Examining diamond drill core from the Soledad Project in Peru. Source: Chakana Copper Corp.
Chakana Copper Corp. [PERU-TSXV] has announced an $8 million strategic investment from Gold Fields Ltd. [GFI-NYSE, JSE] that will see the world’s seventh largest gold producer taking a 16.14% interest in Chakana.
Under an agreement, Gold Fields Nazca Holdings Inc., a wholly-owned indirect subsidiary of Gold Fields Ltd., has committed to purchase 15.7 million shares of Chakana at $0.51 per share. No commissions or fees are being paid in connection with the Gold Fields investment.
On Tuesday April 30, Chakana shares were down 1.33% or $0.005 to 37 cents. The shares trade in a 52-week range of 25 cents and 82 cents.
Chakana is the product of a reverse takeover deal with Remo Resources Inc. Its Peruvian subsidiary owns the rights to acquire a 100% interest in the Soledad Project under an option agreement with Condor Resources Inc. [CN-TSXV].
Net proceeds of the financing will be used to advance the exploration and development of the Soledad copper-gold-silver project in central Peru.
Soledad is located in the Cordillera Negra, or western ranges of the Andes Mountains, 260 km northwest of Lima. Recent exploration has focused on a cluster of near-vertical magmatic-hydrothermal quartz-tourmaline breccia pipes hosted in andesite of the Calipuy group that contains attractive copper-gold mineralization, associated with silver, zinc, lead and molybdenum.
It has been postulated that the breccias are genetically related to a concealed copper porphyry deposit at depth.
Gold Fields is a globally diversified gold company with seven operating mines (and a joint venture on an operating mine) in Australia, Ghana, Peru and South Africa, and total attributable annual gold-equivalent production of approximately 2.2 million ounces.
Upon closing of the financing, Gold Fields (through its wholly-owned subsidiary) will be granted certain rights pursuant to the terms of an investment agreement, excercisable for as long as Gold Fields owns more than 10% of the common shares of Chakana. The rights include:
- A right to set up a technical advisory panel to review and provide input into Chakana’s exploration program.
- A pre-emptive right to participate in any future proposed equity offering of Chakana in order to maintain its pro-rata interest.
- The right to increase their equity position to match that of another mining company in a future equity financing should that occur.
However, under the terms of the financing, no board representation, right of first refusal, or joint venture rights are being granted to Gold Fields.
“We are extremely pleased to welcome Gold Fields as a strategic investor in Chakana,” said Chakana President and CEO David Kelley. Gold Fields’ investment validates the potential of the Soledad Project, and their technical and operational expertise in Peru will help us unlock that potential.’’
Chakana recently said a total of 25,211 metres of diamond drilling has been completed to date in 94 holes on four of the 17 known breccia pipes. Over 60 targets have been defined on the property that have yet to be tested.
The company has a 20,000-metre drill program planned for 2019 that will commence upon approval of a more expansive drill permit that includes 120 drill platforms.