Herencia Resources (AIM: HER) has raised £750,000 and added a new significant shareholder - with 10.4% of the company - with Nyrstar (Euronext Brussels: NYR) agreeing to subscribe for 100 million new ordinary shares at 0.75p each. Consequently, Herencia said it will remain in a strong working capital position, with the ability to undertake additional work targeting the recently discovered 'New' vein at the Paguanta zinc-lead-silver-gold project in Chile.
Furthermore, the company said it will also benefit from Nyrstar's significant experience in the zinc and lead market as the Paguanta project moves forward. The Nyrstar NV Group is a global multi-metals business producing significant quantities of zinc and lead, as well as silver, gold and copper.
"The involvement of Nyrstar will be of tremendous benefit to Herencia ... I look forward to their valuable contribution and support, on a number of levels, as we drive the Paguanta project toward development”, Herencia MD Michael Bohm said. “Shareholders should view this transaction as a significant vote of confidence in our plans for Paguanta".
Under the terms of the agreement, Nyrstar has the right to nominate a representative to Herencia’s board of directors, whilst it has at least 10% of the company’s issued share capital. The agreement also includes certain provisions designed to protect Nyrstar's shareholding from being diluted, also for as long as it holds at least 10%.
The new shares are expected to be admitted on London’s AIM market on 30 April 2010.
The current drill program remains on track at Paguanta, Herencia stated. Yesterday, Herencia told investors that it will focus on advancing the project in northern Chile to feasibility study this year. The company foresees the start of mining operations within the next 3-5 years - during which time zinc, lead, silver and gold prices are expected to rise further after bouncing back in 2009.
The program started in February, and it aims to test the depth extension potential of the known mineralisation, test the potential for eastern and western expansion and gather information in respect of its gold potential.
Most importantly, the programme is expected to help update the mineral resource estimate and provide the basis to move the project toward a feasibility study in 2010.
The Paguanta project currently has an indicated and inferred mineral resource of 3.15 Mt at 3.9% zinc, 1.3% lead and 74 g/t silver including a higher grade component of 1.01 Mt at 6.6% zinc, 2.2% lead and 119pm silver.
Paguanta is located approximately 120km northeast of Iquique and approximately 30km west of the Chile-Bolivia border.
Herencia Resources wins Nyrstar as 10.4% shareholder for £750,000 investment
Published: 14:14 16 Apr 2010 BST