Kincora Copper (ASX:KCC) has caught the attention of prominent North American investors keen to invest in the dual-listed explorer.
Rick Rule and Jeff Phillips are key cornerstone investors taking part in Kincora’s C$4 million ($4.5 million) private placement.
Rule is an over 50-year veteran investor and speculator, focused on resources companies with a sub-US$1 billion ($1.5 billion) market capitalisation. He has structured, led and participated in hundreds of privately placed debt and equity issuances for resources companies operating internationally, and domiciled in Australia, Canada, Chile, UK, New Zealand, Sweden, Switzerland and the US.
In 1990, Rule founded Sprott US Holdings, merging it into Sprott Inc in 2011.
The placement is priced at C$0.30 per unit, comprising one share and one share purchase warrant exercisable for C$0.50 within three years.
Rule says the placement units have a one-year hold period at his request.
“Kincora follows the prospect generator business model, using their business and technical acumen to develop and stake large exploration concepts, which they joint venture to others, obviating the capital risk of exploration, and reducing equity dilution,” Rule says.
“Existing joint ventures have been signed involving more than $100 million in exploration expenditures by third parties, to Kincora’s benefit. The ratio of market cap to third party expenditures offers superb leverage, at greatly reduced risk.”
The prospect generator model is a proven successful model used widely in Canada that provides juniors leverage to exploration success with the right partner and deal structure.
There are very few ASX-listed companies adopting the prospect generator model, with a number that do often applying hybrid approaches.
Kincora has secured asset-level partnerships with US$23.5 billion ($35.8 billion) AngloGold Ashanti (NYSE:AU), Fleet Space Technologies, Earth AI and Orbminco (ASX:OB1).
In April, the company – which has a market capitalisation of around $12 million – expanded its partnership with AngloGold to include a second major joint venture on the Northern Junee-Narromine Belt (NJNB) Project in New South Wales.
As part of the agreement with AngloGold, Kincora receives a 10% management fee which provides the company with a continuous income stream for the duration of the partnership.
Kincora plans to use the fresh cash injection to fund its ongoing project generation strategy, undertake significant drilling at its 100% owned Condobolin gold-base metals project, as well as for general working capital and corporate purposes.
Chairman Cameron McRae says the relatively unique financing structure puts Kincora in a strong position to leverage and accelerate its strategy of more drilling, more asset-level deals, more management fees and discoveries.
“We’re especially pleased to have this strategy endorsed, and financing supported by a number of leading North American natural resource sector investors, including Rick Rule and Jeff Phillips, and other new and existing respected institutional and accredited investors,” McRae says.
Rule says Kincora’s new generative pipeline is quite robust, indicating new, accretive transactions to follow.
“The company’s management have excellent track records in discovering large copper porphyry deposits including Cadia and Reko Diq,” he notes.
Independent non-executive director John Holliday, who has nearly five decades of experience in metals exploration including with BHP (ASX:BHP) and Newcrest Mining, was one of the key people involved in the discovery of Cadia.
Senior Vice President of Exploration Peter Leaman was in charge of managing the exploration programs that led to multiple discoveries including Barrick Mining’s (TSX:ABX) Reko Diq porphyry copper-gold deposit.
Ahead of the placement, Kincora is undertaking a 10-for-one share consolidation of its shares on the TSX Venture Exchange and its chess depositary interests on the ASX.
As part of the placement, the company has retained the right to accelerate the expiry date of the warrants 15 months after the closing date of the placement if the weighted average closing price of Kincora’s shares on the TSX Venture Exchange equals or exceeds C$0.75 for 20 consecutive trading days.
Write to Angela East at Mining.com.au
Images: Kincora
