Canadian-listed miner Kincora Copper on Friday said the European Bank for Reconstruction and Development would acquire a 6.16 percent stake in the company for 1.4 million Canadian dollars ($1.1 million) to further its exploration in Mongolia.
The funding is a departure from the bank’s tendency to avoid financing exploration rather than fully-fledged projects because it is regarded as higher risk.
Eric Rasmussen, director, natural resources at the EBRD, said the bank could make an exception because of “an exploration gap” following the commodity price crash of 2015-16.
Kincora, which has acreage of more than 1,500 square kilometres in Mongolia, has begun drilling for copper, which is expected to be in high demand, especially in neighbouring China as infrastructure projects and an anticipated electric vehicle boom spur consumption.
The company in August announced it had raised a separate tranche of funding of $5.92 million Canadian dollars.
The EBRD is one of the leading institutional investors in Mongolia and has already helped to fund Rio Tinto’s massive underground extension at the Oyu Tolgoi copper mine.
Since becoming involved in Mongolia in 2006, the EBRD has committed a total of 1.4 billion euros ($1.7 billion) to the Mongolian private sector through 86 projects.
Although Mongolia has great mineral potential, investors have been wary because of percevied geopolitical risk. Its prime minister was ousted earlier this month and the country has had repeated changes of government since its transition to democracy in 1990.
The EBRD has said its First Vice President Phil Bennett will visit Mongolia next week to meet the interim government and the business community. He will also visit Rio’s Oyu Tolgoi mining project, a statement on Thursday said. ($1 = 1.2305 Canadian dollars) ($1 = 0.8356 euros) (Reporting by Barbara Lewis; Editing by Elaine Hardcastle)