{kanada_flagge} In the drone video from March of this year, Camino CEO Jay Chmelauskas is seen standing alone in foggy conditions on the huge smoothly polished rock ridge of the Maria Cecilia copper porphyry project in Peru. Before the camera takes off for a scenic flight, he calls out to the viewer, “Please join our journey to discovery.” Today, some four months later and after a successful financing round of CAD $7.5 million, this invitation to investors applies more than ever.
For now, Camino Corp. (CSE: COR; FRA: XCO1) has formally completed the 100% acquisition of the 7,110 hectare project. The explorer Camino now holds a total of three promising copper projects in Peru. In the future, the Maria Cecilia porphyry project will be on an equal footing with the previous flagship project Los Chapitos, which is considered by experts to be one of the most promising IOCG projects in South America.
For Camino, the acquisition of Maria Cecilia is a milestone, not to say a coup: Camino is paying the previous owner Denham Capital, a multi-billion dollar international private equity fund approximately CAD $4.6 million in the form of shares for a project in which more than USD $28 million has already flowed over the past five years. Denham Capital, and this can also be chalked up as a win for Camino, becomes Camino’s largest shareholder as a result of the transaction, holding 17 percent of the company. Justin Machin, one of Denham Capital’s directors, joins Camino’s board of directors.
Incidentally, the acquisition of Maria Cecilia moves Camino into the group of companies with proven resources. The Toropunto resource to the north (32 million tonnes at 0.22 percent CuEq) has surface sampling anomalies of 6.04 percent Cu, 3.4 g/t gold, 305 g/t Ag and 1,700 molybdenum ppm. In addition, there is the Emmanuel Porpyhry (94 mt at 0.29 percent CuEq) to the south. Of all things, the large porphyry with the largest magnetic anomaly (see Figures 1 and 2) has never been drill tested. This is exactly what Camino intends to do this season and it is probably this bold exploration approach that may have convinced Denham. Indeed, successful serial entrepreneur Jay Chmelauskas learned during his apprenticeship with well-known commodities promoter Robert Friedland that you’d better think big in the commodities business. He compares Maria Cecilia’s potential to Ivanhoe Mines’ Oyu Tolgoi project in Mongolia.
Figure 1: After five years of work, $28 million in capital expenditures, and about 30,000 meters of drilling, geologists can get an accurate picture of Maria Cecilia. Camino geologists were particularly interested in the large magnetic anomalies in the center of the project, which had never been tested by drilling.
Figure 2: The large porphyry with the largest magnetic anomaly (indicated by the white dashed oval), of all places, has never been drilled before. Camino plans to change that this season.
New Camino board member Justin Machin, a director at Denham Capital, sees an opportunity to build Camino into a leading junior mining company. Commenting on the transaction, he said, “Now that the Maria Cecilia transaction has closed and Camino has completed its $7.5 million financing, the company is well positioned for its next phase of growth. I look forward to working closely with Jay and the rest of Camino’s Board of Directors.”
Camino management will be in Peru beginning next week to prepare for drilling at the flagship Los Chapitos project, which is scheduled to begin in August. Drilling at Maria Cecilia is expected to follow in September/October.
Transaction Details
Technically, Camino has completed the Maria Cecilia Project by acquiring Minera Maria Cecilia Ltd. (“MMC BVI”), a company incorporated in the British Virgin Islands. MMC BVI was in turn owned by a subsidiary of Denham Capital, Stellar Investment Holdings LLC (“Stellar”). As consideration for the shares of MMC BVI, Camino issued 23,193,098 common shares in the capital of Camino (each a “Common Share”) to Stellar at a price of CAD $0.20 per Common Share for an aggregate purchase price of approximately CAD $4,638,620.
Concurrent with the closing of the Acquisition, Stellar acquired 2,941,176 Camino Shares at a price of CAD $0.17 per unit for aggregate gross proceeds of approximately CAD $500,000. This subscription was previously announced on March 30, 2021 and May 3, 2021. Each unit consists of one common share and one-half of one non-transferable warrant to purchase one common share, with each whole warrant entitling Stellar to purchase one additional common share at a price of $0.25 per common share until July 13, 2023.
Bottom line: the profit is in the purchase, goes the old merchant’s adage. From that perspective, Camino Corp. has scored a coup with its all stock transaction for the acquisition of the Maria Cecilia advanced porphyry project, which also included a $500,000 placement by Denham Capital in Camino shares. The 23,193,098 Camino shares, equivalent to CAD $4.6 million, which Camino used as acquisition currency, compares with previous capital expenditures of about $28 million. The seller, Denham Capital, is thus accepting in the deal that it is significantly behind for the time being. For this very reason, Denham Capital has probably chosen its partner very carefully. Camino’s project portfolio and ambitious team, as well as its ability to raise money on the market, speak in its favor: Both projects, Los Chapitos and the Maria Cecilia, each have what it takes to be world-class discoveries. In addition, the Camino team represents a bolder discovery strategy that, if successful, can resonate with the market. Consider the recent sensational success of Filo Mining (TSXV:FIL), which drilled a mega 858m hole at 1.80% CuEq on the Chile-Argentina border in May of this year. That one drillhole was worth hundreds of millions of dollars in valuation. Filo is now worth CAD $1.1 billion on the stock market. Camino is valued at around CAD $28 million at the current price. So there is still room to go up.
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