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Canadian explorer Pecoy Copper (TSXV: PCU; US-OTC: PCUUF) agreed to raise C$49.8 million ($35.7 million) from Hudbay Minerals (TSX, NYSE: HBM) and another investor to fund drilling and technical studies at its copper-gold project in southern Peru. The stock rose.
Hudbay is to invest C$30.1 million, while the unnamed investor committed C$19.7 million, Pecoy said Monday. Each would hold just under 10% after closing, calculated on a partially diluted basis.
“We view the deal positively, as it validates Pecoy’s technical and geological quality, while strengthening the balance sheet at lower dilution than we had modelled,” Desjardins Capital Markets mining analyst Bryce Adams wrote Monday in a note.
The investment connects Pecoy with a producer that operates the Constancia copper mine in Peru. It also provides funding for drilling and studies needed to better define the deposit and assess how its metals could be recovered.
‘Strong endorsement’
Given Hudbay’s long history of operating in southern Peru, “we view their investment as providing a strong endorsement to the future potential of the Pecoy project,” National Bank Financial mining analyst Andrew Dusome said in a separate note.
Pecoy shares jumped 5.5% to C$1.92 Monday morning in Toronto, valuing the company at about C$405 million ($289 million). The stock has traded between C85¢ and C$2.29 in the past year.
Vancouver-based Pecoy plans to issue about 24.7 million shares at C$2.02 apiece, a 10% premium to its 10-day volume-weighted average price through Oct. 30. The subscription price is also 11% above Friday’s C$1.82 close. Closing is expected around Thursday, subject to regulatory approvals, including TSX Venture Exchange acceptance.
Hudbay would receive rights to participate in future financings and top up its holdings to maintain ownership of up to 9.9%. Subject to ownership thresholds, it could nominate one director, or two if Pecoy’s board expands to at least 10 members.
Both Hudbay and the unnamed investor had previously invested in Pecoy, CEO Vincent Metcalfe told The Northern Miner Monday via e-mail. Hudbay built its position through market acquisitions, while the second investor holds historical warrants, which haven’t been exercised yet, Metcalfe said.
Cash lift
The latest financing would lift Pecoy’s cash resources to roughly C$70 million, enough for five to six quarters of spending, Adams said. His model had assumed a C$50-million financing at C$1.50 a share, requiring about 33.3 million new shares.
The financing “also improves funding visibility through the next phase of resource definition and technical work,” Scotiabank mining analyst Eric Winmill wrote Monday.
The explorer owns the Pecoy and Tororume projects in southern Peru’s Arequipa region. Pecoy lies about 275 km northwest of Arequipa, at an elevation of about 1,650 metres, near highway, power and port infrastructure.
Updated resource
An April 2025 resource estimate outlined 865 million inferred tonnes grading 0.34% copper, 0.012% molybdenum, 0.05 gram gold per tonne and 1.33 grams silver for contained metal of about 6.45 billion lb. copper. The estimate uses a 0.23% copper cut-off. These resources have not demonstrated economic viability.
Tororume, 8 km to the north, provides another exploration target. Previous owner Pembrook completed nine widely spaced drill holes between 2017 and 2023, intersecting copper and molybdenum mineralization. Pecoy says much of the system remains untested.
The new money will support resource expansion, geological work and metallurgical testing ahead of an updated Pecoy resource estimate. Adams expects that estimate early next year and a preliminary economic assessment later in 2027.