Newcrest Mining (ASX: NCM), Australia’s largest gold producer, has announced an agreement with Imperial Metals (TSX: III), a Vancouver exploration, mine development and operating company, to acquire a 70% joint venture interest in Imperials’ Red Chris copper and gold mine in British Columbia, Canada for $806.5m. Newcrest will assume the role of operator for the project.
Imperial will keep a 30% interest in the open-pit copper-gold porphyry open-pit mine has mineral resources of 20 million ounces of gold and 13 billion pounds of copper.
The mine site is located on 23,142 hectares, and the property is comprised of the main and south claim groups, consisting of 77 mineral tenures, five of which are mining leases.
Mine site infrastructure was completed in late 2014 at a cost of $661.9 million.Commissioning of the mine lead to commercial production being achieved July 1, 2015.
Newcrest’s Managing Director and CEO, Sandeep Biswas, commented: “We are delighted to add this joint venture into the Newcrest portfolio. 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 path to potentially turn Red Chris into a Tier 1 operation. 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. We look at this opportunity in the same way as we do with Cadia, where we have proven we can create significant value from deep underground porphyry orebodies.
Imperial’s President, Brian Kynoch, said: “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. 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.
Newcrest’s move should come as no shock to those who’ve been watching the gold industry recently, with some of the largest producers currently in a land grabbing frame of mind – increasing their reserves, raising the quality of their portfolios or simply seeking to make operational savings. The big question, what’s next?