Callinan’s purchase of a royalty on Excelsior’s Gunnison project is welcome news in a battered junior-mining landscape. When it is all said and done, the total investment could equal $22M. By securing a major financing partner, the company has removed a major barrier going forward – whatever the market sentiment, Excelsior is on a much better path now.
Shareholders should appreciate that this financing is largely non-dilutive. One of the advantages that Excelsior had was that when they acquired this huge copper deposit (over 4-billion pounds), it came in with virtually no royalties attached. It is very rare for a project of this size to not be encumbered with royalties. And now Excelsior is playing this trump card through the sale of a royalty.
This financing could suggest that the smart money IS deploying funds for good projects that long ago reached rock-bottom prices. I suspect that firms and investors who have been tracking Excelsior should find this news worthy of further interest.
Generally, royalty companies like Callinan do not invest in projects until at least the feasibility stage. The fact that Callinan is willing to step forward in advance of the Pre-Feasibility can be viewed as a major endorsement of the project and the management team. You can be sure that Callinan did extensive due diligence; obviously they liked what they saw.
And there could be more good news ahead. Management continues to indicate that they are working on a potential transaction of significant scale.
Mark Morabito recently became active on Twitter – you can follow him at @mjmorabito