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A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Foran Mining (TSXV: FOM) says it will use a $150 million loan from Sprott Resource Lending to help construct its McIlvenna Bay copper project in Saskatchewan.
The funding from Toronto-based Sprott joins C$200 million proposed by the Ontario Teachers’ Pension Plan, which was announced in August and should be approved “in due course,” Foran said in a news release on Wednesday.
The financing will almost cover the estimated C$368 million cost to build the project about 330 km northeast of Prince Albert, Saskatchewan, according to a feasibility study released in February. It also forecast C$481 million in sustaining capital for the 18-year initial phase of the mine.
“We have been meticulously evaluating various financing proposals from numerous lenders to support the development,” Dan Myerson, Foran’s chief executive officer, said in the release. “This agreement maximizes risk-adjusted value per share for existing shareholders.”
The McIlvenna Bay project has probable reserves of 25.7 million tonnes grading 1.23% copper, 2.39% zinc, 0.47 gram gold per tonne and 15.3 grams silver, according to the feasibility study. It is aiming for an underground mine to produce 38.8 million lb. copper, 63.6 million lb. zinc, 20,000 oz. gold and 486,000 oz. silver annually for the first 15 years.
The study estimated the project will have an after-tax net present value of C$1.1 billion at a 7% discount rate, and an internal rate of return of 54%. It used base case prices of $3.50 per lb. copper, $1.20 per lb. lead and $1,600 per oz. gold.
Vancouver-based Foran said it has received an initial advance of $29.5 million from the Sprott loan. Principal repayments are to start in mid-2026 and the loan accrues annual interest of at least 8.95%, the company said.
Foran is developing the project in east-central Saskatchewan in a three-pronged strategy with its Bigstone copper-zinc project 25 km west of McIlvenna Bay and eight other targets the explorer is probing in the same area. Foran is planning to build a centralized mill and says the operation will be carbon neutral by using electric vehicles and hydro-electric power.
The project ticks off a few boxes with copper and zinc on the federal government’s list of critical minerals considered essential for economic development. The age of electric vehicles and modern technologies depends on copper wiring, and there’s the push to reduce greenhouse gas emissions blamed for global warming.
“We look forward to partnering with Foran on its destination to become a premier critical metals producer,” Narinder Nagra, managing partner of Sprott, said in the same release. “Our financing of Foran is consistent with our strategy to provide innovative and flexible capital to maximize the value of exceptional projects.”
BMO Capital Markets said last month Foran has so far kept costs for the project in line with the feasibility study while planning to expand drilling on neighbouring targets to 35,000 metres next year after exploration at the Tesla site returned positive results this year.
“Foran continues to consolidate claims in proximity to McIlvenna Bay, providing the company an extensive land package,” mining analyst Rene Cartier wrote in a Nov. 30 note. “The proximity of Tesla offers the strong potential of additional resource growth.”
At presstime in Toronto, shares in Foran were up 3% on the day, valuing the company at about C$763 million ($560m).
