New Pacific shares drop on news it’s raising $35M for Bolivia projects

Shares in New Pacific Metals (TSX: NUAG; NYSE: NEWP) dropped to their lowest level in months on Tuesday  following the announcement it was raising $35 million to advance its Silver Sand and Carangas projects in Bolivia. 

The bought deal is underwritten by a syndicate, which has agreed to purchase approximately 13.2 million common shares of New Pacific at a price of $2.65 per share, New Pacific said in a release on Monday. The underwriters have been granted an over-allotment of nearly 2 million additional common shares. The option is exercisable for a period of 30 days following closing. Closing is expected on or about Sept. 29, 2023. Provision will also be made for working capital and general corporate purposes.

New Pacific said in announcing the financing that Pan American Silver (TSX: PAAS; NASDAQ: PAAS) and Silvercorp Metals (TSX: SVM; NYSE: SVM) have shown interest in participating in the offering, investing $13.5 million and $6.7 million, respectively.

Silver Sand has a base case post-tax net present value at a 5% discount of US$726 million and a post-tax internal rate of return of 39% at a silver price of US$22.50 per oz., according to a preliminary economic assessment for the project released in January. The proposed mine in the Potosi region has a life of 14 years during which time 171 million oz. of silver will be produced. The all-in sustaining cost of producing an ounce of silver is estimated to be US$10.42. The project is 100%-owned by New Pacific. 

Measured and indicated resources were estimated in 2022 to be 54.3 million tonnes grading 116 grams silver per tonne, containing 201.8 million oz. The inferred resource is 4.6 million tonnes at 116 grams silver, containing 13 million oz. of silver.

New Pacific is earning a 98% interest in the Carangas silver-gold-base metal discovery from a private Bolivian corporation.

In September, the company issued an initial resource estimate for the three zones of interest – Upper Silver, Middle Zinc, and Lower Gold zones. Indicated resources total 214.9 million tonnes for 205.3 million oz. of silver, 1.6 million oz. of gold, 1.4 million lb. of lead,  2.7 million lb. of zinc, and 112.6 million lb. of copper. Collectively the contained silver equivalent is 559.8 million oz. The inferred category totals 45 million tonnes for 109.8 million oz. of silver equivalent.

New Pacific shares were down 11.7% to $2.62 apiece on Tuesday in Toronto, valuing the company at $412.9 million. Its shares traded in a 52-week range of $2.48 and $4.14.