Western Copper agrees to a $3-million loan from Teck

A previously announced $5-million financing with Canaccord Capital has been terminated by mutual consent and, instead, Western Copper Holdings (WTC-T) has arranged for a loan of up to $3 million with Teck (TEK-T) to fund its share of exploration and development costs on El Salvador, the partners’ base metal exploration project in Mexico’s Zacatecas state.

The loan, which is payable in either cash or shares, has a term of one year.

The financing with Canaccord, announced Feb. 11, was to have comprised 555,556 special warrants at $9 each.

Robert Gayton, vice-president of finance for Western Copper, said that with the stock trading at the $7 level, the company reached a mutual decision with Canaccord to terminate the deal, and decided to let Teck fund the exploration on El Salvador.

Gayton says there are no immediate plans to pursue other financing deals.

“Right now, we think we’re going to be okay if we get a few options and warrants exercised.” However, should Western Copper arrange further financing, Gayton says Canaccord retains a right of first refusal on any new deals until mid-June.

Western Copper currently has over $2.5 million in cash from a recent private placement with Rio Tinto (rtp-n) subsidiary Kennecott Exploration. Gayton says the exercise of warrants and options in coming weeks will add an additional $1 million to the company’s treasury. Western Copper currently has almost 14 million shares outstanding, or 15.6 million on a fully diluted basis.

As part of a strategic alliance with Kennecott, Western Copper is dedicated to funding exploration and development of the Faja de Plata property group, held under option from Kennecott, and the newly acquired Penasquito base and precious metal project, where drilling is expected to begin in April.

In the meantime, Teck and Western Copper are focused on defining the dimensions of the San Nicolas massive sulphide find, which is part of the El Salvador project. Teck is the operator and holds a 55% interest; Western Copper holds the remainder.

San Nicolas occurs on claims optioned from the Mexican mining company Luismin, which retains a back-in right to a 25% participating interest. Two rigs are being used to drill the San Nicolas deposit on 100-metre centres.

The partners recently released assay results from four additional holes, numbered 44 through 47, bringing the number of holes completed to date to 21.

Hole SAL-44 was collared on the northwest edge of the deposit, 100 metres northeast of hole 34 and 100 metres northwest of hole 42. It hit multiple intercepts including: 7.9 metres averaging 18.29% zinc, 3.51% copper, 0.89 gram gold and 125.9 grams silver per tonne, starting at a depth of 194.8 metres; 27.2 metres averaging 10.52% zinc, 1.45% copper, 1.28 grams gold and 106.6 grams silver, starting at 216.4 metres; and 14.2 metres averaging 0.79% zinc, 2.25% copper, 0.2 gram gold and 18.5 grams silver, starting at 459.3 metres.

Hole 34 intersected a previously reported 56.9 metres averaging 0.75% zinc, 2.49% copper, 0.02 gram gold and 9.5 grams silver, starting at a depth of 450.6 metres. Hole 42 cut 198.3 metres averaging 0.52% zinc, 1.85% copper, 0.15 gram gold and 15 grams silver, starting at 224.7 metres, including an upper zone grading 4.04% zinc, 0.47% copper, 1.11 grams gold and 58.1 grams silver over 15.5 metres and a lower 63.8-metre section averaging 0.16% zinc, 3.18% copper and 10.5 grams silver.

Hole SAL-46, the most northerly hole reported to date, was collared 100 metres northeast of hole 42. It intersected 18.6 metres averaging 0.88% zinc, 0.71% copper, 0.34 gram gold and 16.8 grams silver, beginning at a depth of 267 metres.

The southeastern end of the deposit was tested by hole SAL-45, a 100-metre stepout to the southwest of hole 43. It hit an upper 14.9-metre interval grading 5.48% zinc, 0.94% copper, 1.32 grams gold and 73.4 grams silver, starting at a depth of 161.6 meters, and a lower 28-metre section averaging 0.74% zinc, 4.02% copper, 0.18 gram gold and 15.4 grams silver, beginning at 267 metres.

A stepout 100 metres northeast of hole 43 and 100 metres southeast of hole 38, hole SAL-47 intersected 12 metres grading 3.46% zinc, 0.21% copper, 1.1 grams gold and 36.4 grams silver, starting at 239.6 metres.

Drilling is continuing and metallurgical testwork is under way.