TRANSCRIPTION OF FINANCE NEWS NETWORK INTERVIEW WITH COPPERMOLY, MANAGING DIRECTOR, PETER SWIRIDIUK
Clive Tompkins: Hello Clive Tompkins reporting for the Finance News Network.
Joining me from Coppermoly to discuss its deal with Barrick (PNG) Exploration Ltd., a wholly owned subsidiary of Barrick Gold and provide an update on its rights issue is managing director, Peter Swiridiuk.
Peter welcome back, a lot has taken place over the last month. Starting with the Letter Agreement with Barrick - how much are they investing and at what price?
Peter Swiridiuk: Hi Clive. Barrick are investing basically five percent of shares of Coppermoly at nine cents. Now that price was the volume weighted average trading price over the previous five days trading before the time the deal was signed. We will welcome Barrick as our third largest shareholder as a result.
Clive Tompkins: What are the key terms of the agreement with Barrick?
Peter Swiridiuk: Basically they need to spend twenty million dollars Australian to earn up to seventy-two percent under the projects within eight years. Realistically once they start drilling and get results we would expect they may well want to get to that seventy-two percent mark within just a few years.
Clive Tompkins: What attracted them to your tenements?
Peter Swiridiuk: Well Barrick saw one of our presentations a couple of years ago and it was only recently they started looking more seriously for copper projects with large tonnage potential. Coppermoly has three potentially large tonnage copper projects including Simuku where we have an Inferrred Resource of two hundred million tonnes at about half percent copper equivalent* and that’s only in less than one third of the overall mineralised system that’s been tested. More significantly, it’s only one hour’s drive from an operating deep water port. Now these are all key factors that they look for when looking for potential joint venture partners. Also at Nakru we have higher grade copper grades near surface with significant tonnage potential at depth and this project is only about a four hour drive away from that deep water port - so a combination of large tonnage projects and with access to existing infrastructure including a deep water port.
Clive Tompkins: Alright, so what interest does Coppermoly retain in this project once Barrick has expended twenty million and what does this mean for shareholders?
Peter Swiridiuk: The most important aspect for our shareholders and what makes the agreement so worthwhile is that we can retain a quite substantial twenty-eight percent of the projects without being diluted. Once Barrick get to seventy-two percent, the projects would obviously be of significant interest and our twenty-eight percent will become quite valuable and if it was in the interest of shareholders at that time, that twenty-eight percent could be sold for quite a substantial amount of money or we may retain a percentage of that and move forward into some sort of feasibility studies and beyond.
Clive Tompkins: Okay and finally, how significant is it to have a company like Barrick on board?
Peter Swiridiuk: Our projects are large copper systems which require about twenty million dollars worth of drilling to progress them through to feasibility. Barrick not only have the financial capacity to add value to our assets, the deal will also reflect how good our projects are and how Coppermoly have been able to progress them to a stage where they are quite attractive. Barrick also have significant experience working in Papua New Guinea with other various joint venture agreements such as Porgera, Kainantu and some of the projects of Allied Gold on nearby islands.
Clive Tompkins: Thanks Peter, now to your rights issue – how much was raised in the end?
Peter Swiridiuk: Our rights issue was quite successful and we raised about 2.4 million dollars at five cents with a half attaching option, exercisable at seven cents. That was an attractive deal at the time and that value is now truly reflected in our capacity to attract Barrick, such a significant exploration partner.
Clive Tompkins: What is your cash position now?
Peter Swiridiuk: After the placement with Barrick – after their purchasing five percent of the company, we’ll have about 2.8 million dollars in cash.
Clive Tompkins: And the proceeds are going towards further drilling, is that correct?
Peter Swiridiuk: These proceeds will initially go towards helping Barrick begin drilling on our projects. More significantly the funds will go then towards next year evaluating and pursuing other projects on New Britain Island.
Clive Tompkins: Alright and last question. What has the rights issue meant for your stock in terms of liquidity, spread of shareholders and subsequent price performance?
Peter Swiridiuk: Well we now have substantially more shareholders. This spread of shareholders has improved our liquidity and the share price and volume movements more accurately reflect the value of our projects and the people behind running this company.
Clive Tompkins: Okay good - so win, win.
Peter Swiridiuk: Seems to be the case, yes.
