Altamin’s Gorno zinc play poised for take-off with US$65m funding deal
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Altamin’s plan to develop its advanced Gorno zinc project has received a giant leg-up after the company secured a US$65m ($94m) funding deal from global specialist mining private equity fund Appian.
The first tranche of the program consists of U$10m in committed funding for significantly expanded exploration and infill drilling of more than 20,000m, permitting and then completion of a definitive feasibility study in exchange for a 29.9% stake in the project.
Appian can earn up to a further 37.5% in project by funding up to US$55m – an amount sized for the expected project financing equity component based on Scoping Study parameters – for project construction following a final investment decision.
The investment by Appian is a significant boost for Altamin (ASX:AZI) as the fund has a long history of successfully bringing mines through development and into production, having completed seven mine builds in the last four years, and a successful track record of supporting companies to achieve their development targets.
It also de-risks the finance of further exploration growth and project funding of the Gorno project through to commercial production, whilst removing any immediate financing burden from the company’s shareholders.
Altamin expects to retain a 32.6% interest in Gorno and share management with Appian once the project has been funded to commercial production.
“This funding enables our work program to be significantly expanded to test the significant near mine exploration potential and expand the resource footprint at Gorno, therefore maximising project and shareholder value, whilst significantly reducing equity dilution and finance risk for our shareholders,” managing director Geraint Harris.
“Altamin and Appian are aligned on this strategy and the partnership with Appian also brings a wealth of new exploration and mine development experience to our team.”
Appian founder and chief executive officer Michael Scherb said the fund was excited to partner with the company on the development of Gorno, which he described as a a high-quality asset with a highly prospective resource and strong local support.
The fund’s interest in zinc is unsurprising, given the expectation that the European Union’s energy transition alone will increase its zinc use by up to 15%.
Gorno is a previously producing high-grade, underground mine in a historic zinc and lead mining province that has been idle since 1982.
It has a resource of 7.8 million tonnes grading 6.8% zinc, 1.8% lead and 32 grams per tonne silver that underpins a scoping study which estimates post-tax net present value and internal rate of return – both measures of a project’s expected profitability – at US$211m and 50% respectively.
Capex was estimated at a very manageable US$114m with payback estimated within 2.5 years and a mine life of nine years.
Resources confidence is expected to improve once results from infill drilling are received while step-out drilling is expected to upgrade resources further.
This article was developed in collaboration with Altamin, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.