TORONTO (miningweekly.com) – Outside of dealing with the negative copper market, the biggest challenge for East Coast-focused Rambler Metals & Mining in general was to secure working capital financing, CEO and president Norman Williams told Mining Weekly Online in a recent interview.

Rambler had been advancing discussions with a selection of financing partners, focusing on debt-type financing arrangements of up to $25-million, to mainly cover working capital shortfalls as the company progressed its optimisation plan for its cornerstone Ming copper/gold mine, in Baie Verte, Newfoundland and Labrador.

The company had last month published the results of a prefeasibility engineering study (PFS) to improve the efficiency of the current high-grade massive sulphide operation. This comprised blending increasing amounts of lower footwall zone (LFZ) mineral resource with the massive sulphides, as output ramped up. The company aimed to increase mill throughput to 850 t/d in 2016 and 1 180 t/d in 2017, until full capacity of 1 250 t/d was reached in 2018.

The PFS attached an after-tax net present value, at a 5% discount rate, of C$62.1-million to the project and an internal rate of return of 45%, based on trending copper and gold prices, including a long-term copper price of $2.79/lb.

Meanwhile, Rambler was in advanced discussions to secure a $5-million bridge-loan facility with its current offtake partner Transamine Trading, as a means of strengthening its working capital position while expediting development into the LFZ. The capital required to complete the expansion, which included a new ball mill, was about C$66-million. 

The company initiated discussions with various debt-type financing partners targeting up to $25-million to strengthen the working capital shortfall, initiate the expansion's construction and provide additional capital should it choose to be more aggressive with construction or underground development.

“The company is also looking to [employ more workers] to get the footwall zone set up. It’s a challenge, but we certainly have the ability to accomplish the [needed] development,” Williams noted.

He explained that while Rambler was able to start mining in 2011 from the massive sulphide resource at the Ming mine, the company’s long-term strategy was to show that it could tap into the LFZ sitting underneath and, with the PFS in hand, the company had done just that.

“We have a record of hitting our goals and the PFS has shown that we can significantly improve the Ming life-of-mine, which is what investors want,” he said, adding that the company had progressed the LFZ studies over the last five years with its own cash on hand.

He expected the financing to close in September.

COPPER VOLATILITY
Williams noted that the copper market had been extremely volatile since the start of the year. The red metal had lost about 16% in value this year as increasing global output and slower demand from China, the metal's biggest user, resulted in flooded markets.

Yet, Williams explained that investors often neglected to take into consideration that the majority of Rambler’s costs were priced in Canadian dollars, while the majority of commodities were sold in US currency.

Despite the copper price being fairly low at around $2.30/lb, the falling value of the loonie against the US dollar was extremely favourable in terms of copper sales.

“We are getting a big uplift, so we are getting about C$3.20/lb, which as a Canadian producer, is quite beneficial. So when the copper price goes down, we have a natural hedge if the US dollar gains strength against the Canadian currency,” Williams explained.

Over the past 12 months, the currency had traded at a high of $0.92 against C$1 and a low of $0.75 versus the loonie.

“A lot of people don’t keep that in mind,” Williams added.

During the 21-year mine life ending 2036, Rambler expected the Ming mine to produce about 536 000 t of copper concentrate after milling and recovery, as well as 89 600 oz of gold and 527 800 oz of silver by-products.

Rambler's TSX-V-listed stock had taken a beating since the start of the year, losing 47.5% in value, and on Monday traded at C$0.21 apiece.