Capstone Copper Corp. [CS-TSX] said one of its largest investors, private equity firm Orion, is undertaking a A$593 million sale of Capstone CHESS depository interests on the Australian Stock Exchange.
Once completed, Orion’s stake in Capstone Copper will fall to 12% from 20%, leaving the selling shareholders with beneficial ownership of 90.5 million common shares of Capstone, the company said.
Capstone said Orion has entered into a block trade agreement with Macquarie Capital [Australia] Ltd., Canaccord Genuity [Australia] Ltd. and RBC Capital Markets [Australia] under which Orion has agreed to sell 62.4 million CDIs over the common shares of Capstone for the equivalent of 62.3 million fully paid common shares of Capstone at A$9.50 per CDI, for gross proceeds to Orion of A$592.8 million.
The net proceeds of the secondary offering, which is expected to close by April 9, 2024, will be paid directly to the selling shareholders (Orion Fund JV Ltd., Orion Mine Finance Fund 11 LP, and Orion Mine Finance [Master] Fund I-A (collectively Orion). The company will not receive any proceeds from the secondary offering.
The fixed price of A$9.50 a share represents a 5.7% discount to the last closing price on the TSX. The shares were up 3.1% or 27 cents on volume of 2.76 million in early morning trading on the TSX, Friday. The shares currently trade in a 52-week range of $9.15 and $4.40.
Capstone is a Canadian base metals mining company with a focus on copper.
Its portfolio includes the Pinto Valley copper mine in Arizona, and the Cozamin copper-silver mine in Zacatecas, Mexico, the Mantos Blancos copper-silver mine in Chile and 70% of the Mantoverde copper-gold mine, also located in Chile. In addition, Capstone holds a 70% interest in Santo Domingo, a large scale, fully-permitted, copper-iron-gold project, in partnership with Korea Resources Corp.
The company recently said commissioning activities are underway at its Mantoverde Development Project (MVDP), an asset that is expected to increase the company’s consolidated copper production by over 40% with a significant decrease in unit operating costs.
“The project is on-time and we reaffirm our $870 million total capital cost guidance,’’ said Capstone CEO John MacKenzie. “This marks an exciting time for Capstone, MVDP is transformational for our business and provides the basis for incredible growth in the Mantoverde-Santo Domingo District.”
First ore was introduced to the new concentrator on November 29, 2023. The sulphide copper project is on track to reach nameplate capacity of 32,000 tonnes per day by mid-2024. Mantoverde is expected to produce total copper (concentrates plus cathode) of 98,000 tonnes at a cash cost of US$2.41 a pound in 2024.
