Capstone buys $11M stake in Nevada Copper

Vancouver – Nevada Copper (NCU-V) received both a major vote of confidence and an aggressive strategic partner through a private placement that sees it selling to Capstone Mining (CS-T) an 10% stake of the company for $11.3 million.

The deal satisfies both Capstone’s appetite to grow its copper-gold portfolio beyond its operating Cozamin and Minto mines and Nevada Copper’s need for cash to push its Pumpkin Hollow copper project through a prefeasibility study.

The deal, announced Oct. 27 and closed Nov. 3, has Nevada Copper issuing to Capstone 4.5 million units at $2.50 per unit. In turn the units are worth one share and a half share purchase warrant exercisable at $3 for two years.

The transaction immediately extends to Nevada Copper $11.3 million. If Capstone exercised its warrants, Nevada Copper would net an additional $6.8 million. At $2.50 a share, an 8% premium over Nevada Copper’s closing shareprice Oct. 27, the private placement valued Nevada Copper at $113 million.

The deal wasn’t only about cash, however. Not only did Nevada Copper agree to allow Capstone a seat on its board of directors if Capstone increases its stake to 19%, but as Nevada Copper president and CEO Giulio Bonifacio noted in its new strategic partner Nevada Copper is getting an expert miner.

“We are extremely pleased by this strategic investment by Capstone who has both the operating expertise and financial capabilities to assist Nevada Copper in rapidly advancing the Pumpkin Hollow Project through feasibility to production,” stated Bonifacio.

Pumpkin Hollow, near to Yerington, Nevada, is primarily a copper deposit with gold and silver credits. At last count it weighed in at 443 million measured and indicated tonnes grading 0.58% copper, 0.069 gram gold per tonne and 2.37 grams silver.

The agreement also promised Nevada Copper a get-out-of-takeover-free card from Capstone. Without the consent of Nevada Copper’s board of directors Capstone cannot push its stake in the company beyond 20%. Nevada Copper would, however, drop the Capstone takeover stipulation if another company made a bid for it.

Capstone owns two operating mines, the Cozamin mine in Mexico and the Minto mine in the Yukon, from which it produces about 100 million lbs. copper a year.