HI/ORV – Highland Copper to Acquire Orvana’s Copperwood for $25M

POSTED ON February 11, 2014 BY Travis McPherson
CATEGORY Companies, Resource Stocks, Stocks, Stories, TSXV,

Michigan has a long history of copper mining that dates back to the 1800's (Photo: miningartifacts.org)

Orvana Minerals (ORV:TSX) has found a buyer for their Copperwood project in Highland Copper (HI:TSXV). Orvana has been considering divesting the asset for sometime now in order to focus on its two producing assets and to strengthen its balance sheet. Orvana announced this morning they have signed a definitive agreement with Highland Copper which will generate $20 million in up front cash for them and another $2.5 million within 36 months and $2.5 million once in production.

The Copperwood project is a 'shovel ready' copper project that is set to produce over 850 million pounds of copper concentrate over a 13 year mine-life. The project hosts 2P reserves of 27.4Mt at 1.41% copper and 3.62g/t silver. All permits have been granted and the project has essentially been waiting on the financial green light. Pre-production capex is estimated at $213 million.

Orvana has been looking to strengthen its balance sheet and pay off near-term debt obligations of $2.7 million. The company operates the copper-gold-silver mines in Spain and Bolivia and intend to use some of the proceeds to advance exploration efforts at these existing operations. Globally, the company is forecasting production of 80-93,000 ounces of gold, 18-20 million pounds of copper and 875-950,000 ounces of silver.

Copperwood sits on Michigan's Copper range (Image: Orvana Minerals)

Highland Copper has been trying to develop a portfolio of copper assets in Michigan. In the fall of last year, Highland Copper announced its intention to acquire the White Pine copper project located in Michigan from First Quantum. That project hosts a historical copper resource of over 4.3 billion pounds at 1.04% copper. Highland Copper would pay First Quantum in cash or shares in the amount of $0.005 for the first 1 billion pounds of 2P reserves of copper and $0.0025 for every pound after that. We spoke with the company this morning and they informed us they intend on closing both acquisitions.

David Fennell, executive chairman of Highland, stated: "This transaction is part of a strategy that Highland has undertaken to consolidate an emerging copper district in the Upper Peninsula of Michigan. The acquisition of Copperwood in conjunction with our previously announced acquisition of the White Pine project, and combined with our existing Keweenaw projects, establishes the foundation for an emerging intermediate copper producer. The synergistic combination of these three assets in a single portfolio will bring together a large-scale historical estimate of copper reserves and resources at White Pine and Copperwood, and additional potential copper resources from the Keweenaw projects."

The Copperwood project is located just 30km southwest of White Pine.

Highland Copper was sitting on just over $4 million in cash as of September 30, 2013. On January 8th, the company announced a $25 million financing and the company told us by phone this morning that they would likely be expanding that financing to fund both acquisitions.

Shares in Orvana were up $0.06 or 8.8% on 300k at the time of writing. Highland remains halted.

Read: Highland to Acquire Orvana's Copperwood Project

Travis McPherson

trav@ceo.ca

Travis McPherson

trav@ceo.ca

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