Trilogy Metals Inc. [TMQ-TSX, NYSE] and South32 Australia Ltd. [S32-ASX, JSE, LSE, SOUHY-ADR] have agreed to form a joint venture to develop the Upper Kobuk Mineral Projects in northwest Alaska.
The moves comes after South32 exercised an option to acquire a 50% interest in the joint venture company that will own the Upper Kobuk Mineral Projects (UKMP). Trilogy will contribute all of the assets associated with UKMP and South32 will provide US$145 million to the joint venture.
Establishment of the joint venture is expected to occur in February 2020 and follows an initial exploration partnership between South32 and Trilogy over three field seasons to advance both parties’ geological understanding of the UKMP.
Once the joint venture is established, it will retain US$87.5 million of the US$145 million subscription payment to fund its activities. The balance of US$57.5 million will be loaned back to South32.
Trilogy shares advanced on the news, rising 9.6% or 27 cents to $3.09. The shares are trading in a 52-week range of $2 and $4.10.
“Having the support and partnership from a senior mining company like South32 – both in terms of their financial support and technical expertise – is tremendous for Trilogy Metals,” said Trilogy President and CEO James Gowans.
Trilogy Metals, which was previously known as NovaCopper Inc., is a diversified exploration company with a focus on the Ambler mining district in northwestern Alaska.Â Ambler ranks as one of the richest and most prospective known districts for the discovery of world class polymetallic volcanogenic massive sulphide (VMS) deposits that contain copper, zinc, lead, gold and silver as well as carbonate replacement deposits with high grade copper mineralization.
The UKMP is located within the Ambler Mining District and includes the high grade, polymetallic Arctic deposit, the Bornite copper deposit and a highly prospective regional exploration portfolio. Arctic is located is located 20 miles north of the Bornite carbonate replacement deposit.Â Both are located on Trilogy’s land package, which covers 143,000 hectares.
Trilogy has an agreement with NANA Regional Corp. a regional Alaska Native Corp. and owner of the giant Red Dog zinc-lead silver mine which is operated by Teck Resources Ltd. [TECK.B-TSX, TECK.A-TSX, TECK-NYSE], and which has been in operation for 26 years.
The mining lease agreement provides a framework for the exploration and potential development of Amber district in co-operation with local communities. Trilogy’s goal has been to develop the Ambler district into a premier North American copper producer.
South32 is a diversified mining and metals company, producing bauxite, alumina, aluminum, energy and metallurgical coal, manganese, nickel, silver, lead and zinc at operations in Australia, Southern Africa, and South America.
“Forming the UKMP joint venture will be another important milestone as we reshape and improve our portfolio, by adding high-quality copper and base metals development options,” said South32 CEO Graham Kerr. “The decision to exercise the option follows a successful exploration partnership with Trilogy Metals and is an exciting step forward,” he said.