Mining giant Rio Tinto (ASX:RIO) has entered into a partnership with First Quantum Minerals (TSE:FM) that will seek to advance development of the La Granja Copper Project in Peru.
Rio Tinto says the joint venture (JV) will bring together the combined knowledge, expertise, and resources of both parties in order to progress the project, which represents a complex orebody that has potential to be a ‘large’, long-life operation.
The company notes under the proposed transaction, First Quantum will initially acquire a 55% stake in the project for $105 million, and will invest a further $546 million into the JV to sole fund capital and operational costs in order to take the project through a feasibility study and toward development.
It is expected upon completion of the sole funding commitment all subsequent expenditures will be applied on a pro-rata basis according to the share ownership of the project.
The transaction is expected to be complete by the end of Q3 2023 subject to satisfaction of regulatory approvals. First Quantum is then expected to operate the project with initial work focused on completing the feasibility study.
Addressing the JV agreement Rio Tinto Copper Chief Executive Bold Baatar says: “La Granja is an exciting but complex project that has the potential to be a significant new source of the copper that is needed for the energy transition. We are pleased to enter into this binding agreement with First Quantum, that will bring our combined development capabilities and deep knowledge of La Granja to progress the project.
“We are pleased to enter into this binding agreement with First Quantum, that will bring our combined development capabilities and deep knowledge of La Granja to progress the project”
The partnership underscores not only La Granja’s potential to be a significant copper producer, but Peru’s position as one of the world’s most important mining investment destinations. Developing La Granja would also further strengthen Rio Tinto’s copper portfolio following the acquisition of Turquoise Hill Resources and commencement of underground mining at Oyu Tolgoi in Mongolia.”
The company also notes it has entered into a memorandum of understanding (MoU) for strategic cooperation globally in copper and other base metals exploration and project development. The MoU also includes sharing information and technical know-how around best-in-class mining, processing, and decarbonisation.
Rio Tinto is an ASX-listed, multinational mining giant which represents the world’s second-largest metals and mining corporation. The company is focused on finding, mining, and processing the Earth’s mineral resources.
The company’s La Granja project is located at high altitude in Cajamara, Northern Peru, and was acquired from the Government of Peru in 2006. Since then the project has been the centre of an ‘extensive’ drilling program that has ‘significantly’ expanded the declared resource and understanding of the orebody, as well as establishing partnerships with host communities, and local and national governments.
The project also currently holds a published indicated and inferred mineral resource totalling 4.32 billion tonnes at 0.51% copper.
First Quantum Minerals is a Canadian-based mining and metals company listed on the Toronto Stock Exchange (TSE). The company is focused on copper, which accounts for 80% of revenues as of 2016.
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