Guarantees from Aur Resources (TSE) will secure a US$55-million loan to Canada Tungsten (TSE) for preproduction development of the Andacollo copper deposit in Chile.
Dresdner Bank Canada is providing the loan on the condition that Canada Tungsten, which owns 70% of Andacollo, and Compania Minera del Pacifico, which owns the rest, invest US$23 million directly in the project before using the loan.
Canada Tungsten plans a rights offering to raise $16.2 million (Canadian), which will finance a guarantee fee for Aur, working capital and part of the funds for Andacollo. So far, institutional investors have indicated an intention to take up about 30% of the offering. Aur has agreed to take 46% and to buy up to 25% more if the offering is undersubscribed.
Aur is providing a $11-million loan as bridge financing until the rights offering is complete, and will collect a $4.2 million fee for its guarantee, the interim loan and the standby commitment to purchase shares. Canada Tungsten is placing these arrangements before its shareholders at its annual meeting on Nov. 8.
Andacollo’s oxide and supergene zones have a minable reserve of 34.6 million tonnes with an average grade of 0.87% copper and can be exploited by heap leaching and solvent extraction-electrowinning methods.
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