Sumitomo taking bulk of $37.5-million Augusta financing

Vancouver – Augusta Resource (AZC-T, AZC-X) has lined up a $37.5-million financing with Japanese multinational Sumitomo (SSUMY-O) subscribing to 71% of the non-brokered private placement.

The financing will see Augusta sell just over 10.7 million shares at $3.50 apiece, almost a one dollar premium over its trading price prior to the announcement.

Sumitomo will purchase 7.6 million shares of the placement giving it an 8.7% interest in Augusta upon completion. It describes the investment as a strategic partnership for development of the Rosemont copper and molybdenum resources.

The remainder of the financing is being taken up by a pair of funds managed by private US investment firm Harbinger Capital Partners. Harbinger will boost its interest in Augusta from 18.6% to 19.9% after closing.

Currently in the late-stage of a feasibility study, Augusta is advancing its Rosemont copper project in southern Arizona towards planned open pit development.

Measured and indicated resources at Rosemont stand at 67.6 million tonnes of oxide material grading 0.2% copper (using a 0.1% copper cut-off grade) plus 492.7 million tonnes of sulphide mineralization averaging 0.5% copper, 0.014% molybdenum and 4.1 grams silver per tonne with a 0.2% copper cut-off grade.

The proposed operation would see a 68,000-tonne-per-day milling rate producing about 250 million lbs. copper and 5 million lbs. molybdenum annually along with silver byproduct credits of up to 3 million oz.

This financing arrangement will enable us to meet immediate project requirements for long-lead capital equipment, and fund working capital needs through to project financing at the end of our permitting process, stated Augusta president and CEO Gil Clausen.

Shares of Augusta rallied 22% on the financing news to post a 56 gain and closing at $3.10 apiece in TSX trading.

The company also recently entered a sale agreement for its Mount Hamilton and Shell projects in White Pine Cty, Nevada. Ivana Ventures (ANA-V, IVVEF-O) intends to pay US$6.5 million in cash and warrants for the properties.