Bear Creek to raise $113M for Santa Ana

On the back of a positive feasibility study for its proposed 63-millionoz. Santa Ana silver mine project in Peru, Bear Creek Mining (BCM-V) is raising $113 million in a bought deal financing.

Led by BMO Capital Markets, a group of underwriters have agreed to buy 17.6 million shares at $6.40 apiece by way of a public offering. The syndicate group will have the option to buy up to an additional 15% of the offering to cover any over allotments. The financing closed on Nov. 5.

The proceeds will be used to fund the continued exploration and development of the company’s Santa Ana and Corani silver projects in Peru. The two projects contain reserves totaling 320 million oz. silver, plus additional silver resources and significant base metal byproduct. Both projects are located in the southern province of Puno.

A recently completed feasibility study of Santa Ana describes an open-pit, heap-leach scenario producing 4 million oz. silver annually over a mine life of 11 years, at a cash cost of US$9 per oz.

Minable reserves contain 63 million oz. silver in 37.1 million tonnes grading 53 grams silver per tonne, 0.34% lead and 0.58% zinc. Another and indicated categories. Initial start-up capital for Santa Ana is estimated at US$69 million, with a projected 3.4-year payback based on a silver price of US$14.50.

Bear Creek is moving Santa Ana towards final permitting and detailed engineering, as it works to acquire key surface rights. “With the development of Santa Ana followed by the larger Corani project, Bear Creek has the assets to become a 20-million-oz.-per-year silver mining company by 2014,” stated Andrew Swarthout , president of Bear Creek, in a recent news release.

Corani hosts 258 million oz. silver in reserves of 139.6 million tonnes grading 57.5 grams silver, 0.94% lead and 0.46% zinc. Measured and indicated categories contain another 71.8 million oz. silver in 110 million tonnes averaging 20.2 grams silver, 0.45% lead and 0.4% zinc. A remaining 34.2 million tonnes of 32.4 grams silver, equivalent to 35.6 million oz., is inferred.

A positive prefeasibility study for the high-altitude Corani examined a 15,000-tonne-per-day mine producing 10 million oz. silver annually for the first six years, or 6.4 million oz. on a yearly basis over a 27-year life. Projected cash costs of US$2.87-per-oz. life-of-mine are net of lead and zinc byproduct credits. Initial capital costs are estimated at US$339 million, with payback in less than three years.

Bear Creek is advancing Corani towards completion of a feasibility study in 2011.