Teck can earn 75% stake in Chile copper project

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Teck Resources Ltd. (TECK.B-TSX, TECK.A-TSX, TECK-NYSE) has been granted an option to earn up to a 75% interest in Golden Rim Resources Ltd.’s [GMR-ASX] 100%-owned Loreto Copper Project in northern Chile.

The Canadian mining giant can exercise the option by making US$600,000 in staged cash payments to Australia Stock Exchange-listed Golden Rim and spending US$17 million on exploration.

The Loreto concessions cover an area of 16 square kilometres. They are situated in the northern extension of the West Fissure, which hosts the world’s largest known concentration of major copper and molybdenum deposits. The project is 30 kilometres north-east of BHP Billiton Ltd.’s [BHP-NYSE, BHPLF-OTCPK] Cerro Colorado mine, and 130 kilometres north of the Collahuasi (Anglo American Plc [AAUKF-OTCQX] and Glencore) and Quebrada Blanca (Teck/Sumitomo/ENAMI) mines.

Golden Rim said its exploration has identified a highly prospective 2.3 kilometre by 1.0-kilometre alteration centre at Loreto, which has the potential to host a deeper porphyry copper deposit.

“Golden Rim believes that Loreto could well represent the last unexplored outcropping Oligocene-Eocene porphyry system in northern Chile,’’ said Golden Rim’s Managing Director Craig Mackay. “Not surprisingly, Loreto is surrounded by BHP and Codelco, two of the largest copper companies in the world.’’

Golden Rim has granted Teck the option to acquire a 55% interest in Loreto (the first option), by spending US$5 million ion exploration and making US$600,000 in cash payments to Golden Rim.

If Teck exercises the first option, the Canadian mining major can acquire an additional 20% interest in Loreto by spending an additional US$12 million on exploration over a four-year period.

If Teck exercises the first option, the two companies will form a joint venture with each partner funding its pro-rata share of future expenses through equity contributions to the joint venture or incur dilution.

If either party’s shareholding interest in the joint venture is diluted below 10%, its shareholding interest will be converted to a 1.0% net smelter return royalty. The partner with the majority interest will be the operator of the joint venture.

Mackay went on to say that the option and joint venture allows Golden Rim to leverage off Teck’s significant porphyry copper exploration and development experience. “With the ability to retain an interest in Loreto, Golden Rim gets to share in the upside should Teck make a significant copper discovery,’’ he said.

Teck is developing the QB2 operation in the Tarapaca Region of northern Chile. QB2 is essentially a continuation of the existing Quebrada Blanca open pit operation, which is expected to produce up to 8,000 tonnes of cathode copper this year.

QB2 will boast an initial mine life of 28 years, the company has said. Project highlights include 316,000 tonnes of copper equivalent production per year for the first five full years of mine life, putting QB2 among the world’s top 20 copper producers. The first production is planned for the second half of 2022.

Teck’s Class B common shares were virtually unchanged on the news, rising 0.022% or $0.01 to $45.68 on volume of 669,210. The shares are currently trading in a 52-week range of $56.67 and $24.84.


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