Kitsault Mine Raises $40 Million

resources | BCBusiness
Exploratory drill rig at the Avanti site.

A former molbdenum mine near Kitsault inches closer to being brought back to life with the raising of US$40 million in financing

Avanti Mining Corp. may be a step closer to its goal of reopening the Kitsault Molybdenum Mine 140 km north of Prince Rupert after reaching an agreement with Resource Capital Fund for a US$40 million pre-construction loan.
Avanti says it will use the loan to improve infrastructure, expand its construction management team, and pay expenses related to permitting and financing at its Kitsault molybdenum project. Funding of the loan will take place in four tranches of US$10 million each, as long as the transaction is approved by the TSX Venture and shareholders, who are expected to vote on the transaction at a shareholders’ meeting scheduled for December 4.
The B.C. government approved an Environmental Assessment Certificate for the Kitsault project in March this year. That certificate, along with an environmental assessment certificate from the federal government, are required before the company can apply for as many as 34 other permits necessary to develop the project into a mine.
Avanti has spent the last five years in the environmental assessment process with both the B.C. and Canadian governments, and with extensive consultation with First Nations groups.
“We’ve spent about $75 million in total on the project so far, of which $16 million or $17 million has been spent solely on the environmental processes and consultations with First Nations,” says Craig Nelson, executive chair of Avanti Mining. “All this to ensure that this project will have no significant impacts on the environment.”
Avanti acquired the past-producing Kitsault molybdenum mine in 2008. A 2013 feasibility study for the project established the project’s net value at $433 million (at a molybdenum price of $14.50 per pound, which was the average price for the three years prior to the report). The study estimated the mine will produce 374 million pounds of molybdenum and 14.4 million ounces of silver over a 16 year mine life. Cash costs were estimated to be $5.73 per pound of molybdenum, which today is sold for $9.75 per pound.
Other key project components will include expansion of the historic open pit, a processing plant, tailings impoundment area, explosives manufacturing facility and other infrastructure. Total pre-production capital costs for the Kitsault project are estimated at $938 million, with an additional sustaining capital requirement of $106 million.
Molybdenum’s primary use is as an alloying ingredient in steel for the construction industry, high speed tools, pipelines, nuclear reactors and aircraft parts.