South32 Acquires Arizona Mining, Plans Hermosa Development

In a US$1.3-billion deal, South32 (ASX,LSE:S32) has acquired Arizona Mining in its entirety, with immediate plans to develop the Hermosa base metals project.

South32, which previously had a 17-percent stake in Arizona, announced in June that it would be acquiring the company in full through an all-cash offer of C$6.20 per share. Arizona was delisted from the Toronto Stock Exchange on Friday (August 10) following the acquisition’s completion.

“The acquisition of Arizona Mining adds to our portfolio one of the most exciting base metal projects in the industry,” South32 CEO Graham Kerr said in a statement.

“Our deep understanding of the high-grade Hermosa project and surrounding land package, together with our extensive experience at Cannington, [our Australian silver and lead mine], positions us well to bring the project to development and deliver significant value to our shareholders.”

According to South32, work on Hermosa’s design and development will begin in the coming weeks. That work will include optimizing studies and the start of an exploration decline, which will allow for drilling to test for extensions and for a further understanding of Hermosa’s resource.

Hermosa, which is located 13 kilometers north of the Mexico/US border in Arizona, hosts two primary mineral deposits, Taylor and Central. Taylor has significant zinc-lead-silver sulfide mineralization with a measured and indicated resource of just under 101 million tonnes at 10.4 percent zinc equivalent. Meanwhile, Central has a zinc, manganese and silver oxide resource.

The Taylor deposit is set to have a 29-year mine life, with a preliminary economic assessment showing a US$2-billion net present value. It is expected that average annual production will hit 946 million pounds of zinc equivalent and 9.5 million ounces of silver concentrate in the first five years. Production is docketed to begin in late 2020.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.