Wealth Minerals to spin out copper company

Lithium-focused Wealth Minerals (TSXV: WML; US-OTC: WMLLF) says it will spin out a copper company, containing two copper exploration projects, that it plans to acquire in Chile.

Wealth Copper will be spun out to shareholders of Wealth Minerals and eventually the new entity will list on the TSX Venture Exchange, the company says.

Henk Van Alphen, Wealth Minerals’ CEO, says the spin-out gives shareholders “additional exposure to the global energy consumption paradigm shift.”

“Wealth’s exposure to lithium is intimately tied to the success of battery technology, in which copper plays a key role,” he explains in a statement. “We remain committed to our world-class lithium projects, but as a result of our activities in South America we receive an enormous amount of deal flow.”

Wealth Minerals has signed letters of intent to acquire the Escalones copper-gold porphyry project from TriMetals Mining (TSX: TMI; US-OTC: TMIAF) and the Cristal copper porphyry from New Energy Metals (TSXV: ENRG).

The Cristal copper porphyry project is near Chile’s northern border with Bolivia and Escalones is 97 km southeast of Santiago and 9 km from Chile’s border with Argentina in the Andes mountain range. It is also just 35 km east of El Teniente, one of the world’s largest underground copper mines and currently owned by Chile’s national copper company.

The Escalones deposit was discovered through greenfield exploration work by TriMetals Mining’s former president and CEO, Ralph Fitch, and Felipe Malbran, the company’s vice president of exploration for South America.

The project hosts a 4-sq.-km area of hydrothermal alteration, with coincident geophysical anomalies, that has demonstrated significant grades of copper, gold and silver in replacement-style skarn mineralization hosted in limestones and in porphyry related mineralization.

The Escalones deposit remains open to expansion laterally and down dip, with an untested extension more than ten kilometres long to the north.

A resource estimate in 2013 outlined an indicated resource of 232.6 million tonnes grading 0.31% copper, 0.07 gram gold per tonne, 0.66 gram silver per tonne, 0.006% molybdenum, for 1.58 billion lb. of contained copper, 498,012 ounces of gold, 4.9 million ounces of silver and 31.9 million lb. molybdenum.

Inferred resources add a further 527.7 million tonnes grading 0.34% copper, 0.04 gram gold, 0.85 gram silver and 0.007% molybdenum for 3.99 billion lb. of contained copper, 609,437 ounces of gold, 14.4 million ounces of silver and 79.5 million lb. molybdenum.

Infrastructure at Escalones includes road access, electricity, access to seaports and a gas pipeline that crosses a 70-sq.-km portion of the property.

The Cristal property consists of nine square kilometres of exploration concessions.

Between 2012 and 2014 BHP Billiton completed airborne geophysical data surveys, including magnetics, gravity and electromagnetic that demonstrated a circular doughnut-shaped anomaly measuring about 3 km in diameter and having a central magnetic high surrounded by a magnetic low.

Wealth Minerals says Wealth Copper’s initial focus will be to drill the center of the geophysical anomaly to a depth of between 600 and 800 metres below surface.

Under the proposed spin out, shareholders of Wealth Minerals will receive one common share of Wealth Copper for every three common shares they hold of Wealth Minerals. Wealth Copper will also raise $5 million through a private placement.

After the spin out and private placement, Wealth Minerals shareholders will own about 30% of Wealth Copper, while participants in the private placement will own about 40% and TriMetals Mining will own about 30%.

According to the letter of intent that Wealth Minerals signed with TriMetals Mining on Nov. 30, Wealth Copper will issue TriMetals Mining about 20 million shares, pay $350,000 upon the closing of the private placement and another $500,000 a year after the financing. In addition, TriMetals Mining will be allowed to participate in certain future equity financings, as well as nominate one director to the board for as long as it owns 20% of the company.

Wealth Minerals signed a letter of intent with Cristal’s owners, New Energy Metals, at the end of August. Under the LOI, Wealth Copper will deliver 50,000 common shares and grant it a 30% free-carried interest in Cristal until Wealth Copper completes its option agreement for 100% of the asset. Wealth Minerals will have to pay a total of $4.45 million in cash payments before Aug. 4, 2022.

Initially, Wealth Copper will own 70% of Cristal and New Energy Metals 30% and each will have to contribute its share of budget expenditures. If either party’s interest in the joint-venture drops to 10% or less, its stake will be converted to a 2% NSR royalty, one half, or 1%, of which can be purchased by the other for US$1 million.