Trafigura rattles zinc market with huge order for LME metal
Orders to withdraw zinc from warehouses overseen by the exchange have surged by 97,225 tons over the past two days.
Blue Moon Metals (TSXV: MOON) is buying two former copper-producing assets in Norway to diversify from its zinc project in the US while emphasizing near-term output.
The Vancouver-based junior plans to acquire the Nussir and NSG properties in two separate deals valued at $55.3 million and $12 million, respectively, it said Wednesday. Both deals will be funded by issuing common shares priced at C$0.30 each.
Shares in Blue Moon’s traded at C$0.355 early on Thursday in Toronto for a market capitalization of C$18.9 million. Its 52-week high was C$0.43, while its low during that period was C$0.025.
In tandem with the project acquisitions, the company said it will also issue new equity valued at between C$30 million and C$50 million, the bulk of which will be used to fund planned work at the Nussir property. This financing will comprise units of Blue Moon priced at C$3.00, with each unit comprising one share (priced at C$0.30, or one 10th of the unit price) and nine subscription receipts.
Newly appointed CEO Christian Kargl-Simard said the transactions would “create a new copper-zinc development company located in Tier 1 jurisdictions.” Norway is a member of the United State-led Minerals Security Partnership that aims to secure supplies of critical raw materials including copper and zinc, he in a release.
Some shareholders criticized the company for share dilution under previous management. This month, former Adventus CEO Kargl-Simard took over with board members Maryse Belanger, the former interim CEO of Iamgold (TSX: IMG; NYSE: IAG), and Haytham Hodaly, Wheaton Precious Metals (TSX: WPM, NYSE: WPM; LSE: WPM) corporate development vice-president.
Together with the shares issued in acquiring the projects, the implied equity value of the transactions is approximately $100 million to $115 million on a fully diluted in-the-money basis. At the minimum, existing Blue Moon shareholders would own 12% of the company, while the Nussir and NSG shareholders would own 55% and 12%, respectively. At the maximum, the respective shareholdings would be 10%, 48% and 10%.
Of the two copper projects, Nussir is the more advanced asset with existing infrastructure located next to the property such as roads. power and a port. The property hosts a historic mine that was in production during the 1970s, with mining occurring from four shear-hosted open pits until operations halted in 1979.
The project owner, Norway’s Nussir ASA, has been focused on advancing a sedimentary hosted copper deposit on the same project with analysis, study work and permits granted over a 20-year period. SRK Consulting completed an updated feasibility study according to Australian JORC regulations on the construction-ready project in May 2023. It estimated the initial capital cost at $101 million.
The SRK report outlined a historic resource estimate of 1.7 million measured tonnes at 1.16% copper, 0.22 gram gold per tonne and 13.3 grams silver. It showed 31.8 million indicated tonnes at 1.09% copper, 0.13 gram gold and 12.6 grams silver. It also has 33.4 million inferred tonnes at 1.16% copper, 0.17 gram gold and 16 grams silver.
Blue Moon said it will focus the next 18 months on investigating opportunities to increase both shear-hosted and sediment-hosted resources through primarily drilling from underground. It then plans to complete a feasibility study and make a full construction decision. Meantime, it’s starting to build an undergound ramp early next year.
Blue Moon said it is also “excited” for potential of the NSG property, held by Nye Sulitjelma Gruver AS in northern Norway, as it would be the first new copper mine in the country in over 50 years. The NSG property is in an area that hosted the country’s largest mining operation, while it still holds some of Norway’s largest known copper deposits, the company said.
While the project has no Canadian standard NI 43-101-compliant resource, it has a historical estimate of 29.4 million tonnes at 0.9% copper and 0.17% zinc. Precious metals and sulphur have not been assayed but are expected to become a credit, Blue Moon said.
Regional exploration activities through underground tunnels at NSG will aim to expand on the production history at multiple volcanic massive deposits between 1887 and 1991, it added.
Meanwhile, the company is also advancing its Blue Moon polymetallic project in east-central California, for which a preliminary economic assessment is expected to be completed in next year’s first quarter.
The polymetallic deposit has an NI 43-101 resource estimate of about 3.5 million indicated tonnes with a zinc-equivalent grade of 11.07% for 431 million lb. of zinc, 53 million lb. of copper, 200,000 oz. of gold and 5 million oz. of silver. It has 3.8 million inferred tonnes at 10.71% zinc-equivalent for 455 million lb. of zinc, 45 million lb. of copper, 200,000 oz. of gold and 6 million oz. of silver.
Blue Moon is focused on drilling off the existing volcanic massive sulphide resources with the aim of upgrading to reserve status from underground, and extending the deposit down dip.
The property also has mining history. Under Hecla Mining (NYSE: HL) during 1943-1945, it produced 55,656 tons grading 12.3% zinc, 0.36% copper, 0.48% lead, 3.75 oz. silver per ton and 0.062 oz. gold per ton. The property was more recently actively explored and advanced by Imperial Metals (TSX: III), Stockholm-based Boliden and Lac Minerals, now part of Barrick Gold (TSX: ABX; NYSE: GOLD).
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