Arc Minerals’ von Schirnding discusses institutional support and Zamsort acceleration following £2.2m equity injection
Arc Minerals surprised investors on Monday with the news that it had raised £2.2m ($2.9m) over the weekend through a private placing at 3p a share. Here, executive chairman Nick von Schirnding talks through the importance of institutional support to Arc’s long-term growth and plans to accelerate the drilling of an exciting new target at the firm’s Zamsort project.
In its update on Monday, Arc highlighted its efforts to build a new strategic shareholder base through the raise, revealing that it was carried out alongside two family offices, one of which was an existing shareholder. Von Schirnding tells TMS that securing additional institutional support has allowed Arc to accelerate its operations quickly while extending its cash runway to the second half of 2020. Critically, he added that the long-term backing of investors who will provide ongoing support over a long-term horizon is also essential to Arc’s long-term growth plans:
‘If we can move Arc towards a more stable and strategic share ownership structure then that is first prize,’ he told us. ‘We have struck up an excellent relationship with a Swedish family office that came back in again and offered us funds over the weekend, and we have also been building a relationship with a Middle Eastern family office group who became shareholders over the weekend. This support is excellent to see.
‘As we have more success and increase in size, we will attract an increasing number of institutions. We need results to do this, so having the money to accelerate operations is essential. I have been on the boards of very large mining companies, and I know a great deal of medium-to-large institutional fund managers across Europe and the US. Encouragingly, one or two have already reached out to say they are monitoring us as we grow and fall into their sphere.’
Last weekend’s placing also received a great deal of support from Arc’s board. Indeed, von Schirnding, COO Vassilios Carellas, CFO John Forrest, and non-executive directors Don Bailey, Mumena Mushinge, and Brian McMaster together subscribed for c.£113,000 worth of shares.
With so much demand already in place, Arc opted not to utilise any broker services for the placing. Von Schirnding says the absence of fee and commission payments saved the firm more than £100,000, something he considers essential to maximising shareholder value:
‘We are massive believers in driving shareholder value and if we can save fees like that, then all the better for our investors. Of course, there is room for brokered deals, and we are not ruling those out, but when we can we like to drive the best deal possible for our shareholders, and we will broker it ourselves if necessary.’
The placing proceeds will be used to accelerate exploration and development work on Arc’s Zamsort copper and cobalt project in the Zambia copper belt and towards general working capital purposes. Arc owns a 66pc equity interest in Zamsort, together with a convertible loan that converts into around a 5pc additional equity interest.
Chiefly, von Schirnding tells us the money will go into drilling Cheyeza West and Lumbeta- two large new targets identified at Zamsort earlier this month from an airborne geophysical and soil sampling programme.
Lumbeta stretches for 11km and is associated with the crest of a fold. In a previous update, Arc said these hinge points in a folded environment could act as mineralisation traps and form high-grade deposits. Cheyeza West, meanwhile, is a core 3km by 3km anomaly outlined by very high copper valued in the soils enclosed by the wider 10km x 8km anomaly. At this size, the prospect is roughly ten times the size of Kalaba, currently Arc’s most developed prospect at Zamsort.
With the co-incident electromagnetic anomaly over Cheyeza West’s core indicating conductivity within the host rock, Arc moved the prospect to the top of its internal ranking of exploration targets earlier this month. It even called the site a ‘potential game changer’, adding that, alongside Lumbeta, it had ‘exceeded all our expectations’.
Von Schirnding said last weekend’s raise means the business can now accelerate its exploration of both sites, initially focusing principally on Cheyeza West. He adds that the lack of historical investigation at the anomaly makes it particularly exciting for the firm:
‘The airborne data and EM we have carried out all looks extremely interesting at Cheyeza West. The interesting thing here is that this part of the licence has not ever been explored properly before. Anglo American and some of the other predecessors have looked at deposits more around the perimeter of Zamsort, but very little work has been done towards the centre of the property. We feel that this is breaking new ground and it is an extremely exciting new development for us.’
A small portion of the proceeds will also be allocated to Kalaba, where Arc is currently completing an 11,000m diamond and reverse circulation drilling programme. Much of this work has already completed, with encouraging results released to the market throughout the back end of 2018. These have shown boasted disseminated cobalt throughout the prospect and varying copper grades averaging between 0.3pc and 0.5pc. However, von Schirnding tells us that there remains one final prospect that Arc wishes to investigate in the north-east of the area.
Elsewhere he says work on Arc’s commercial-scale demonstration plant at Kalaba is near completion, with commercial production expected to commence over the next fortnight.
‘We are just procuring the last acid and fuel to really get it started. We will run initially 10,000ts of stockpile through it and we will be able to see how it runs,’ he tells us. ‘We will then mine further material from the oxide resource base at Kalaba to continue feeding it. It is a small plant, it will produce a few thousand tonnes of contained copper a year, but we think it was worth finishing off because we inherited it and I am very pleased with where we are.’
Nick von Schirnding, executive chairman of Arc Minerals talks to Andrew Scott 4/5/2019
The author does not hold shares but was remunerated to write the article