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British Columbia-focused base metals producer Imperial Metals (TSX: III) has announced a rights offering to raise C$60.2 million, ($49.6m) which it will use to fund its portion of work at the Red Chris copper-gold mine and repay debt.

Imperial will issue rights to subscribe for 12.85 million common shares at C$4.70 each.

Insiders and their affiliates, including major shareholder and Alberta-based resource financier Murray Edwards, president Brian Kynoch and director Larry Moeller will subscribe for about 45.2% of the rights offering.

Imperial says it will use a portion of the cash raised to repay a short-term loan of C$10 million ($8.24m) extended by Edwards in March.

Imperial kept a 30% interest in the Red Chris mine after Australian gold major Newcrest in 2019 acquired a 70% stake in the operation. Subsequently, Newcrest had earlier this year approved a C$135 million ($111m) investment at Red Chris as the Australian company seeks to leverage its technical expertise in block caving operations at the mine.

Newcrest and Imperial have been developing a plan to mine the deep resource beneath the current open pits to exploit high grades in the deep East Zone, which has been the focus of ongoing exploration drilling.

Recent drill results have confirmed the potential for additional high-grade mineralisation south of the South Boundary Fault towards the east of the East Zone pit. This area represents a game-changing discovery that can expand the known area of the Red Chris porphyry system, as the South Boundary Fault has historically been thought to define the southern extent of mineralisation.

Newcrest has guided for Red Chris to produce 55.1 to 66.1 million lb. copper and 45,000 to 55,000 oz. gold between July 1, 2020, to June 30, 2021.

Since Newcrest’s involvement, the Red Chris mine output has been on the up. Imperial has reported 88.3 million lb. copper and 73,787 oz. gold production at ed Chris in 2020. It said copper and gold production increased 22.9% and 102.9%, respectively, compared with 71.9 million lb. copper and 36,371 oz. gold in 2019.

(This article first appeared in The Northern Miner)