Junior mining: LatAm project financings top US$800mn

Junior mining companies advanced financing deals worth more than US$800mn for Latin American projects in November – the highest monthly figure in 2021.

Exploration and development-stage firms closed or announced at least 18 financings during the month, totaling US$833mn, almost five times more than the US$172mn in October, according to industry information compiled by BNamericas.

The November figure also dwarfed the previous February peak of US$480mn, which was spread over 26 deals.

The November deals include share offerings, a streaming agreement and loans. Financings worth less than Cdn$2.0mn (US$1.6mn) are excluded.

Junior mining companies are pushing ahead with projects as they seek to take advantage of higher prices of metals including gold, copper and silver, and forecast growing demand for copper, lithium and nickel, metals needed in the transition to low-carbon energy and technology.

BRAZIL FOCUS

The bulk of the November total was in a single US$633mn financing package announced by Horizonte Minerals to advance its Araguaia nickel asset in Brazil (in picture).

Chilean projects were the focus of four deals totaling US$79.3mn, with five for Mexican assets, worth US$61.5mn.

Peru and Argentina saw two deals each, worth US$29.8mn and US$14.0mn, respectively, with the remainder spread over Colombia, Nicaragua and Guyana.

After nickel, the main focus of financings was on gold (six deals worth US$68.1mn), followed by silver (three deals, US$56.8mn), lithium (four deals, US$42.4mn) and copper (four deals, US$31.7mn).

TOP NOVEMBER DEALS

1. Horizonte Minerals, US$633mn

Target: Nickel, Brazil

Horizonte announced a US$633mn financing package which is expected to provide all funding required for the construction of its Araguaia nickel project in Brazil.

The package comprises a planned US$346mn senior debt facility from a syndicate of international financial institutions, a US$197mn equity fundraise, a US$65mn convertible loan notes issue and a US$25mn cost-overrun debt facility.

The company also intends to raise up to US$8.0mn in an open offer to existing shareholders.

The bulk of the proceeds of the package (US$477mn) are earmarked for Araguaia capex, with US$136mn for working capital and other expenditures and US$45.0mn for possible cost overruns.

“This [funding package] represents a significant milestone in the company’s journey to become a major nickel producer and will enable Horizonte to capitalize on the significant projected growth in nickel demand,” CEO Jeremy Martin said.

A feasibility study at Araguaia showed initial capex of US$443mn for an operation producing 14,500t/y nickel over a 28-year mine life, with a potential doubling of output to 29,000t/y, financed through cash flows.

2. Rio2, US$50mn

Target: Gold, Chile

Rio2 entered into a precious metals purchase agreement with Wheaton Precious Metals International, to advance its Fénix gold project in Chile.

The US$50mn gold stream is one of the components of mine construction financing totaling US$125-135mn to build Fénix.

The stream follows a Cdn$35.1mn equity offering completed in August and positions the company to finalize a previously announced US$50-60mn debt project finance facility with BNP Paribas.

Under the stream, Wheaton will purchase 6.0% of gold production from Fénix until 90,000oz have been delivered, after which it will reduce the amount to 3.5% of gold production for the life of the mine.

A 2019 updated prefeasibility study showed Fénix will produce 93,000oz/y gold in the first 13 years of a 16-year mine life, for capital costs of US$111mn.

3. MAG Silver, US$46.2mn

Target: Silver, Mexico

MAG raised US$46.2mn in an upsized non-brokered private placement on November 29.

Net proceeds will be used for exploration on the US$440mn Juanicipio silver-gold project in Mexico and its other projects, as well as sustaining capex at Juanicipio.

MAG and 56% JV partner Fresnillo expect Juanicipio to begin operations by end-2021, with average production forecast at 11.7Moz/y silver and 43,500oz/y gold.

4. American Lithium, US$27.4mn

Target: Lithium, Peru

American Lithium closed the biggest lithium-focused financing of the month, raising Cdn$35.0mn (US$27.4mn) in a private placement on November 3.

Funds will be used for exploration and development of the company’s Falchani and Macusani projects in Peru, and TLC in the US.

5. NGEx Minerals, US$19.6mn

Target: Copper, Chile

NGEx raised Cdn$25.0mn in a non-brokered private placement, which was upsized in October.

Net proceeds will be used to further work programs in Chile and Argentina and repaying debt, as well as general corporate and working capital purposes.

NGEx has the Los Helados copper-gold deposit in Chile and an option to earn a 100% interest in the Valle Ancho project in Argentina.