Imperial Metals Corp. [III-TSX; IPMLF-OTC] shares rallied sharply Monday March 11 on news that the company has agreed to sell a 70% stake in its Red Chris copper and gold mine to Newcrest Mining Ltd. [NCM-ASX] for US$806.5 million in cash.
Under the agreement, Imperial Metals will become a joint venture partner with Newcrest and retain a 30% stake in the British Columbia operation.
Australian Stock Exchange-listed Newcrest ranks among the world’s leading gold producers and will act as operator of the joint venture.
Alberta oil billionaire Murray Edwards is Imperial Metals’ largest shareholder. Published reports say Imperial was faced with US$325 million in bond payments coming due this month, leaving investors to wait and see if Edwards and Fairholme Capital Management, the company’s largest bondholder, would be prepared to launch a rescue act.
News of the deal sent Imperial Metals shares up 55% or $1.09 to $3.07 on volume of 1.5 million. That was after the shares traded up to a day high of $3.48. The shares trade in a 52-week range of 93 cents and $2.49.
Imperial is a Vancouver-based company with a portfolio of assets that includes a 100% interest in the Mount Polley mine, a 100% stake in the Huckleberry mine, plus 30% of Red Chris. All three are located in British Columbia.
In addition, the company holds a suite of both advanced and early stage exploration projects, including an approximately 50% interest in the Ruddock Creek lead/zinc property, which is located 155 km northeast of Kamloops, B.C.
“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,” said Imperial President Brian Kynoch.
“Imperial will be in a much stronger position to create value and opportunities for its shareholders, stakeholders and the Tahltan Nation,” he said.
Newcrest CEO Sandeep Biswas said the companies have identified a clear path to potentially turn Red Chris into a Tier 1 operation.
News of the Newcrest deal comes just two months after Imperial announced that it was suspending operations at its Mount Polley copper-gold mine in south-central British Columbia due to declining copper prices.
At the time, Imperial said milling of low-grade stockpiles was expected to extend operations until the end of May 2019. Full operations will resume once the economics of mining at Mount Polley improve, the company said in a press release.
Imperial also said there will be no impact to the mine’s ongoing environmental monitoring and remediation program stemming from a tailings dam breach in August, 2014, that released over 21 million cubic metres of water and mine tailings in the surrounding environment and water courses.
According to B.C.’s Chief Inspector of Mines, the spill was due to a structural failure of the Mount Polley tailings storage facility perimeter embankment. As a result, all mines in B.C. were ordered to conduct accelerated dam safety inspections and assess the safety of their impoundments. Mining operations were suspended in August, 2014 due to the tailings dam breach.
Mount Polley resumed normal operations in June 2016, following the receipt of authorizations from the B.C. Ministry of Energy and Mines and the B.C. Environment Ministry. The company says significant progress has been made with the remediation of the areas impacted by the breach in 2014.
The Mount Polley mine, located 56 km northeast of Williams Lake, is an open pit copper-gold mine with an underground component. The property covers 20,113 hectares, and consists of seven mining leases.