AbraSilver Resource (TSX: ABRA; US-OTC: ABBRF) is raising C$45 million ($32 million) through a bought-deal share offering to fund early works at its Diablillos silver-gold project in Argentina as it moves towards a construction decision next year and production by the end of 2029.
The Toronto-based company has agreed to sell 3.06 million common shares at C$14.70 each, according to a release on Thursday. Shares in AbraSilver fell 5.3% to C$14.81 in Toronto on Thursday morning, valuing the company at C$2.41 billion.
The new capital will be used for early works expected to start this quarter at Diablillos in Salta province and purchases of long-lead equipment.
The financing follows a string of milestones including a definitive feasibility study released last month, final environmental approval, acceptance into Argentina’s Large Investment Incentive Regime (RIGI) and continued exploration success outside the current mine plan.
“The recently completed definitive feasibility study highlights Diablillos as a robust, high-margin, long-life precious metals project with significant production potential and substantial exploration upside,” AbraSilver said.
Drilling
Underwriters led by National Bank Financial, Beacon Securities and Raymond James hold an option to buy another 339,000 shares that could lift gross proceeds to almost $50 million. The financing is expected to close around July 29. The project is about 160 km south of the town of Salta in northwestern Argentina.
On July 13, AbraSilver reported drilling that pointed to further resource growth beyond the limits of the Diablillos feasibility study. Hole DDH-26-036 at the Oculto West zone cut 109 metres grading 221.2 grams silver and 0.72 gram gold from 114 metres downhole, including 14 metres grading 580 grams silver and 0.23 gram gold from 135 metres.
The results “highlight continuity of high-grade oxide silver-gold mineralization in a previously untested area at Oculto West and beyond the DFS mine plan,” Scotia Capital mining analyst Eric Winmill said at the time.
Resource
Diablillos hosts 232 million measured and indicated tonnes grading 33 grams silver and 0.34 gram gold for 248.1 million oz. contained silver and 2.5 million oz. contained gold. It also has 49.3 million inferred tonnes grading 12 grams silver and 0.26 gram gold for 18.4 million oz. silver and 420,000 oz. gold.
The feasibility study outlined a 25-year open-pit mine with an after-tax net present value of about US$3 billion, a 42% internal rate of return and initial capital costs of US$722 million, including contingency.
The mine is expected to produce an average of 20 million silver-equivalent oz. annually during its first five years before averaging about 10 million silver-equivalent oz. over its life.
The company is also developing La Coipita, a copper-gold porphyry project in Argentina’s San Juan mining district beside the Chilean border, in a joint venture with Teck Resources (TSX: TECK.A, TECK.B; NYSE: TECK). The Miocene porphyry-epithermal belt there hosts world-class deposits such as Filo del Sol, Los Azules, El Indio, Veladero, Pascua Lama and El Pachon.
