. Additionally, compensation options (exercisable for two years) equal to 2% of total gross proceeds of the offering divided by the issue price of series E units will be issued to the firms.
Earlier this year, Redcorp tabled its feasibility study results calling for a $201.5-million pre-startup capital investment for Tulsequah.
The base case mining scenario in the study uses a probable reserve of 5.4 million tonnes grading 1.4% copper, 1.2% lead, 6.3% zinc, 2.6 grams gold per tonne and 93.7 grams silver. Operations are modelled at 2,000 tonnes per day over an 8-year mine life, with mining by underground ramp and inclined shaft access.
Average production is forecast at 88.6 million lbs. (40,200 tonnes) zinc, 19.8 million lbs. (9,000 tonnes) copper, 8.6 million lbs. (3,900 tonnes) lead, 1.7 million oz. silver and 50,000 oz. gold.
Total estimated operating costs for Tulsequah are estimated at $86.64 per tonne of ore.
Net present value for the planned polymetallic mine is $160.6 million, using an 8% discount, along with a 23.4% after-tax internal rate of return and a 29-month payback period.
Redcorp’s operating plans call for supplies and concentrate transport by tug-towed barges operating year-round on the Taku River to Juneau, Alaska. The plan eliminates the need for an access road into the project that could have cost about $50 million.
The company has begun design and fabrication of its Amphitrac tow vessel and two air cushion barges, each with a cargo capacity of 450 tonnes. Initial units are expected to be operational by December 2007.
Redcorp also recently started building a 200-person camp at Tulsequah.
About 2,600 metres of preproduction underground development is scheduled to begin in late 2007, before production is ramped up in late 2008.
Shares of Redcorp recently traded at the 55-level, giving the company a $73-million market capitalization based on its 132 million shares outstanding. The stock has a 52-week trading range of 22.5-93.
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