LONDON (Reuters) - Canadian-listed miner Kincora Copper (KCC.V) 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 kilometers in Mongolia, has begun drilling for copper, which is expected to be in high demand, especially in neighboring 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.
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 perceived 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.
Reporting by Barbara Lewis; Editing by Elaine Hardcastle