Highland Copper Company Inc. (TSXV: HI) and its subsidiary Upper Peninsula Copper Holdings reported today that they have entered into an agreement with Sweetwater Royalties to sell all of the issued and outstanding shares of Upper Peninsula subsidiary UPX Minerals. The acquisition is reported to be for total consideration worth US$18 million.
The transaction payment involves Sweetwater paying US$3 million in cash and the assumption of UPX Minerals’ US$15 million remaining promissory note. The outstanding payable came from UPX Minerals’ previous acquisition of mineral rights and real properties from Rio Tinto Nickel Company and Kennecott Exploration Company. This 2017 transaction entailed a secured promissory note with a principal value of US$16 million of which US$15 million remains unpaid.
Related to the acquisition, the copper mining firm also intends to raise $26 million via private placement through selling 260.0 million company units at $0.10 per unit. Each unit will consist of one Highland Copper common share and one-half of a purchase warrant. A whole warrant is exercisable to purchase one common share at $0.18 per share within two years from issuance. The closing of the UPX Minerals acquisition is conditional on raising not less than US$12.5 million in this private offering.
Sweetwater’s parent company, Orion Mine Finance, has pledged to subscribe for US$5 million in the said financing. This potentially puts its stake in Highland Copper at 28% should the private placement is fully subscribed.
Highland Copper intends to use the offering proceeds to settle liabilities, including the loan due to Osisko Gold Royalties and Greenstone Resources, to advance the development of the Copperwood and White Pine North projects, and for general working capital purposes.
Both the closing of the acquisition and the offering are expected to occur during the third quarter of 2021, subject to customary closing conditions and regulatory approvals.
Highland Copper Company last traded at $0.12 on the TSX Venture.
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