Mining News: Goldcorp buys large interest in Colorado
Colorado Resources Ltd. Aug. 4 announced that Goldcorp Inc. is making a strategic investment that will give the major a roughly 14.25 percent interest in the explorer. At the same time, Colorado has cut a deal with Seabridge Gold Inc. to acquire full ownership of the KSP copper-gold project in northern British Columbia. Adam Travis, President and CEO of Colorado stated “This is one of the most important milestones in Colorado’s eight-year history,” said Colorado President and CEO Adam Travis. “Goldcorp’s investment will not only allow us to increase our ownership of KSP to 100 percent, it will also provide additional funding to expand our 2017 exploration program and drill-test targets we would not otherwise be able to explore this year.” Goldcorp’s investment into Colorado is part of a financing package that is expected to include the issuance of up to 10 million units at C26 cents each and 12.72 million flow-through units at C36.5 cents each. Each unit, both regular and flow-through, will consist of one Colorado share and one half of a purchase warrant, with each full warrant exercisable at C45 cents for 30 months. Colorado expects to raise up to C$7.24 million with the financing. Goldcorp is expected to be the ultimate holder of the flow-through units and has agreed to purchase 4.24 million additional units directly from Colorado. Following the closing of the financing, expected by Aug. 31, Goldcorp will own roughly 14.25 percent of Colorado’s issued and outstanding shares. Going forward, Goldcorp will have the right to maintain its pro-rata ownership percentage in Colorado during future financings. This right will entitle, but not obligate Goldcorp to participate in any future equity financings by Colorado to the extent necessary for Goldcorp to maintain a 19.95 percent equity interest in the issued and outstanding common shares of Colorado. Colorado said it will use the money raised from the flow-through financing to expand the 2017 exploration program. Concurrently, Colorado has entered into an agreement with SnipGold Corp. a wholly owned subsidiary of Seabridge Gold Inc. to purchase full ownership of KSP. A C$150,000 cash payment made to Seabridge in May, together with C$6 million of exploration completed in 2016, earned Colorado an initial 51 percent interest in KSP. This year, Colorado launched a 7,500-meter drill program that was expected to satisfy the C$4 million of exploration required to increase its interest in KSP to 80 percent. Now Colorado can own the property outright by paying Seabridge C$1 million in cash and issuing the company 2 million Colorado shares. “We look forward to welcoming both Goldcorp and Seabridge as shareholders and now have the opportunity to advance KSP with significant support on all levels,” said Travis. Seabridge will retain a 2 percent net smelter return royalty on KSP, half of which can be repurchased at any time for C$2 million. “We wish Colorado every success at KSP and we hope to profit from their work as a shareholder and royalty holder in the project,” said Seabridge Chairman and CEO Rudi Fronk.