Newcrest Invests in Junior Explorer and Colo. Project

May 22, 2023 (Investorideas.com Newswire) Mining major Newcrest invests in Metallic Minerals Corp. to advance its La Plata copper-silver-gold-platinum group project in Colorado.

Mining major Newcrest Mining Ltd. (NCM:ASX) has invested CA$6.34 million in Metallic Minerals Corp. (MMG:TSX.V; MMNGF:OTCQB) to advance its La Plata copper-silver-gold-platinum group project in Colorado.

Following the closing of the investment, Newcrest will hold 9.5% of the issued and outstanding common shares of the company on a non-diluted basis. Including warrants, it will hold 15.5% of the issued and outstanding common shares on a partially diluted basis.

In addition to capital, the Australia-based major will help Metallic Minerals with technical issues involving similar alkalic porphyry systems and underground bulk-tonnage block-cave mining operations. A technical committee will be formed with representatives from both companies.

"Newcrest was one of the first to recognize the potential (of La Plata)," Metallic Minerals Chief Executive Officer Greg Johnson said in a recent interview. "These guys really have key expertise in this type of geology as well as in bulk-tonnage block-cave mining, which is what we're probably looking at."

The company completed an NI 43-101 resource last year for La Plata of 889 million pounds copper (Cu) and 14.975 million ounces silver (Moz Ag) at an average grade of 0.39% Cu Eq, 0.35% Cu, and 4.02 4.02 g/t Ag, using a 0.25% Cu Eq cutoff grade.

Hole 22-04, drilled in 2022 for resource expansion, is ostensibly what caught Newcrest's attention. The hole hit 816 meters of 0.41% recovered copper equivalent (Cu eq), which the company said was "one of the top intersections for any North American project for the past several years" as it ended in 2.44% Cu, 18.7 grams per tonne silver (g/t Ag) and 5 g/t Au+PGE due to mechanical issues with the rig.

The company has indicated its priority is to step out from 22-04 and take it to depth in order to test the extent of the high-grade mineralization. Johnson said expanding the 43-101 resource will form the basis of exploration of the project in 2023.

Combined with results from its flagship Keno Silver project in the Yukon Territory and a royalty agreement signed with Parker Schnabel of the Discovery Channel's "Gold Rush" on claims in the Yukon, the La Plata results led Couloir Capital to maintain its Buy rating on the stock with a fair value per share estimate of CA$0.75.

"The developments, especially the large intercept at La Plata and the royalty agreement, are catalytic events that could fundamentally change aspects of our valuation thesis for MMG moving forward," Couloir wrote in a March research note. "Should the company manage to achieve similar results with its 2023 follow-on drill program at La Plata, management believes the project could start to attract interest from major mining companies."

The company is also moving forward on an inaugural resource estimate for Keno, which could also bring more attention from majors.

"That estimate has the potential to raise Metallic's profile as a silver explorer with considerable upside," Gold Newsletter Editor Brien Lundin wrote May 5. "Metallic Minerals remains a Buy."

The Catalyst: Fast-Tracking Expansion Drilling

The money will allow Metallic Minerals to fast-track planned expansion drilling following up on 2022 successes, Greg Johnson said.

"This year is shaping up to be one of the most exciting in our company's history, with an updated resource estimate in progress at La Plata and an inaugural resource at our Keno Silver project also underway," he said.

As part of the private placement, Newcrest will complete a financing of CA$6.34 million, consisting of 15,838,593 units of Metallic Minerals at a price of CA$0.40 per unit, with each unit comprising one common share and 0.75 of a common share purchase warrant. This represents a 13% premium to the 20-day volume weighted average price of Metallic Minerals' shares on the TSX-V on May 9.

Each full warrant entitles Newcrest to purchase one common share at an exercise price of CA$0.55, providing CA$6.5 million in additional funding if exercised.

The warrants are exercisable for three years and contain a customary acceleration provision, which is effective if the common shares trade for a period of 20 consecutive trading days at or above CA$0.825 on the TSX-V.

Newcrest will also have investor rights, such as participation in future equity issuances and a right to maintain its pro-rata position in the company. Newcrest will also have the right to appoint a director to MMG's board if they hold at least 13% of the issued and outstanding shares of the company.

"We are excited to become a cornerstone investor in Metallic Minerals and to be able to contribute towards this promising copper and precious metal project," Newcrest General Manager of Exploration Fraser MacCorquodale said.

Working Toward Maiden Resource in Yukon

The Keno Silver project is in the historic Keno Hill Silver District of the Yukon, which has produced more than 200 million ounces Moz Ag at an average grade exceeding 1,300 grams per tonne (g/t), the company said.

The district also hosts Hecla Mining Co.'s (HL:NYSE) Keno Hill mines, which feature an estimated life-of-mine production grade of 804 g/t and a fully operational mill complex, highway access, and grid power.

Metallic Minerals said its project covers mainly the eastern portion of the district and was host to eight historical silver mines, five of which had average production grades of about 5,000 g/t.

The company said in total, at Keno Silver in 2022, there were 138 significant intervals of greater than 100 g/t Ag eq and 22 intervals over 500 g/t Ag eq over 23 holes. A "robust" drilling program meant to expand the resource and test new targets is planned for this year. [OWNERSHIP_CHART-9081]

"We expect these results will be instrumental in advancing Keno Silver to its maiden resource milestone," Couloir Capital wrote.

Ownership and Share Structure

About 17% of Metallic Minerals is owned by management and insiders, including CEO Johnson with 4.67% or 7.05 million shares, Independent Director Gregor Hamilton with 0.91% or 1.37 million shares, and the president, Petsel, with 0.56% or 850,000 shares.

About 34% is owned by strategic investors, including Newcrest's 9.5% and mining financier Eric Sprott, who owns 14.5%.

About 22% is owned institutionally. The rest, 27%, is retail.

Its market cap is CA$59.6 million, with 150.9 million shares outstanding, 120 million of them free-floating. It trades in a 52-week range of CA$0.435 and CA$0.195.

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