TORONTO (miningweekly.com) – New Brunswick-focused tungsten/molybdenum project developer Northcliff Resources has secured a partial financing partner for its Sisson project in the province.

New Zealand-based Todd Minerals has agreed to invest up to $39-million in funding in exchange for a direct interest in the project.

Todd is a subsidiary of the family owned Todd Corporation, one of New Zealand's most successful companies and which has a growing portfolio of mineral investments.

Under terms of the agreement, Todd would complete a private placement through which it would buy 13.88-million Northcliff common shares for $5-million, at $0.36 a share. This represented a 20% premium over the 30-day volume-weighted average on the TSX before the partnership was announced.

Todd would become the largest shareholder of Northcliff, owning about 15% of the company, would have the right to nominate a board member and the right to maintain its 15% shareholding in Northcliff by participating in any future offerings.

Todd also agreed to hold its newly acquired shares for 24 months after closing the investment.

Todd and Northcliff would enter into a limited partnership agreement, under the name of the Sisson Project Limited Partnership, to advance and operate the project, with Northcliff remaining the operator.

Todd would also have the right to acquire an initial 11.5% interest in the limited partnership by investing $14-million on a staged basis, failure of which would result in Todd divesting its entire interest in the partnership.

The initial investment in the partnership would be made in three tranches with the first tranche of $5-million being made on the execution date of the limited partnership agreement. The remaining two tranches of $5-million and $4-million would be made upon achieving agreed project milestones.

Further, Todd held an option to buy another 10% interest in the partnership, for a total potential interest of 21.5%, by investing $20-million when a final investment decision to start construction had been made.

The two partners would each be required to fund their portions of the development capital.

"Tungsten market fundamentals remain strong with robust prices and continued supply restrictions out of China. These factors underpin the investment case for advanced tungsten deposits in low risk jurisdictions.

“Todd is an important strategic investor in the Sisson project as Northcliff sets out to permit, build and operate the Sisson mine,” Northcliff president and CEO Chris Zahovskis said.

He added that the initial funding from Todd, totalling up to $19-million, was earmarked for ongoing environmental work to support the harmonised environmental impact assessment process currently being undertaken by the federal and provincial governments, as well as to continue with design and engineering studies. Northcliff would also continue its efforts to source project financing and offtake arrangements.

Northcliff in January completed a feasibility study for the project, which gave it a pretax net present value (NPV) of C$714-million at an 8% discount rate, an internal rate of return (IRR) of 20.4% and a 4.1-year payback on the initial capital expenditures of C$579-million, at long-term metal prices of $350/t for ammonium paratungstate (APT) and $15/lb for molybdenum.

Sisson would be developed as an efficient bulk-tonnage operation and Northcliff said it intended to undertake value‐added processing of tungsten concentrates by constructing and operating Canada’s first APT plant at the project site, which would add significant economic value to the project.

After deducting tax, Sisson has a C$418-million NPV, which is equal to $5.40 per Northcliff share, based on 77.39-million outstanding shares, a 16.3% IRR and a 4.5-year payback on the initial capital expense.

Located 100 km by road north-west of Fredericton, the Sisson property hosts a 334-million-ton proven and probable mineral reserve containing 22.2-million metric ton units of tungsten trioxide and 154.8-million pounds of molybdenum at an $8.83/t net smelter return cutoff.