http://www.grandich.com/2012/03/grandich-client-donner-metals-12/

Feed the Mill, Expand the Mine, Find the Next One; Donner Metals is Fully Financed into Production in Q1 2013

Donner’s shareholders should have some peace of mind with $15M – the amount raised by private placement on March 6th. This is the last amount of financing required before production begins in Q1 2013 and was the very last financial hurdle for Donner to overcome.

Donner will receive another $5M from Sandstorm Energy to complete the $25M upfront payments as part of the copper purchase agreement with Donner signed in July 2011. Donner has the option to buy back half of the copper purchase agreement. With copper prices at $3.86 today (and Donner’s 2010 feasibility study assuming a conservative $2.50 for copper,) it makes sense to do the buy back. Having the necessary financing in place is useful on multiple fronts, for development, ongoing exploration, and buy-back.

All the major development hurdles have been cleared, which should make it business as usual for development partner Xstrata Zinc and their team on the ground. Equipment and personnel are steadily preparing for the transition from the Perseverance Mine to the Donner Bracemac-McLeod Mine.

Donner’s Matagami zinc/copper joint venture project in Québec is unique in the junior industry because Donner has delivered on just about everything they have promised to do; and in some cases they have over-delivered. Xstrata has a hungry mill to feed and they could be scraping the edges of their own current Perseverance mine, while getting the new Bracemac-McLeod ready to go. Take a look at Donner’s recent development update and checklist showing what they have already accomplished:

Surface:

• Haulage road to Matagami mill
• Ramp portal at BAS pit, and stockpile and waste rock pads
• Access road to BAS pit
• Power, water service, surface pumps and mine water line to treatment facilities
• Power and access to vent/fill raise sites
• Surface garage and support buildings (will be augmented by Persévérance buildings)
• Matagami mill (2,950 tonnes per day capacity – upgraded in 2007-2008
• Tailings facility
• Railroad and highway (zinc and copper concentrate shipping)

Underground:

• Ramp to Bracemac area and underground power supply (Bracemac)
• Temporary ventilation
• Multi-face development to Bracemac ore lenses in progress
• Ramps to Macleod zone in progress
• Vent and fill raise construction in progress
• Underground pumping system in progress
• Equipment purchase and transfer from the Persévérance Mine ongoing as needed

Feeding the Mill

Donner’s now approximately 10 months (Q1 2013) from full production. The financing, the partner, and the infrastructure de-risk this project, making it very attractive for investors who want something fairlysoon, with as many check marks as possible.

Expanding the Mine

Donner and Xstrata have changed the mine plan, within the existing development budget, and rescheduled production from the McLeod Zone to begin a year ahead of schedule. The new plan improves the overlap and timing from the mine, and for those of you keen on the McLeod Deep zone as an area to expand the mine, this news should please them.

Finding the Next One

Donner is contributing to an ongoing $5M drill program this year, delivering more high-grade results. On February 21, 2012 they announced 6.20 metres of 3.27% copper with 4.46% zinc at New Hosco. The concept leading to the Bracemac-McLeod discovery has won multiple awards for the Donner/Xstrata exploration team. The fact that this concept is repeatable, and useful in other areas of the Matagami mining camp, makes the exploration opportunities quite interesting. In an established mining camp where the infrastructure is already in place, investors should like the idea that Donner and Xstrata can rapidly test a deposit’s economics, and quickly make the decision to move ahead.

This entry was posted on March 19, 2012 at 11:39 AM. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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