Ivanhoe Electric to acquire remaining Kaizen interest

Ivanhoe Electric Inc. [TSX-IE, NYSE American] has struck a deal to acquire the shares it doesn’t already own in Kaizen Discovery Inc. [TSXV-KZD]. Ivanhoe, through a subsidiary, currently owns 54.4 million shares in Kaizen, or 82.5% of the shares outstanding.

Under the deal, Kaizen shareholders will receive one common share of Ivanhoe Electric for every 127 common shares of Kaizen currently held.

The deal implies a premium of 11.4% over the closing price of Kaizen shares on December 1, 2023 when they were priced at 11 cents. The shares have previously traded in a 52-week range of 21 cents and 10 cents.

Kaizen is a Canadian mineral exploration and development company with exploration projects in Peru. They include the Pinaya project, which covers 110.6 square kilometres of strike length within the Andahuaylas-Yauri Porphyry Belt in southwestern Peru.

The Pinaya Project contains mineral resources within three contiguous zones over a 1.7-kilometre strike length in the central part of the property, where the measured resource stands at 8.2 million tonnes of 0.33% copper and 0.60 g/t gold, containing 27,000 tonnes of copper and 158,000 ounces of gold.

Previous exploration on the property was focused on defining the current mineral resources and much less on systematic regional exploration. Kaizen has reviewed existing geochemical and geophysical surveys and has identified multiple untested targets along and across the strike of the current mineral resources.

News of the Ivanhoe Electric transaction comes on the heels of Kaizen’s announced sale of the company’s Coppermine project in Nunavut to privately-owned Durango Gold Corp. Upon closing, Kaizen was set to receive US$100,000 in cash, US$750,000 in Durango Gold shares and a 3.0% net smelter return royalty on the asset.

Ivanhoe Electric is headed by billionaire mining magnate Robert Friedland. His previous endeavours include nickel discoveries in the Voisey’s Bay area of Newfoundland and Labrador and more recently copper mining operations in Mongolia and the Democratic Republic of Congo (DRC). The DRC assets are held by Ivanhoe Mines Ltd. [TSX-IVN, OTC-IVPAF].

Friedland is Executive Chairman of Ivanhoe Electric, which is led by President and CEO Taylor Melvin.

The company has said it is aiming to develop mineral deposits in the U.S. in order to support American supply chain independence and to deliver critical metals needed for electrification of the economy.

Ivanhoe Electric recently said it was planning to raise US$150 million to fund a preliminary feasibility study at the Santa Cruz Copper project in Arizona, mineral rights payments, drilling and other exploration activities, and other working capital and general corporate purposes.

Santa Cruz is one of the company’s two flagship properties. The other is the Tintic Copper-Gold project in Utah. “Santa Cruz is situated in a prolific mining region that hosts some of the largest copper mines in the United States,’’ the company said.

Ivanhoe recently began drilling at the historic Tintic copper-gold district after more than five years of property acquisition, digitization of old mine records and meticulous geologic mapping.