---ADDS SHARE PRICE AND BROKER COMMENT---
Chile-focused mining exploration group Herencia Resources (LON:HER) has revealed it has agreed a second tranche of funding - £1.86mln in total - with cornerstone investor Shining Capital.
The Hong Kong firm will buy 300mln new shares at 0.62p each, a significant premium to the last traded price.
Following the issue of equity, Shining Capital will own just over 16% of the AIM-listed group.
Managing director Graeme Sloan said: “The receipt of the Shining funds is a great way to kick start the new-year and allows us to advance all our Chilean projects, which will add both value and provide the opportunity for regular news flow in 2014.”
He also told investors the Picachos Project is shaping up as a first-class copper opportunity, while Guamanga is advancing under the guidance of partner Oz Minerals.
Picachos has large tonnage, high-grade potential with two styles of mineralisation present: structural, or vein, and “mantos”, or lithographical.
There are up to five mineralised trends, with a combined strike length of over eight kilometres.
Small-scale mining already produces between 4,000 and 10,000 tonnes a month, but analysts believe there is the potential for something much larger, particularly given Picachos’s location.
This type of deposit can typically host resources anywhere in the region of 10-50 million tonnes and, in some instances, much more.
And the property is just eight kilometres west of Teck Resources’ large Carmen de Andacollo Copper-Gold Mine, which has a resource of over 400 million tonnes.
Picachos seems to be blessed with outstanding infrastructure (roads, electricity, etc.) and it is only 50 kilometres from the city of La Serena and its airport, and is near to the bulk port of Coquimbo.
The latest data from the project, revealed earlier this month, served to burnish Picahcos’s high-grade potential.
Samples taken from the 40-metre shaft underground workings returned grades up to 8.7% copper using an X-ray fluorescent (XRF) analyser. Spot XRF grades averaged 2.2%, Herencia said.
The AIM-listed explorer said the results confirmed “the pervasive nature of the high-grade mineralised structures at Picachos”. Moreover, they support the high copper grades being reported from the processing of ore that is currently being mined.
Again, this is just one leg of the story. The Oz Minerals joint venture (JV) reveals Sloan and the team to be shrewd negotiators, with the Australian mining midcap shouldering the financial burden of exploration.
In phase one, Oz will spend US$3mln to earn 51% of Guamanga, which is located 750 kilometres (km) north of the capital, Santiago, followed by a further US$5mln for 80%.
But the potential prize is big with the Guamanga mineralisation similar to the 250mln-tonne Mantoverde iron ore copper gold (IOCG) deposit, which is located only 15 km to the north of Guamanga.
In October Oz said two geophysical targets had been identified using a ground magnetic survey, which support this thesis.
The shares, up 12.5% in last three months, advanced 3% to 0.54p after the announcement.
“The funding appears to us to be a positive vote of confidence in the quality of management and that the investment firm sees the projects as being of sufficient merit that they anticipate a positive return on their money being invested at this pre-production stage,” said VSA Capital in a note to clients.