The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
North of 60 Mining News – June 15, 2018
During the summer months, copper concentrates from the Minto Mine are barged across the Yukon River. An ice bridge is constructed to deliver these concentrates over the winter.
Pembridge Resources plc June 11 announced that it has signed a terms agreement with a leading global Japanese trading house that will provide the England-based company US$30 million in exchange for an offtake agreement for 125,000 metric tons of copper concentrate to be produced at the Minto Mine in the Yukon.
In February, Pembridge cut a deal with Capstone Mining Corp. to acquire Minto for US$37.5 million in cash, plus working capital adjustments, and common shares representing 9.9 percent of the issued and outstanding shares of Pembridge upon completion of the transaction.
"Minto fits perfectly with the company's stated goal to acquire a producing and profitable mining operation to which our team can add further value," Pembridge CEO David Linsley said at the time. "This acquisition will represent a core asset to Pembridge and will be used as a platform for future growth."
The low-cost capital provided by the offtake agreement with the Japanese firm represents a significant portion of the funding required to complete the acquisition of Minto and Pembridge's plans to enhance the mine.
"Securing this agreement with such a large and sophisticated mining investor is a validation of both the great potential we see in the Minto mine and our vision of growing Pembridge using the Minto Mine as a platform," said Linsley.
In 2017, Minto produced 37,372 metric tons of copper concentrates containing 16,332 metric tons of copper, 170,809 ounces of silver and 25,205 oz of gold.
The deal with the Japanese trading house will provide Pembridge with US$30 million that will be available immediately on closing of the agreement.
In exchange, the trading house will acquire all copper concentrate produced at Minto – delivered on a cost, insurance and freight basis to a nominated Japanese port – until 125,000 metric tons of the concentrate are delivered or the end 2021, whichever comes first.
One advantage for Pembridge is that the agreement allows it to sell concentrate from Minto at the mine gate thus eliminating large working capital requirements when the site is unable to transport concentrate owing to seasonal weather conditions.
The seasonality of delivering copper concentrates from Minto is due to crossing the Yukon River. In the summer, a barge provides a connection between the mine and the Klondike Highway and in the winter an ice bridge is built over the iconic river. However, there are periods in the spring and fall when concentrates must be stored at Minto due to the inability to cross the Yukon.
Once across the river, these concentrates are delivered to Alaska Industrial Development and Export Authority's Skagway Ore Terminal in Southeast Alaska, where they are loaded on ships for international markets.
Pembridge and the Japanese trading house envision working together on the UK-based company's planned development at Minto site and the broader region.
"The backing from a leading global Japanese trading house, with extensive copper market experience, is an important event for Pembridge and our shareholders as we approach the completion of the acquisition of Minto from Capstone," said Linsley. "We look forward to developing a long-term relationship with our new partners."
The financing and offtake is subject to, among other things, the execution of final definitive agreements and the closing of the acquisition of the Minto Mine, which is expected in the coming weeks.
–SHANE LASLEY
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