Arizona Sonoran Copper Raises C$35 Million, Including Strategic Investment by Rio Tinto

Edward Kim  |

Image source: Arizona Sonoran Copper

Arizona Sonoran CopperASCUF

The company will issue up to 17.5 million shares of common stock at C$2.00 per share.

Global mining company Rio Tinto

RIO) will subscribe for 6.4 million shares, or about 36.5% of the private placement. After the deal closes, Rio Tinto will own about 7.2% of Arizona Sonoran Copper.

In conjunction with the investment, Rio Tinto and Arizona Sonoran Copper have entered into a strategic partnership through which Arizona Sonoran Copper will deploy Rio Tinto's Nuton copper leaching technologies. Nuton is designed to deliver increased copper recovery with low carbon footprint and reduced waste.

Tembo Capital Elim Co-Investment LP, an existing investor, will subscribe for 6.4 million common shares, reducing its net holding from 37.6% to 34.6% of Arizona Sonoran Copper.

Arizona Sonoran Copper's principal asset is a 100% interest in the Cactus Project, located about 44 miles south of Phoenix International Airport, just outside the city of Casa Grande. Geologically, the project is situated at the convergence of three major porphyry copper belts.

Investment thesis

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Arizona Sonoran Copper went public on the Toronto Stock Exchange in November 2021, raising gross proceeds of C$45 million at C$2.45 per share. The shares have largely spent the last six months below issue price, but we think investors have reasons to be optimistic about this small cap's prospects.

  • The investment by Rio Tinto represents endorsement of the Cactus Project by a major industry player.
  • Arizona Sonoran Copper began trading on the OTCQX Best Market on March 29, 2022, which should increase visibility and liquidity.
  • Global copper market fundamentals are strong.
  • The increasing demand for electric vehicles should support copper prices for the next decade.
  • In the near term, copper prices are highly correlated with inflation.
  • The company benchmarks strongly to other larger copper developers.

    Click to enlarge

Image source: Arizona Sonoran Copper


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