By James Kwantes
Published first at Patreon

Most junior exploration companies are forever financing. John Black’s Aldebaran Resources (ALDE-V) managed to land what could be a “forever financing” while retaining majority control of the company’s flagship asset, the Altar copper-gold porphyry project in Argentina.

Aldebaran recently inked an agreement allowing Rio Tinto subsidiary Nuton, which is developing copper sulphide leaching technology, to obtain 20% of Altar by paying Aldebaran US$250 million in milestone payments. Aldebaran would own 60% of Altar; Sibanye-Stillwater the other 20%.

It’s a “forever financing” in the sense that Aldebaran may not need further financings if Rio Tinto stays invested. That preserves the share structure and removes a massive impediment to shareholder value creation. This assumes a major mining company buys and builds Altar – an outcome I expect.

The back-end-loaded deal, announced November 7, gave Aldebaran US$10M upfront and another US$20M upon publication of an updated mineral resource estimate. That landed Monday.

Altar now hosts 22 billion pounds of copper (Measured and Indicated), 5 million ounces of gold and 93 million ounces of silver. M&I copper lbs almost doubled; M&I gold oz rose 48%. In the Inferred category, Altar hosts a further 9.8 billion lbs of copper, 1.7 million oz of gold and 49 million oz of silver.

Copper juggernaut

It vaults Altar into the top 15 largest undeveloped copper-gold projects in the world. Several that rank ahead of it will likely never be mined (due to factors including geopolitics, environmental concerns and local opposition).

Altar is in mining-friendly San Juan province in a country whose pro-business president, Javier Milei, is taking a chainsaw to red tape.

The publication of a PEA – planned for Q2 2025 – would unlock another US$30 million in funding from Rio Tinto. The final milestone is a pre-feasibility study planned for the second half of 2026, which would trigger a US$190M payment to Aldebaran.

Aldebaran’s financing is an innovation masterclass in a capital-starved junior mining sector. In one fell swoop, the company:

  • Landed a significant amount of non-dilutive financing
  • Put a high “mark-to-market” value on the remainder of the asset
  • Increased competitive tensions among the majors invested in Altar, and in Aldebaran.

Post closing, the ownership and capital structure would look like this:

  • Rio Tinto, the No. 2 global miner, owns a 20% interest in the Altar deposit;
  • Sibanye-Stillwater owns a 20% interest in Altar and a 14.35% stake in Aldebaran’s equity (Aldebaran optioned an 80% interest in Altar in 2018 from the South African-based miner);
  • Copper miner South32 owns 14.82% of Aldebaran’s shares;
  • Route One Investment Company, a San Francisco-based hedge fund, owns 44.1% of the company.

Including the 5.27% owned by management, it adds up to an impressive 78.5% of stock locked up with long-term-oriented shareholders. That type of registry bodes well for future share price appreciation in a world starved for high-quality copper assets.

Black & Heather for the win

In a recent webinar, Black credited Aldebaran’s Senior VP Corp. Dev. Adam Greening for doing the heavy lifting on structuring the financing deal. The economic geologist tag team of Black and Kevin Heather deserve a healthy dose of credit too.

It's not their first rodeo. In fact, both Regulus Resources and Aldebaran Resources emerged out of their $650-million sale of Antares Minerals and its Haquira copper-moly deposit to First Quantum Minerals in 2010.

Aldebaran's parent/sister company, Regulus Resources (REG-V), was spun out of the Antares sale along with $5 million in cash. In 2014 Regulus merged with Southern Legacy, which had the AntaKori copper-gold-silver project in northern Peru. The flagship AntaKori project is now being developed by Regulus, which has a market cap of about $250M (Rio Tinto's Nuton has a 16.11% equity stake in Regulus).

Road map to value

Regulus spun out its Argentine projects into Aldebaran in 2018, along with an option to acquire an up-to-80% stake in Altar from Sibanye-Stillwater for US$15M, 20% of Aldebaran's shares and spending commitments.

It was a steal, considering what Stillwater Mining had paid for the asset -- US$487 million -- in 2011. The seller was Eric Friedland's Peregrine Metals and the eye-popping premium, 280% above the latest close, was a record.

Plucking unloved but premium projects at the bottom of market cycles and developing them into valuable assets is a tried-and-true playbook for savvy junior mining entrepreneurs. The shareholder value created in the Antares transaction, and since, establishes Black and Heather as one of the top management teams in copper porphyries.

Like Bob Wares, Black is a "Chairman of the Booth." He's a road warrior who is a regular at Regulus/Aldebaran booths, meeting with shareholders at mining and exploration shows from Vancouver to Florida and Europe, with points in between.

A major focus of my writing here has been sustainable business models in junior mining, rather than the coveted -- and extremely rare -- takeover. Aldebaran appears destined to be the exception to the rule.

Aldebaran Resources (ALDE-V, ADBRF-OTC)
Price: $2.14
Shares out: 169.9 million (181.8M fully diluted)
Market cap: $363.6 million

Disclosure: I own shares of Aldebaran. No business relationship with any company mentioned in this article. This article is not investment advice.