Los Helados is a large copper-gold porphyry deposit in Chile's Region III, comprised of adjacent mineral titles in Chile and Argentina. Upon completion, the spinco will hold about 63% of Los Helados and a portfolio of exploration interests. The remaining 37% interest is held by its exploration partner Pan Pacific Copper, operator of the Caserones mine some 12km from Los Helados.
Los Helados will be spun out with $7.3 million in cash, with spinco shares to be distributed to NGEx shareholders on a pro rata basis at a rate of one spinco share for every two NGEx shares held. The spinout follows a similar move in 2016 when NGex moved the Filo del Sol project into Filo Mining (TSXV:FIL), which has since grown to a market capitalisation of C$200 million.
"Long-term copper fundamentals appear strong, and it is our understanding that the global project pipeline is at multi-decade lows. We believe that this scarcity may lead to increased valuations for companies with construction-ready projects and we plan to work towards advancing Josemaría towards that status. The creation of Spinco is expected to enhance shareholder value by bringing increased investor focus to the potential that we see at Los Helados," said president and CEO Wojtek Wodzicki.
Los Helados has an indicated mineral resource of 2.1 billion tonnes grading 0.38% copper, 0.15 grams per tonne of gold, and 1.37g/t of silver for a copper-equivalent grade of 0.48% containing 17.6 billion pounds of copper, 10.1 million ounces of gold and 92.5Moz of silver). In inferred resources it has 827Mt grading 0.32% copper, 0.10g/t gold and 1.32g/t silver containing 5.8Blb of copper, 2.7Moz of gold and 35.1Moz of silver.
NGEx will become a single purpose vehicle focused on advancing the development of the Josemaría project in San Juan, Argentina. A 2018 pre-feasibility study evaluated an openpit mine with a shallow, high-grade starter pit. The company intends to advance development of the Josemaría by completing a feasibility study, securing water rights and advancing its environmental permitting plans. Field work for the FS was completed during the first quarter and NGex is targeting its completion in 2020.
Josemaría is a copper-gold porphyry that hosts an initial probable mineral reserve of 1 billion tonnes grading 0.29% copper, 0.21g/t gold and 0.92g/t silver or 0.41% Cu-eq.
Following the spin out, NGex intends to change its name to Josemaria Resources while the spinco will become NGEx Resources and list on the TSXV.
William Rand will become chairman of spinco with Wodzicki as CEO, Joyce Ngo as interim CFO and Bob Carmichael as VP exploration.
Shares in NGex (TSX:NGQ) are trading at C$1.05 Thursday, valuing the company at $249 million. Its share price has increased about 3% so far this year.