Imperial Metals has entered a joint venture agreement with Newcrest Mining by selling a 70-percent stake in its Red Chris copper-gold asset.
Imperial Metals (TSX:III,OTC Pink:IPMLF) has entered a joint-venture agreement with Newcrest Mining (ASX:NCM,OTC Pink:NCMGF) by selling a 70-percent stake in its Red Chris copper-gold asset to the major miner.
While Imperial retained a 30-percent stake in Red Chris, it sold majority ownership to Newcrest for US$806.5 million in cash. Going forward, the two companies will form a JV for Red Chris’ operation, while Newcrest will act as the operator.
“This transaction presents a compelling opportunity for all stakeholders as it allows Imperial to significantly strengthen its balance sheet while forging a strategic partnership with a leading global mining company,” Imperial President Brian Kynoch said in a statement.
“We believe that this joint venture partnership will enable Imperial to unlock significant value at Red Chris by leveraging Newcrest’s unique technical expertise in block caving operations. With a stronger financial position and highly actionable path to exploiting the underground mining potential of Red Chris, Imperial will be in a much stronger position to create value and opportunities for its shareholders, stakeholders and the Tahltan Nation.”
Looking ahead, Newcrest has a two-stage game plan to “deliver value” from picking up the Red Chris asset. The first stage will entail applying the company’s “Edge” transformation approach, which will entail optimizing the current open-pit mine plan and improving operational productivity and milling recovery, along with an extensional drilling program.
Stage two will consist of implementing technology to Red Chris that has been previously successful at the company’s other operations, which would include block caving, coarse ore flotation, exploration and mass sensing and sorting.
“Following due diligence, we believe we can bring our unique technical capabilities to unlock the full value potential of this orebody in one of the premier gold districts in the world. We have identified a clear pathway to potentially turn this orebody into a tier 1 operation,” Newcrest Managing Director and CEO Sandeep Biswas said in a statement.
“The geology of Red Chris is similar to our Cadia orebodies in Australia and we will be applying our considerable experience in exploration, open pit mining, caving and processing to maximize the value of Red Chris and the opportunities in the surrounding region.”
The Red Chris acquisition is not subject to shareholder approval, but is expected to close during Q3 of 2019’s calendar year.
Red Chris is a porphyry orebody located in British Columbia, Canada that spans over 23,000 hectares and consists of 77 mineral tenures, five of which are mining leases. Constructed in 2014, commercial production at the site began in July 2015; the asset’s mineral resource is approximately 20 million ounces of gold and 13 billion pounds of copper.
As of March 8, copper was trading at US$6,398 per tonne on the London Metal Exchange.
Newcrest shares climbed 3.8 percent on the ASX on Monday, March 11, ending the day of trading at AU$25.43 per stock. Meanwhile, Imperial stocks skyrocketed on the TSX on Monday, having grown 56.57 percent by 3:03 p.m. EST, reaching C$3.05 per share.
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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.