Virginia Mines Obtains $28 M Financing for Coulon Project in NW Québec

Virginia Mines Inc. announced today the finalization of financing for its Coulon project in Québec’s James Bay Region managed by its newly created subsidiary Mines Coulon.

The financing deal was signed with four financial funds that include SODÉMEX Développement, limited partnership,  a subsidiary of the Caisse de dépôt et placement du Québec;  the Fonds de solidarité des travailleurs du Québec (F.T.Q.) jointly with the Fonds regional Nord-du- Québec and Sidex Limited. The financial agreement will be used to finance a $28 million, accelerated exploration program in the James Bay region.

“The investment of Sodémex Développement attests to the great potential for additional discoveries at Coulon,” declared Carl Gilbert, Investment director of Sodémex Développement. “With this investment that meets all our selection criteria, we support an experienced management team (at Virginia Mines/Mines Coulon) with an impressive track record”.

Prior to concluding the financial arrangement with the four funds, Virginia Mines established Mines Coulon as the principle owner of the Coulon mining exploration program. The newly created subsidiary was created when Virginia Mines transferred all its interests in the Coulon project to Mines Coloun Inc. In return, Virginia received common shares of Mines Coulon for a value of $42M.

“I’m very pleased to be associated with these exceptional partners to fully explore the potential of this unique project in Québec,” said André Gaumond, president of Virginia Mines. 

Virginia and the institutional shareholders then agreed to subscribe, over a 4-year period (2014-2017), to $28M in common shares of Mines Coulon. Subscriptions will be completed by annual instalments of $7M. SODEMEX will contribute $2M, the Fonds $2M, Sidex $1M and Virginia $2M. For their contributions, Virginia will receive 71.45% of shares with SODEMEX allotted 11.42%, the Fonds 11.42% and Sidex 5.71%.

The institutional shareholders were granted a right to exchange 75% of their respective investment in Mines Coulon in common shares of Virginia should the following occur no later than October 20, 2017: 

 - the sale of the Éléonore royalty;

- a change of control of Virginia occur;

- the sale of Mines Coulon.

In the event of the sale of Mines Coulon, the shareholders have agreed to a royalty as follows: a) the first 0.5% exclusive to Virginia; and b) the remaining balance to be divided between the shareholders in proportion to their respective interest in Mines Coulon.

The transaction has been conditionally approved by the Toronto Stock Exchange.

The Coulon project holds the most important undeveloped copper-zinc-silver resource in Québec (43-101-compliant resource estimate published on April 14, 2009: indicated resource of 3,675,000 tonnes and inferred resource of 10,058,000 tonnes). The project comprises 498 mining claims covering a surface of 24,767.12 hectares. It is host to 8 lenses and is part of one of the most important felsic volcanic belts ever discovered in Québec.

Last year, Virginia discovered Lens 257 (the richest one to date), which returned intersections of 9.48% Zn, 3.11% Cu and 46.16 g/t Ag over 15.7 metres (CN-13-271) and 14.65% Zn, 2.04% Cu and 35.83 g/t Ag over 7.35 metres (CN-13-273).

Although relatively well located in the James Bay region, the Coulon project is nonetheless relatively far from copper-zinc smelters. It is one of the reasons, the institutional shareholders have partnered with Virginia to accelerate exploration work and enable the development of the needed infrastructure to make mining development possible.

About Virginia Mines

Virginia Mines conducts its exploration activities over the vast, unexplored territories of Northern Québec in order to create value for its shareholders while protecting the quality of life for both present and future generations. With a working capital position of $40.4 million as at November 30, 2013, and a large area of mining claims in Québec North, Virginia is among the most active mining exploration companies in Québec. Strengthened by the discovery of the Éléonore project and more than 20 years expertise on the territory, Virginia’s exploration team is recognized as one of the best in Canada. Virginia also holds a 2% to 3.5% royalty in the Éléonore property.