Tintina surges on $91M for Chile copper-gold project

Tintina Mines (TSXV: TTS) surged to a 17-year high after it secured a $91 million (US$65.7 million) investment backed by Japan’s Sumitomo Corp. and the Gignac mining family to fund the development of its main Domeyko Sulfuros copper-gold asset as well as consolidate the project’s ownership.

In a statement on Tuesday, the Chile-focused junior said the parties are among the investors joining a private placement of subscription receipts priced at C68¢ each. The receipts will be offered in two tranches, each with a different type. The first – totalling $62 million – has both common shares and warrants of Tintina, while the second comprises only common shares totalling $29 million. Up to about C$82 million of additional capital could be available upon full exercise of the warrants attached to the first-tranche receipts, Tintina said.

“Domeyko Sulfuros is precisely the kind of opportunity the Gignac family has been seeking, a copper-gold porphyry, and with a clear pathway to development. Importantly, the scale and complexity of the project sit squarely within the range of assets that we have successfully developed, financed, built and operated,” G Mining Services President Mathieu Gignac said in a release.

The deal represents a significant vote of confidence in Domeyko Sulfuros, pairing one of Japan’s largest trading houses with one of Canada’s best-known mine-building groups as Tintina advances a project with an estimated US$1.28 billion in capital costs.

The Tintina Mines’ share price more than doubled on the news, rising as much as 150% to a new high of $1.70 apiece, a high not seen since 2008. The Toronto-based company trades at a market capitalization of $216.3 million, in a 12-month range of 23¢ to $1.70. 

Milestone transaction

Sumitomo and the Gignac family are expected to create a new investment vehicle to to equally fund the purchase of $48 million in receipts, all in the first tranche, Tintina said. Upon completion and conversion of the receipts into shares, it would own 25% of the company’s shares (or 38% after exercise of warrants).

Juan Enrique Rassmuss, Tintina’s chairman and CEO, is expected to own 47% of the company. His shareholding could drop to 36% should the outstanding warrants be exercised.

The remaining $43 million would be acquired by a broader investor group, including C$14 million from its cornerstone investor Franco-Nevada (TSX, NYSE: FNV), as well as those associated with G Mining Capital (GMC), a Canadian mining investment platform backed by the Gignac family and Sumitomo.

According to Claude Dufresne, CEO of GMC, the platform was established as “an origination and business development platform of Sumitomo and G Mining Services”, a Canadian mining consultancy firm led by Louis Gignac Sr. and his three sons.

The platform “was mandated to source and evaluate high-quality copper opportunities and, once identified, to draw on the broader ‘in-house’ capabilities to advance them through development and into production,” he said.

Of the $91 million in proceeds, about $55 million will go towards advancing Domeyko Sulfuros towards a final investment decision (FID), Tintina said, while the remaining $36 million will be used to buy out the minority shareholders of the project, which currently own a 26.25% stake. This gives the Domeyko Sulfuros project a pre-money valuation of C$138 million, it added. The project is located 540 km north of Santiago.

Rassmuss, who controls the entities holding the project’s minority ownership, said the transaction provides the capital required to advance the Domeyko Sulfuros project to FID and brings together a partnership “with an outstanding track record of delivering large-scale mining projects on time and on budget.”

Development opportunity

Domeyko Sulfuros, located in the Atacama Region of northern Chile, is a brownfield site with prior oxide operations. The copper-gold porphyry project hosts a measured and indicated resource of 100.8 million tonnes grading 0.35% copper and 0.28 gram gold per tonne, containing about 777 million lb. copper and 907,000 oz. gold; plus an inferred resource of 256.3 million tonnes grading 0.34% copper and 0.24 gram gold, containing about 1.92 billion lb. copper and 1.98 million oz. gold.

Earlier this year, Tintina released a preliminary economic assessment for the project, outlining a potential 25-year open-pit operation producing 37,000 tonnes of copper and 57,000 oz. of gold in concentrate annually. The after-tax net present value (at 8% discount) was estimated at US$328 million, compared with an initial capital requirement of US$1.28 billion.

Founded in 2016, G Mining Services provides a full range of services fundamental to the development of a mining project, from exploration, to feasibility studies, then construction, commissioning and into operations.