Former Kirkland Lake CEO to Introduce Arizona Sonoran Copper Junior to Canada
Arizona Sonoran Copper Company Inc. is looking to raise $ 60 million in an initial public offering on the Toronto Stock Exchange, in hopes of capitalizing on investor enthusiasm for one of the metals top performers this year.
Led by former Kirkland Lake Gold Ltd. chairman and CEO George Ogilvie, the privately-owned junior filed documents for release on Wednesday. Arizona Sonoran hopes to revive a copper mining camp in Arizona that dried up in the 1980s. Tembo Capital Management Ltd., based in London, and Resource Capital Funds of Denver are the major shareholders.
Copper fell from US $ 2.20 per pound at the start of the pandemic to a record US $ 4.76 per pound in May. It now sits at US $ 4.17. The metal has benefited from a pickup in industrial demand this year, as global economies rebound rapidly with the easing of restrictions linked to COVID-19. The increased demand for copper in cleaner energy uses, such as electric car batteries, has also contributed to the copper bull run.
Arizona Sonoran plans to use the proceeds of the offering to finance the development of its Cactus copper project. It is located approximately 60 kilometers south of Phoenix, on the site of a former producing mine called Sacaton, which operated between 1974 and 1984. The Cactus Project is expected to have an 18-year lifespan and produce copper at an average all-inclusive maintenance level. cost US $ 1.88 per pound.
Cactus requires even more drilling and engineering before construction can begin. The current capital estimate for the construction of the mine is set at US $ 124 million. The company hopes that Cactus will start as an open pit mining operation in 2023 and gradually transition to underground mining.
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Prior to joining the company, Arizona Sonoran CEO Mr. Ogilvie ran Canadian junior gold mining company Battle North Gold Corp. She was sold in a friendly transaction earlier this year to Australian Evolution Ltd. for $ 343 million.
During his tenure at Battle North, Mr. Ogilivie oversaw the full turnaround of a problematic asset. In 2016, a previous iteration of the company, called Rubicon Minerals Corp., filed for creditor protection after the company ran out of money. Rubicon rushed production at its Red Lake, Ontario gold project without doing enough due diligence, and approximately $ 1 billion in shareholder capital was lost. Mr. Ogilvie joined Battle North during the restructuring phase and was successful in relaunching the gold project, albeit on a smaller scale.
Mr. Ogilvie also managed Kirkland Lake Gold Ltd. from late 2013 to mid-2016. While he helped resuscitate the then struggling Canadian gold mining company by overseeing various operational improvements, a clash with Chairman Eric Sprott over strategy resulted in Mr. Ogilvie being replaced by Tony Makuch. Kirkland, still headed by Mr. Makuch, agreed last month to be acquired by Agnico Eagle Mines Ltd. for over $ 13 billion.
While reviving dormant mining sites can be lucrative, they are far from risk-free. Earlier this year, Pure Gold Mining Inc. relaunched the Madsen gold project in northern Ontario, but it experienced a host of issues, including grade shortages. The underground gold mine had previously been in production for 40 years until the 1970s.
The Arizona Sonoran IPO syndicate is run by Canadian investment banks RBC Dominion Securities Inc. and Haywood Securities Inc. Bankers earn a 6.5 percent commission, worth approximately $ 3.9 million.
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