Newcrest taking 9.5% stake in Metallic Minerals

VANCOUVER – Metallic Minerals Corp. (MMG-TSXV, MMNGF-USOTC) on Wednesday announced a $6.34 million strategic equity investment by a unit of Newcrest Mining Ltd. [NCM-TSX, ASX, PNGX].

It said the investment will take the form of a non-brokered private placement, with the goal of advancing Metalic’s La Plata copper-silver-platinum group element alkalic porphyry project in Colorado.

Newcrest is an Australian company with significant mining operations in Canada. It recently became the target of a US$16.9 billion non-binding takeover proposal by U.S. gold mining giant Newmont Corp. [NGT-TSX, NEM-NYSE].

Under the deal, Newcrest will complete a financing of $6.34 million, consisting of 15.8 million units of Metallic at 40 cents per unit, with each unit consisting of one common share and 0.75 of a common share purchase warrant.

This represents a 13% premium to the 20-day volume weighted average price of Metallic shares on May 9, 2023, when the shares closed at 39 cents. The shares are currently trading in a 52-week range of 43.5 cents and 19.5 cents.

Each full warrant entitles Newcrest to purchase one common shares at an exercise price of $0.55, providing $6.5 million in additional funding if exercised.

The warrants will be exercisable for three years from the issue date and contain an acceleration provision if the common shares trade at or above $0.825.

After closing, Newcrest will hold a 9.5% stake in Metallic on a non-diluted basis. The exercise of warrants would increase Newcrest’s stake to 15.5%.

“This funding will enable us to fast-track our planned expansion drilling to follow-up on the success of 2022,’’ said Metallic CEO and Chairman Greg Johnson

Last year, the company announced a NI 43-101-compliant resource estimate for its La Plata copper project in Colorado.

The road accessible La Plata project covers 33 square kilometres, approximately 26 kilometres northwest of Durango, Colorado.

The project’s Allard copper-silver- porphyry deposit is estimated to host an inferred mineral resource of 889 million pounds of copper and 14.9 million ounces of silver in a constrained model with 115.7 million tonnes at an average grade of 0.39% copper equivalent (CuEq) (0.35% copper and 4.02 g/t silver) based on a 0.25% CuEq cut-off.

The resource estimate was completed by SGS Geological Services and is based on 56 diamond core drill holes, covering 15,200 metres completed by Rio Tinto Plc [RIO-NYSE], Freeport-McMoran Inc. [FCX-NYSE] and others, along with new drilling and underground sampling by Metallic Minerals.

Exploration by Rio Tinto and Freeport-McMoran in the 1950s and 1970s focused on bulk tonnage disseminated and stockwork porphyry copper-silver-gold mineralization.

Metallic acquired the project in 2019. Exploration activities by Metallic in 2020 and 2021 included 1,980 metres of core drilling, resampling of historical drill core, underground sampling from the Allard deposit, airborne and ground-based geophysics and surface sampling across the broader property.

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