Recent financing arrangements have set the stage for Azco Mining (TSE) to bring the Sanchez operation into production in southeast Arizona. The copper project is one of three held by the company in the southwestern U.S and Mexico.
Permitted and ready for construction, Sanchez is expected to produce about 56 million lb. per year at a cash cost of US50-55 cents per lb., over a 20-year mine life. Mining is expected to last 20 years and will feature solvent extraction-electrowinning (SX-EW) to produce cathode copper. Barclays Bank of Canada and Barclays Bank PLC of London agreed to underwrite up to US$60 million in debt-project financing to construct the mine and bring it into production.
Deacon Barclays de Zoete Wedd, a subsidiary of Barclay’s investment banking arm, will act as lead manager for a proposed complementary public equity financing. Nesbitt Thomson and Midland Walwyn are co-managers in the financing.
The US$60-million loan will be applied directly to the estimated US$75-million cost of construction. Equity funds will be applied to the balance of construction costs while a portion will be directed to a cash reserve account and the costs and fees of a copper-hedging program. The proposed financing is also expected to bring the second mine project — Piedras Verde in Mexico’s Sonora state — to bankable feasibility status. Azco’s goal is to produce more than 100 million lb. copper per year within five years at about US50 cents per lb.
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