Roca lines up $13-million to advance moly mine

Vancouver – In a move to bolster the treasury as its Max molybdenum mine nears production, Roca Mines (ROK-V, ROCAF-O) has arranged a $13-million bought deal financing.

An underwriting syndicate, led by Desjardins Securities, has agreed to purchase 4.09 million units of Roca at $3.18 apiece. Units will be comprised of a share plus a half-warrant with full warrants exercisable at $4.00 for two years. The brokers also have also been granted an overallotment option to buy an additional 15% of the offering.

For its work, the underwriting group will get 6% of the gross proceeds and broker warrants equal to 6% of the units sold through the offering. Broker warrants will be exercisable at $3.19 for one year.

Roca expects the financing to close by the beginning of August.

Funds are being allocated to its Max molybdenum mine, located 60 km southeast of Revelstoke, B.C., where it is anticipating initial production by late-August.

The company reports underground development is progressing with ore zones being prepared for mining. Additionally, all the processing equipment (including a 1,000-tonne-per-day mill) is installed and being wired in to power.

Mineralization in the pipe-like deposit consists of molybdenite (MoS₂) associated with a granodiorite intrusive. The molybdenite occurs mostly within quartz stockworks but also as disseminations in the intrusive.

A measured and indicated resource of 42.9 million tonnes grading 0.2% MoS₂ has been tabled for the deposit, using a 0.1% MoS₂ cut-off grade.

Roca intends to initially target the high-grade HG zone, about 260,000 tonnes of 1.95% MoS₂, and produce a concentrate of approximately 95% MoS₂.

The deposit was previously evaluated by a Newmont Mining (NMC-T, NEM-N) and Esso Minerals joint venture in the late-1970s and early-1980s, and included some underground development. In 1982 the pair suspended operations deciding not to advance the project due to a weak molybdenum price and market outlook.

The molybdenum price has recently risen to the US$35 per lb. level after spending most of 2006 around the US$25-range per lb. Price for the metal increased significantly through 2004, from the US$5.00-level per lb., to reach US$40 per lb. in mid-2005.

Molybdenum is principally used as a hardening and anti-corrosion alloy in stainless and specialty steels.

Shares of Roca have recently risen to new highs at the $3.70-level, giving the soon-to-be molybdenum miner a $278-million market capitalization based on its 75-million shares outstanding.