Panoro Minerals Announces the Sale of Antilla Copper Projecthttps://money.tmx.com/en/quote/PML/news/8192293572099027
Panoro Minerals Ltd . (TSXV: PML) (Lima: PML) (Frankfurt: PZM) (OTCQB: POROF) ("Panoro" or the "Company") is pleased to announce the sale of its Antilla Project to Heeney Capital Acquisition Company Inc. ("HCAC"), a mineral exploration and development company. Panoro has agreed to sell 90% of the shares of Antilla Copper S.A. ("Antilla"), a wholly owned subsidiary of Panoro, which holds the Antilla Project, in consideration for advanced payments of up to 13% of the Net Present Value of the Antilla Project plus a Net Smelter Return royalty ("NSR") of 1% (on top of the 2% NSR that the Company already owns on the Antilla Property). The advanced payments will be staged and HCAC will initially earn a 75% interest in Antilla on closing plus an additional 15% 12 months after the earlier of drilling permits being obtained or a pre-feasibility or feasibility study being completed on the Antilla Project (a "Study"), for a total 90% interest. The Company and HCAC will contribute their pro-rata portion of all exploration and development expenditures. Pending the results of the Study, the total of the advanced payments could be between C$ 20 million and C$ 70 million , plus the aggregate up to the 3% NSR over the life of the mine.
Advance payments to Panoro will include both scheduled and contingent payments for HCAC to earn in a 90% interest in stages as outlined below:
- Scheduled Payments of:
- C$ 10 million on closing of the transaction,
- C$ 2.8 million 10 months from closing,
- C$ 7 million 12 months after the earlier of drilling permits being obtained or a Study being completed.
- Contingent Payments of:
- C$ 10 million if the Study estimates the Net Present Value at an 8% discount rate (NPV 8 ) of the Antilla Project to be above US$ 310 million ; or
- Up to C$ 50 million if the Study estimates the NPV 8 to be above US$ 360 million
Including the contingent payments, which will be received within 12 months of the completion of the Study, the total advance payments could equal up to C$ 70 million (or approximately 13% of NPV 8 ).
Net Smelter Return royalty payments to Panoro over the life of the Antilla Project will include:
- an existing 2% NSR; plus
- if Panoro's ownership in Antilla is diluted to below 5%, it's ownership interest will automatically convert to an additional 1% NSR
- Total 3% NSR, subject to a buyback right for the 1% NSR for C$ 4 million
The range of potential payments from this transaction are summarized in the table below.
| Antilla Project NPV 1 (million US$) | Total Advance Payments (Scheduled and Contingent) (million C$) | NSR (%) |
| up to 310 | 20 to 24 | 2% to 3% |
| 310 to 360 | 30 to 34 | 2% to 3% |
| above 360 | up to 74 | 2% to 3% |
| 1. To be estimated in the Study at a 8% discount rate at long-term street consensus pricing |
The Antilla Project's preliminary economic assessment ("PEA") was completed in 2018 estimating an after tax NPV of C$ 516.1 million ( US$ 397 million ) at a long-term copper price of US$ 3.25 /lb and a 7.5% discount rate. For comparative purposes, at copper prices of between US$ 3.25 /lb and US$ 4.00 /lb, a discount rate of 8% and factoring in an aggregate 3% NSR, the estimated payments from the sale of the Antilla are shown in the table below.
| Long-term Cu Prices (US$/lb) | Total Advance Payments 1,2 (million C$) | NSR (%) |
| 3.25 | 56 to 60 | 2% to 3% |
| 3.50 | 70 to 74 | 2% to 3% |
| 4.00 | 70 to 74 | 2% to 3% |
| 1. Based on NPV (US$ 335 million @ US$ 3.25/lb, US$ 426 million @ US$ 3.50/lb, US$ 640 million @ US$ 4.00/lb) |
| 2. 1.30 C$/US$, Factoring for the aggregate 3% NSR |
Luquman Shaheen, President & CEO of Panoro Minerals states, "The Company is very pleased with the completion of this transaction. Panoro will reinvest the proceeds into the Company's projects in Peru including its flagship Cotabambas Project. The focus at the Cotabambas Project will be to advance with the work required to support a feasibility study and environmental impact assessment. Our first priority will be to drill test attractive satellite targets before moving to infill drilling programs. In parallel, metallurgical testing will look to optimize flotation recoveries and estimate leach recoveries of the oxide resource. The resource growth potential at the Cotabambas Project is encouraging, recovery improvements from the transition zone look promising, and the addition of a heap leach component will add value, which, together with the high copper, gold and silver commodity prices, present compelling upside to the value of the Cotabambas Project. Importantly, Panoro will advance the Cotabambas Project while minimizing share dilution and thereby maximizing our shareholders' exposure to the valuation upside. Furthermore, the Company's growing royalty package presents additional upside to Panoro shareholders. The royalty package now includes up to a 3% NSR on the Antilla Project, a 2% NSR on the Kusiorcco Project and a 5% NSR on the Cochasayhuas Project."
Antilla Project
The Antilla Project PEA estimated production of between 54 and 66 million pounds per year of payable copper during its first five years of operation and an average of over 46 million pounds per year over the project's 17 year mine life.
The economic metrics estimated in the PEA are summarized in the Table below
| | Before Tax 1 | After Tax |
| Copper
Price
(US$/lb) | NPV
5%
(million
US$) | NPV
7.5% (million
US$) | NPV
10%
(million
US$) | IRR (%) | Payback (Years) | NPV
5% (million
US$) | NPV
7.5% (million
US$) | NPV
10% (million
US$) | IRR (%) | Payback (Years) |
| 2.75 | 487 | 383 | 301 | 28.8 | 2.9 | 232 | 169 | 118 | 18.7 | 3.6 |
| 3.05 | 648 | 520 | 419 | 34.7 | 2.6 | 394 | 305 | 236 | 25.9 | 3.0 |
| 3.25 | 755 | 611 | 497 | 38.4 | 2.5 | 501 | 397 | 314 | 30.3 | 2.7 |
| 1. Excluding Peru statutory charges ( i.e. profit sharing, regulatory fees, mining royalty, special mining tax, and income tax) |
| 2. The economic results are based on the heap leach tonnages in the selected ultimate pit. The heap leach tonnages include
Inferred Resources. The reader is cautioned that inferred resources are considered too speculative geologically to have the
economic considerations applied to them that would enable categorization as Mineral Reserves. Mineral resources that are not
Mineral Reserves do not have demonstrated economic viability. |
The PEA includes an open pit mining rate of 20,000 tonnes per day with the crushed ore being delivered to a valley fill heap leach pad. The proposed processing includes a solvent extraction and electrowinning (SX/EW) plant. The recovery of copper from the SX/EW plant was estimated to be 72.5% in the PEA. Subsequent to the PEA, column leaching tests completed have estimated potential recoveries as high as 79.9%.
The Antilla Project includes a resource composed of indicated and inferred resources as follows:
- Indicated Resources of 291.8 million tonnes at 0.34% Cu and 0.01% Mo; and
- Inferred Resources of 90.5 million tonnes at 0.26% Cu and 0.008% Mo.
Resource growth potential identified at the Antilla Project includes:
| North Block: | appears to be an extension of the resource zone of between 0.5 to 1.5 km, where
outcroppings of the same mineralization and the same sandstone package
included in the resource estimates has been mapped and sampled. In the North
Block the copper oxides and secondary sulfides outcrop along 2 km in the east-
west direction. |
| West Block: | located 1 to 3 km to the west of the project resources where 7 drillholes have
been executed in the past intersecting near surface copper mineralization. The
drillholes were completed before an extensive geochemistry survey by Panoro
which identified other drill target areas. |
| Intermediate Block: | the copper anomalies are aligned by structural control along 2.2 km length in
north-south direction. The target indicates a porphyry stock at surface located
from 200 m to 1 km to the west and southwest of the mineral resources area. |
| Chabuca Block: | the copper anomalies cover an area of 1.5 by 1.5 km at surface and are located
from 300 m to 2,000 m to the East of the resources. In Chabuca, a porphyry
stock intrudes the same sandstones package hosting the mineralization in the
resources area and in the North Block. |
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