Premium placement funds Zenith’s ambitions

Global mining firm Zenith Resources has secured $125 million in premium placement funding to accelerate development of its flagship copper project in northern Chile, marking a significant step forward in the company’s expansion strategy amid surging global demand for critical metals.

The capital raise, announced yesterday at a mining investment conference in London, attracted strong support from institutional investors across North America and Europe. Shares were placed at $2.85, representing a modest 5% discount to the company’s 30-day volume-weighted average price.

Zenith CEO Maria Rodriguez called the funding a “vote of confidence” in the company’s Horizonte Copper Project, which has estimated reserves of 1.8 million tonnes of copper and is expected to begin production by mid-2025.

“This capital injection comes at a crucial time as we transition from exploration to development,” Rodriguez said. “With copper prices maintaining strength above $4 per pound and global electrification trends accelerating, we’re positioned to deliver this project when markets need it most.”

The Horizonte project sits in Chile’s Atacama region, already home to some of the world’s largest copper operations. Industry analysts have highlighted the region’s established infrastructure and skilled labor force as key advantages for Zenith’s development timeline.

Approximately 70% of the funds will directly support construction of processing facilities at Horizonte, with the remainder allocated to exploration of adjacent claims and general corporate purposes. The company has already completed preliminary site preparation and secured necessary environmental permits.

Morgan Stanley mining analyst James Hoffman noted the timing aligns with forecasted supply constraints in global copper markets.

“We’re seeing multiple indicators pointing to a potential copper deficit of up to 8 million tonnes by 2030,” Hoffman said. “Projects like Horizonte that can come online in the next 24-36 months will be critical in addressing that gap and likely to command premium pricing.”

The copper market has experienced significant volatility in recent years but has maintained an upward trajectory as demand from renewable energy, electric vehicles, and grid infrastructure continues to grow. The International Energy Agency estimates that a global transition to net-zero emissions could increase copper demand by up to 50% by 2040.

Chile remains the world’s largest copper producer, accounting for approximately 28% of global output. However, the country has faced challenges including declining ore grades, water scarcity, and political uncertainty regarding mining regulations.

Zenith’s approach to these challenges includes a $45 million investment in desalination infrastructure and renewable energy to power operations, addressing both environmental concerns and operational stability.

“We’ve designed Horizonte with Chile’s specific challenges in mind,” said Carlos Mendez, Zenith’s Vice President of Operations. “Our water recycling systems will recover over 85% of process water, and our solar facility will provide roughly 40% of our energy requirements.”

The premium placement comes after Zenith reported promising drill results earlier this year, extending the known mineralization zone at Horizonte by an additional 1.2 kilometers. The expanded resource potential contributed to investor interest in the capital raise.

Industry observers have noted that Zenith’s funding success stands in contrast to difficulties faced by junior miners in the current market. According to data from Mining Intelligence, capital raised by exploration companies decreased by 18% in the first half of 2023 compared to the same period last year.

“What separates Zenith from struggling juniors is their advanced project stage and clear path to production,” said Elena Vasquez, mining sector specialist at Deloitte. “Investors are becoming increasingly selective, favoring companies with near-term production potential in established jurisdictions.”

The premium placement was jointly managed by Goldman Sachs and BMO Capital Markets, with shares allocated primarily to long-term institutional investors with existing exposure to the mining sector.

Zenith’s stock responded positively to the announcement, closing up 3.2% yesterday on the Toronto Stock Exchange. The company’s market capitalization now stands at approximately $1.7 billion.

Construction at Horizonte is expected to create approximately 1,800 jobs during peak activity, with 650 permanent positions once operations begin. The Chilean government has welcomed the project’s advancement as part of its efforts to maintain the country’s position as a premier mining jurisdiction.

“This development demonstrates that despite challenges, Chile continues to attract significant mining investment,” said Chilean Mining Minister Javier Torres. “Projects like Horizonte that incorporate sustainable practices align with our vision for responsible resource development.”

Zenith indicated that with funding now secured, it expects to provide quarterly updates on construction progress and remains on track for first production in the second quarter of 2025.