The deal is in the form of a non-binding term sheet with Ontario Teachers' Pension Plan Board, who will continue with ongoing due diligence. It's conditional on Foran obtaining a senior secured credit facility.
The parties intend to enter a definitive agreement in Q3.
Upon achieving commercial production at the project, among with other conditions, Ontario Teachers are to take a 19.99% equity interest in the Foran subsidiary which holds the project and surrounding properties.
Red Cloud Securities said the announcement reduces project financing risk and brings on a partner who could potentially support future expansion of the mill and exploration of the surrounding areas.
"We estimate ~C$180 million-C$200 million additional financing is required for construction, which could be met with the anticipated Senior Secured Credit Facility. This estimate considers that we model development capex of C$400 million (vs. C$368 million in the 2022 Feasibility Study) and Foran's existing cash balance of C$64 million as at Q1/22.
"Prior to today's update, our model assumed funding needs to be met with C$260 million 8% project debt, C$110 million equity issuance and cash on hand," Red Cloud said.
The proposed investment by Ontario Teachers will consist of C$180 million that would be available during construction and C$20 million upon McIlvenna Bay reaching a production threshold of 90 million pounds of copper or copper equivalent per annum on a run-rate basis for 60 consecutive days.
A 2022 feasibility study outlined current mineral reserves at the project which could support an 18-year mine life, producing an average of 65 million pounds CuEq annually.
Foran's share price closed the session at C$2.62 on 8 August, having risen 15% day on day. The company has a market capitalization of C$555.22 million.
