After finalizing a $30 million bought deal with a syndicate of underwriters earlier this month, Copper Mountain Mining Corp. (TSX:CUM) expects to have a new secondary crusher installed at its flagship mine near Princeton by the end of next summer.
The impetus for the deal was to buy a secondary crusher for the company’s Copper Mountain mine because the company has struggled to reach its intended daily throughput of 35,000 tonnes of rock.
An abundance of large, coarse rock being mined from the deposit is being blamed for the lag. The larger the rock, the longer it takes to be processed at the mill. A secondary crusher will reduce the size of the rock going into the mill and, as a result, increase production.
The company has established some interim measures to increase throughput such as buying a portable crusher and hiring an independent contractor to crush rock.
But those patchwork plans aren’t enough, said Rodney Shier, Copper Mountain’s chief financial officer.
“Right now, without a permanent solution where you crush everything, we seem to be challenged, and we’re getting about 32,000 tonnes per day throughput at the mill. What we need to do is get all of our throughput.”
Some analysts gave the deal mixed reviews.
They questioned why the company would choose to raise money through equity financing rather than through debt. The deal involved 17,700,000 common shares at $1.70 per share.
Its underwriters were National Bank Financial, Canaccord Genuity, Scotia Capital, CIBC World Markets and Raymond James.
But Matt O’Keefe, managing director of mining research with Toronto-based Mackie Research, told Business in Vancouver that the company made the right decision because choosing the equity route allowed Copper Mountain to raise the capital it needed faster.
“When offering additional debt, it tends to be a time-consuming business as the banks go through the loan requirements or look at covenants,” said O’Keefe.
“The market was there, so the deal got done very quickly, which allowed them to get the ball rolling quite quickly on the crusher. Financially, I think that was the right way to go. Now, it’s up to them to execute, bring the crusher in on time and demonstrate that that is the solution.”
O’Keefe added that he expects annual mine production to reach 89 million pounds next year.
Copper Mountain Mining Corp. owns 75% of the Copper Mountain mine. Mitsubishi Materials Corp. owns the remaining 25%.
