Source: The Critical Investor for Streetwise Reports 02/03/2018
The Critical Investor provides updates on this company’s financing and permitting on its U.S. copper project.
Johnson Camp Mine
After having closed the second tranche of a non-brokered private placement, Excelsior Mining Corp. (MIN:TSX; EXMGF:OTCQB) raised an impressive total of US$30M. Strong features of this round were the absence of warrants, and the fact it was oversubscribed, as Excelsior initially was looking for US20.2M, and ended up with US$30M. Another strong achievement for me was the ability to do this raise before the very important UIC permit was granted, this is a strong vote of confidence for the permitting process, despite the small delay, more on this later. On the other hand, something not impressing me that much was the share price of C$1.00. When looking at the chart, it was obvious that certain parties liked to get in on the cheap, as soon as word got out that management was raising cash:
Share price MIN.TO, 1 year time period; source tmxmoney.com
The share price was walked down professionally from C$1.25 to C$1.00, against all positive copper and mining stock sentiment at the time, and at December 11, 2017 the financing was announced. As majority shareholder Greenstone took up about half the amount, they probably wouldn’t have mind to say the least, but there was also a Nordic fund, arranged through UK/Norwegian advisors, which has a reputation of being very aggressive at these sort of things, so management was in no position to raise at higher levels unfortunately.
As a relatively small junior, this is what you can encounter when dealing with multibillion-dollar funds. On a side note, management attracted PI Financial and Clarksons Platou, which is Norway based, for coverage, because of the financing.
In total this meant an increase in share count of 38.635M shares, bringing the total at 206.2M shares outstanding. Greenstone now owns 48.89% of all outstanding shares of Excelsior Mining, and it is my feeling that it is vying for absolute majority in the near-term future as well. Which is not a bad thing as the firm has only one thing in mind, and that is an exit upon successful ramp-up towards commercial production. Excelsior management is eying first production before year-end, as quoted from the news release:
“The Offering was oversubscribed with strong support from major North American, UK and European based institutional investors alongside Greenstone, the Company’s major shareholder,” said President & CEO Stephen Twyerould. “With this financing, pre-construction activities at Gunnison will continue on pace as we prepare to seamlessly transition to well-field construction as planned, upon the receipt of the final permit and project finance, expected in the New Year. Backed by stakeholders that share our commitment for technical excellence and environmental stewardship, we remain on-track for copper production in 2018.”
The cash position of Excelsior was estimated at US$4M before this round, so my take is that after subtracting all fees, a bit of working capital, etc., the company could have about US$33M at the moment. According to the company, the proceeds of the US$30M round will be used for the development, construction and maintenance of the Gunnison project, including the acquisition of long lead items, and for working capital requirements.
As management mentioned earlier that they were looking to raise US25M in working capital to use during the first years of staged construction, and capex is US46.9M, my guess is they have arranged part of capex and a good portion of their working capital for now. I can imagine seeing Greenstone going to 51-53% in another financing, raising about US$4-8M, which should be enough to come up with the balance of capex in a debt package. This will probably take place after the UIC permit is granted. This permit was anticipated in January or February the latest, but the Environmental Protection Agency (EPA) decided on January 23, 2018, that the public comment period would be extended in order to facilitate a public meeting. This meeting is scheduled for February 27, 2018. This extended comment period and public meeting came as a surprise as Excelsior management never indicated this as a possibility. Notwithstanding this, they see it as a good opportunity to inform all stakeholders:
Stephen Twyerould, the President and CEO, said, “We look forward to working with the EPA and all stakeholders to ensure our Gunnison Copper Project meets all regulatory requirements. The Public Meeting is a typical part of the permitting process and represents an opportunity for the communities around us to learn more about the Project prior to receipt of the final EPA Permit. Backed by industry-leading economics, and our commitment to environmental stewardship, the Gunnison Copper Project remains on-track to become the next new copper producer in the United States.”
I was surprised as management indicated that there were no extensively motivated comments provided to EPA in the commenting period