Avanti – Production at Kitsault by 2015
Overview
Avanti Mining Inc. (TSXV:AVT) is an exploration and development company with a development-stage project in British Columbia. The Kitsault Molybdenum Project, located north of Terrace BC, is a brownfield re-development of a past producing mine. The mine was closed in 1982 due to a drop in the molybdenum price to $2/lb caused by an over supply of moly from by-product production in copper mines. This surplus of by-product molybdenum required almost two decades of increasing demand to rectify which finally occurred in 2002.
The Company began confirmatory drilling programs on the project in 2008 that continued throughout 2011. Avanti completed a Feasibility Study on Kitsault in December 2010 and is currently involved in an Environmental Assessment and financing activities so as to begin construction in early 2013. The Company announced a mandate with five lending institutions to provide up to US$640 million of project financing coupled with $289 million in equity to bring the project back into production. The equity portion is expected to be filled with a combination of the sale of a 30% project interest to a strategic partner, sale of a portion of by-product silver production to either a streaming company or a silver forward sale and finally, public equity if required.
Investment Highlights
- Strong history of molybdenum mining at Kitsault (but only 5% of deposit mined)
- Commitment to working collaboratively with Nisga’a Nation
- Robust economics as shown in recent Feasibility Study
Key Property
Kitsault Mine, British Columbia, Canada
The Kitsault Mine is located 140 km northeast of Prince Rupert in west-central BC. The property is accessible by boat, air, and road via Terrace or Prince Rupert. As a former producing molybdenum mine, the property has existing infrastructure including road access and a 138 kv power line connected to B.C. Hydro’s grid. The project contains over 220 mineral claims and leases comprising an area of 43,668 ha. The property contains three known molybdenum deposits, the three deposits (Kitsault, Bell Moly, and Roundy Creek) form zones of mineralization that are annular (ring-shaped) in plan and nearly vertical in section.
Historic mining on the Kitsault property between 1968 and 1972 by Kennecott produced 9.3M tonnes of ore and recovered 22.9M pounds of molybdenum. Finally, almost seven million pounds of molybdenum was produced in the early 1980s by Amax. A total of 239 diamond drill holes have been used to calculate the current resource on the project.
The Company has drilled 115 core holes on the property between 2008 and 2011. This drilling and nearly all the historic drilling was used in the calculation of a new resource model in April 2012 that yielded Measured and Indicated Resources of 321.8 million tonnes grading 0.071% Mo containing 505.5 million pounds of molybdenum and 4.8 g/t Ag containing 49.5 million ounces of silver.
A NI 43-101 compliant Feasibility Study was completed by AMEC in December 2010 that resulted in the Kitsault Project’s NPV (using an 8% discount factor) increasing to US$774 million. The project contains Proven and Probable Reserves totaling 232.5 million tonne of ore grading of 0.081% molybdenum. AMEC has highlighted the possibility for Kitsault to produce 374 million pounds of moly over the course of a 16-year mine life.
The 2010 Feasibility Study did not consider silver as a potential revenue metal because the metallurgical process had not been finalized. Since that time, Avanti has been working with a process that recovers silver from tailings with only modest additions to capital and operating cost. With likely recovery of only 30% to 40%, Kitsault could produce between 450,000 to 800,000 ounces per year of silver. This is a potential by-product metal that could be used to assist in raising capital and/or provide additional revenue that will lower the already robust operating cost of Kitsault.
Avanti announced a US$20 million bridge loan with Resource Capital Funds and CEF Holdings Ltd in June 2012 that is expected to fund the Company’s activities until project financing is completed in late 2012.
Avanti has plans to start construction in 2013 with production scheduled for 2015.
Management
Craig J. Nelsen — President, CEO, and Director
Mr. Nelsen, a geologist by training, is the President, CEO, and Director of Avanti. Mr. Nelsen served as the Executive Vice-President, Exploration, for Gold Fields Limited (from April 1999 to June 2007), one of the world’s largest gold mining companies, listed on the Johannesburg Securities Exchange in South Africa and also on the New York Stock Exchange, London Stock Exchange, Euronext in Paris and Brussels and the SWX Swiss Exchange. He was the founder and Chairman of Metallica Resources Inc. (from 1994 to 2008).
He previously served as Chief Executive Officer of that company from 1994 to 1999. In June 2008, a three-company merger between Metallica, Peak Gold, and New Gold Inc. was finalized, forming the new, larger gold producer known as New Gold Inc., listed on both the Toronto Stock Exchange and American Stock Exchange. He also serves as a non-executive director of Golden Star Resources. Mr. Nelsen holds a Master of Science degree in Geology from the University of New Mexico and a Bachelor of Arts degree in Geology from the University of Montana.
Peter W. Roberts – Director
Mr. Roberts is a Director of Avanti and is also currently a Director of Canadian Public Accountability Board (CPAB) (since 2009) and Director and Chair of Audit Committee of Cardiome Pharma Corp. (since 2005). Mr. Roberts was formerly a Director of the following companies: Bradmer Pharmaceuticals (2006-2008), Webtech Wireless Inc. (2008-2011); MDSI (2005-2006), Offshore Systems (2003-2005), Spectrum Signal Processing (2004-2006) and Seymour Golf & Country Club (2007-2010).
Mr. Roberts was a Chief Financial Officer of Sierra Wireless Inc. from 1999 to 2004. He is a Chartered Accountant in BC, a Chartered Certified Accountant in the UK and a CPA in the United States. Mr. Roberts serves as Chairman of the Audit Committee of Avanti.
Gordon Bogden, P.Eng – Director
Mr. Bogden is a corporate director and a retired investment banker with over 30 years of experience in the mining industry advising in mergers and acquisitions, restructuring and debt and equity capital markets transactions. He concluded his banking career in 2012 as Vice Chairman, Metals & Mining, of Standard Chartered Bank and was previously a co-founder and Managing Partner of Gryphon Partners Canada and held senior executive positions with National Bank Financial Inc., Beacon Group Advisors Ltd., Newcrest Capital Inc., N.M. Rothschild & Sons Canada and CIBC Wood Gundy Securities Inc. He currently sits on boards of Camino Minerals Corp, NexGen Energy Ltd., Royal Gold, Inc. and Volta Resources Inc.
Michael Winship, P.Eng – Director
Mr. Winship is a mining engineer with over 30 years of experience in the mining industry. Most recently he was Chief Operating Officer of Quadra FNX Ltd before its acquisition by KGHM in March 2012. Prior to that Mr. Winship had senior management positions with HudBay Minerals Inc., PT Inco, Vale Inco Limited and Placer Dome Inc. He sits on the board of Rubicon Minerals and has served as director of Ontario & Canadian mining associations.
Jasper A. Bertisen – Director
Mr. Bertisen is a principal with RCF Management LLC, the manager of Resource Capital Funds (together “RCF”), a group of private equity funds that invests exclusively in the mining sector. Mr. Bertisen joined RCF in 2004 and, since that time, has completed technical and commercial due diligence on a large number of mining companies with projects ranging from late stage exploration through production.
Mr. Bertisen graduated with a M.Sc. degree in Mineral Economics from the Colorado School of Mines and a M.Sc. degree in Mining Engineering from Delft University of Technology. Mr. Bertisen is currently also a non-executive director of TSX-V listed AQM Copper Inc. and TSX-listed EMED Mining Public Ltd.
Mark A. Smith – Director
Mr. Smith is a Director for Avanti and is currently Chief Executive Officer, member of the Board of Directors and a shareholder of Molycorp Minerals, LLC. Molycorp Minerals is headquartered in Greenwood Village, Colorado and owns and operates a rare earth mine and processing facilities in Mountain Pass, California, where it produces various forms of rare earth products for sale. Molycorp Minerals is also engaged in technology development concerning rare earth applications and has several patents in this regard. Prior to Molycorp Minerals, Mr. Smith was the president and Chief Executive Officer of Chevron Mining Inc. a wholly owned subsidiary of Chevron Corporation.
Mr. Smith was appointed president and Chief Executive Officer in April 2006. Chevron Mining Inc. operated five mines and was engaged in a joint venture with CONSOL Energy Inc to develop the Youngs Creek Mine, a surface coal mine in Wyoming. Prior to this appointment, Mr. Smith was a Vice President for Unocal Corporation, where he was responsible for managing the real estate, remediation, mining and carbon divisions. Mr. Smith worked for Unocal for over 22 years. Mr. Smith received his Bachelor of Science degree in agricultural engineering from Colorado State University in 1981 and his Juris Doctor, cum laude, from Western State University, College of Law, in 1990. He is a registered professional engineer and an active member of the State Bar of California and Colorado.
Mark G Premo – Chief Operating Officer
Mr. Premo is the Chief Operating Officer of Avanti Mining Inc. and Chief Executive Officer of its wholly owned subsidiary, Avanti Kitsault Mine Ltd. Mr. Premo has over 34 years experience of combined surface and underground coal and minerals mining in the industry. He most recently served as President and CEO of Chevron Mining in Englewood, CO, the company that he began his mining career at in 1977. He has held a number of mine site positions as well as executive leadership roles in Chevron Mining, responsible for all phases of mining operations and overall company management.
Mark has served as Chairman of the Alabama Coal Association and currently serves on the Board of Visitors for the College of Continuing Studies at the University of Alabama and is on the Board of Directors of the National Mining Association. He is a Registered Professional Engineer with a bachelor’s degree in Civil Engineering from Michigan Technological University.
Amjad J. (“AJ”) Ali – Chief Financial Officer
Mr. Ali is the Chief Financial Officer of Avanti. He is a Chartered Accountant with over 25 years experience in the mining industry. Most recently, he was the Chief Financial Officer of Centenario Copper Corporation, a company listed on the Toronto Stock Exchange. Previously, Mr. Ali was the Executive Vice-President and Chief Financial Officer of EuroZinc Mining Corporation (2004 to 2006), a public company listed on both the Toronto and American Stock Exchanges.
Mr. Ali was the Chief Operating Officer and Chief Financial Officer of Resource 21 (1998 to 2003), a subsidiary of Boeing, formed to produce satellite-based imaging data and information services primarily for the agricultural industry. Mr. Ali was the Vice-President, Finance and Chief Financial Officer of Vista Gold Corp. (1992 to 1998), a public company listed on the Toronto and American Stock Exchanges. He was a director of Centenario Copper Corporation before its acquisition by Quadra Mining. Prior to the merger of Peak Gold, Metallica Resources and New Gold Inc., Mr. Ali served as the Director and the chair of the Audit Committee of Metallica Resources Inc. Mr. Ali is also a member of the Financial Executives International and the Institute of Corporate Directors.
Kenneth Collison — Senior Vice President of Project Development
Mr. Collison is the Senior Vice President, Project Development for Avanti. Mr. Collison has over 30 years of experience in the mining industry. Most recently, he served as Chief Operating Officer of Thompson Creek Metals, which included the responsibility for the operations of the Endako and Thompson Creek molybdenum mines. From 2001 to 2004, Mr. Collison worked for the State of Alaska managing construction of sewer and water systems for rural Alaska with extensive dealings with rural populations including first nation communities.
In addition, he has held various high ranking positions with Coeur d’Alene Mines and Rio Algom Limited. Mr. Collison has served as a director of the Mining Associations of Canada and BC as well as president and director of the Nova Scotia Chamber of Mineral Resources. Mr. Collison holds a B. Sc. in Mining Engineering and a Masters of Engineering in Mining; he received both from University of Saskatchewan.
Shane Uren — Vice President of Environmental and Permitting
Mr. Uren is the VP Environmental and Permitting. Mr. Uren is a Registered Professional Biologist in British Columbia with a Masters in Civil Engineering from the University of British Columbia. Mr. Uren has considerable experience in the management of environmental assessments of mining projects in British Columbia, Canada and oversees; including BHP Billiton’s Ekati Diamond Mine, Cambior’s Gros Rosebel Mine, Inco Ltd.’s Goro Project, Novagold’s Galore Creek Project, Thompson Creek Metal’s Davidson Project and is currently engaged with Copper Fox Metals on their Schaft Creek Mine Project environmental assessment.
