October 14, 2021 - Last week, Arizona Sonoran - a junior exploration and development mining company - filed to list on the TSX Index. This week, the company announced preliminary pricing in which it expects to raise ~$66M at prices between $2.45-2.85 per share.
It is worth noting that this will not be one we would be interested in, simply because it is a E&D mining company. So very early stages for this company and there will likely be plenty of opportunities over years to get into this stock. Nevertheless, let's take a look at some quick facts.
Arizona Sonoran expects to issue between 21-24M shares and post closing share count has not yet been disclosed.
The reason for the going public is simple - the company is raising funds to develop the Cactus project (Cactus Mine). Cactus is 100% owned by the company and according to the documents has the potential to be one of the largest independent intermediate copper producers in the US.
The Cactus Project development plan "demonstrates the ability to produce an aggregate of 1 billion lbs of copper, equivalent to 56 million Cu lbs per year (28ktpa) on average, over an 18-year mine life at an estimated LOM average C1 cash cost of US$1.55/lb of payable copper."
It is also expected to be one of the least capital intensive copper projects in the US - likely because it was a previous operating mine back in the 80s.
As mentioned, the company intends to use to proceeds to develop the property. Enclosed within the prospectus is a two Phase workplan and where it estimates cash to be used. Mainly its for drilling, land payments and exploration + debt repayment and corporate operations. The chart is not really all that user friendly, so if interested you can see the exact details on pages 35-36 of the prospectus.
Bottom line is this - this will be the first of many capital raises to help Arizona Sonoran bring this project to fruition. There are more details on the project itself (not much) between pages 22 and 33 of the prospectus, but much of it is generic statements about potential. This funding round is expected to see the company through June 2022 (end of Phase 2) and cover operating costs until March of 2023.
All things being told, no reason to rush out on this one. Take your time with this, read the prospectus in greater detail as this will be a highly speculative play that is prone to volatility. These juniors sitting on old assets to be revitalized and further explored come along fairly often with big promises. It's all about execution and that is something that will take years to analyze.
Proceed with caution.