JOHANNESBURG (miningweekly.com) – British Columbia-based mineral exploration and development company Amarc Resources on Tuesday announced that it had finalised a definitive agreement with TSX-listed diversified miner Thompson Creek Metals Company to advance the IKE porphyry copper discovery in south-central British Columbia.

Under the agreement, Thompson Creek had the option to acquire an up to 50% interest in the IKE project through a staged investment process.

Thompson Creek had the option to acquire an initial 30% interest through staged investments totalling $15-million on or before December 31, 2019, of which $3-million was paid in 2015.

For each $5-million of project expenditure funded, Thompson Creek would incrementally earn a 10% ownership interest. Stage 1 option expenditure could be accelerated by Thompson Creek at its discretion. Amarc will be operator during the Stage 1 earn-in period. 

If Thompson Creek fully exercised the Stage 1 option, the miner would have a one-time right under a Stage 2 option to elect to earn an additional 20% ownership interest in the IKE project for a total 50% ownership interest. To fulfil its obligations under the Stage 2 option, Thompson Creek would have to fund and complete a feasibility study for the IKE project that could serve as the basis for a decision by an internationally recognised financial institution to finance the development of a mining project.

This feasibility study had to be completed within a two-year period, which could be extended to three years under certain conditions. While completing the feasibility study under the Stage 2 option, Thompson Creek would also be required to meet all other expenditures necessary to maintain and advance the project.

Thompson Creek would become operator of the IKE project upon initiation of the Stage 2 option and would remain operator as long as it held a 50% interest. The parties expected to form a joint venture to further develop the IKE project once Thompson Creek concluded its earn-in period, provided that it had earned at least a 10% interest.

During both the Stage 1 and Stage 2 options, Amarc would retain a 'co-expenditure right', whereby it could fund, at its discretion, additional expenditures on the IKE project.

Thompson Creek could elect to pay its 30% or 50% share of these additional expenditures upon completion of the Stage 1 option and Stage 2 option, failing which its ownership interest would be reduced.

Under the 'co-expenditure right' provision of the agreement, the maximum amount that Amarc could recover from Thompson Creek on completion of the Stage 1 option period was capped at $6-million, or 30% of $20-million. The maximum amount that Amarc could recover from Thompson Creek on completion of the Stage 2 option period was capped at $10 million, or 50% of $20-million.

About IKE

The IKE copper-molybdenum-silver porphyry discovery, together with the surrounding district of highly prospective porphyry copper targets yet to be drill tested, potentially possessed the grades and resources necessary to develop an important mining camp.

The project was located 45 km north-west of Gold Bridge, in south-central British Columbia, near the heartland of the British Columbia’s producing porphyry copper mines.

Assay results from all 18 holes (10 437 m) drilled by Amarc at IKE since 2014, combined with results from geological, geochemical and geophysical surveys completed outwards from the area drilled, indicate the presence of an important porphyry-style copper-molybdenum-silver deposit.

All drill holes had intersected varying amounts of chalcopyrite and molybdenite mineralisation over a broad area measuring 1 200 m east-west by 1 000 m north-south, extending to depths of over 500 m. The deposit remained open to expansion in all lateral directions and to depth.

Grades returned over long continuous drill intercepts continued to compare favourably with the range of copper-equivalent grades at active British Columbia porphyry copper mines.