NEW YORK Procon Resources Inc. will invest Canadian $11.7 million ($11.1 million) in the capital stock of Fortune Minerals Ltd. for its Nico gold-cobalt-bismuth-copper project.
Procon will hold a 19.4-percent stake in the company and will be part of a financing plan for Nico that could include an offtake agreement and other benefits, Fortune said June 27. Procon is buying 29.25 million shares at 40 cents per common share. The purchase will occur in two payments of $5.85 million, closing July 25 and Oct. 1, respectively.
"The investment that was provided was an interim step into arranging for the project financing," Fortune president and chief executive officer Robin Goad told AMM. "They have taken a minority investmentthis is still a Canadian company controlled by Canadians."
Vancouver, British Columbia-based Procon, a mining contractor, is majority owned by Beijing-based Camc Engineering Co. Ltd.
"If we can do a project financing joint venture, they would have a representative on our board of directors and were certainly looking at various components of project financing that might include issues on where the metals go," Goad said. "Its safe to say China has significant interest in requiring raw materials to satisfy manufacturing needs."
China already has a majority of global supply of bismuth, used as an environmentally safe replacement for lead. But Fortune, which owns several mineral deposits and exploration projects, has 15 percent of the supply of bismuth, he said. There is also high demand for cobalt, as the Democratic Republic of the Congo holds more than 50 percent of the global supplywhich is hampered by new regulations in the Congo such as a ban on exports of copper and cobalt concentrates (amm.com, May 21).
The Procon investment is significant in allowing the company to push forward a project that will increase its market supply, Goad said. "And weve accomplished this in an environment that is difficult for this sector. Its very difficult to find a financing source," he added.
Nico is in the final stages of permitting, which Procons investment will fund, Goad said. The company estimates construction on Nico will begin in 2014, although Goad said that could change depending on permitting and other "outstanding issues" that he couldnt disclose.