- AbraSilver Resource (TSXV:ABRA) has signed C$20M in subscription agreements for a non-brokered private placement with Kinross Gold (TSX:K) and Central Puerto (NYSE:CEPU)
- Each participant will invest C$10M, representing approximately 4 per cent of common shares on an undiluted basis
- AbraSilver Resource is an advanced-stage gold and silver exploration company active in Chile and Argentina
- AbraSilver stock has added 4.05 per cent year-over-year and 541.67 per cent since 2019
AbraSilver Resource (TSXV:ABRA) has signed C$20M in subscription agreements for a non-brokered private placement with Kinross Gold (TSX:K) and Central Puerto (NYSE:CEPU).
The company will sell 50 million shares at C$0.40 each, a 2.56 per cent discount to the current price of C$0.38 per share. Each participant will invest C$10 million, representing approximately 4 per cent of common shares on an undiluted basis.
AbraSilver will use the proceeds for exploration and development of its flagship Diablillos project in Argentina, as well as for working capital and general corporate purposes. Diablillos boasts a pre-feasibility study estimating a US$494 million after-tax net present value, a mineral reserve of 209 million ounces silver equivalent (AgEq) (124M ounces of silver and 1.1 million ounces of gold), and all-in sustaining costs per ounce AgEq of US$12.40, with silver trading at a significantly value-accretive US$27.39 as of 10:15 am ET.
AbraSilver will consolidate its common shares on a 1-to-5 basis after closing the private placement, which is expected on or about Friday. All shares issued will be subject to a hold period of four months and one day from the date of issuance in accordance with applicable securities laws.
The junior miner’s new investment complements its earn-in option and joint venture agreement with Teck Resources (TSX:TECK.A) for its La Coipita project, where the senior copper, zinc and coal miner can fund up to US$20 million in exploration expenditures and make certain payments to earn up to an 80 per cent stake.
The 70,000-ha project is host to multiple copper-gold porphyry targets, yielding 226 metres grading 0.43 per cent copper equivalent (CuEq) and 146 m of 0.30 per cent CuEq during 2022 exploration, and up to 3.59 per cent copper and 20.6 grams per tonne of silver during 2023 sampling.
Investor rights agreements
AbraSilver will enter into separate investor rights agreements with Kinross and Central Puerto that provide for standard clauses, including anti-dilution and equity participation.
The agreements also lay the groundwork to form a technical advisory committee composed of two members from AbraSilver, two members from Kinross and one member from Central Puerto, to provide advice and guidance on upcoming exploration and the future development of Diablillos.
AbraSilver and Central Puerto will form a separate strategic and operational committee composed of two members each to provide insights on operational, financial, tax, infrastructure, government and regulatory affairs.
Regional partnership with Kinross Gold
AbraSilver and Kinross intend to form a regional partnership to jointly explore and acquire new silver, gold and copper projects in Argentina. Kinross will receive a right of first offer to purchase a minimum of 50 per cent of AbraSilver’s newly staked or acquired projects in Argentina. Exercising this right entails the establishment of an exploration program and budget for each project, as well as a joint venture agreement with standard funding and dilution mechanisms.
Management insights
“We are very excited to welcome both Kinross and Central Puerto as important strategic shareholders and partners,” John Miniotis, AbraSilver’s president and chief executive officer, said in a statement. “Through this transaction, AbraSilver is well-funded for a dual strategy to aggressively advance the Diablillos project towards a production decision and to accelerate our exploration efforts. The company also gains access to deep technical expertise in mineral exploration, mine development and power generation. We look forward to working closely with our new partners as we embark upon the next stages of successfully advancing the development of our high-quality Diablillos silver-gold project.”
“The strategic investments by Kinross and Central Puerto represent a strong endorsement of the Diablillos project and our technical team,” added Rob Bruggeman, AbraSilver’s chairman. “The exploration team has successfully grown mineral resources and reserves at the Diablillos project and we look forward to unlocking additional value at Diablillos and, potentially, other projects in Argentina. We look ahead to leveraging the relationships with Kinross and Central Puerto as we continue to grow the company.”
About Kinross Gold
Kinross is a senior gold miner with operations in the United States, Brazil, Mauritania, Chile and Canada. The company produces about 2 million ounces of gold equivalent per year, and estimated a 22 million-ounce reserve as of December 2023.
Kinross Gold stock (TSX:K) is down by 3.65 per cent, trading at C$8.97 per share as of 10:40 am ET. The stock has added 31.91 per cent year-over-year, and 102.48 per cent since 2019.
About Central Puerto
Central Puerto is the largest private sector power generator in Argentina with an energy industry track record spanning more than a century. The company commands an 18 per cent market share and operates 13 plants at an installed generation capacity of 7,200 MW.
Central Puerto stock (NYSE:CEPU) is up by 5.26 per cent, trading at US$9.61 per share as of 10:55 am ET. The stock has added 62.33 per cent year-over-year, but only 26.78 per cent since 2019.
About AbraSilver
AbraSilver Resource is an advanced-stage gold and silver exploration company active in Chile and Argentina.
AbraSilver stock (TSXV:ABRA) is down by 1.28 per cent, trading at C$0.38 per share as of 10:30 am ET. The stock has added 4.05 per cent year-over-year and 541.67 per cent since 2019.
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