Redcorp looks for $240 million to build Tulsequah

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 into one unit comprised of a secured redeemable $1,000 principal amount 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 secured notes will rank equal or senior to all existing and future indebtedness.

The equity portion sees series E receipts exercisable into units consisting of a Redcorp share plus a half-warrant. Full warrants will be exercisable for two years subject to an acceleration clause.

Paradigm Capital is lead agent in the agent syndicate that 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 2 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 $201.5-million pre-start-up 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 per tonne. Mining is modeled at 2,000-tonnes-per-day over an 8-year mine-life with total estimated operating costs of $86.64 per tonne of ore.

Net present value is calculated at $160.6 million, using an 8% discount, along with a 23.4% after-tax internal rate of return and a 29-month pay back period.

Operating plans calls for concentrate transport by an air cushion barge towed by an amphibious tug operating year-round on the Taku River.