Base metals miner Taseko on Wednesday announced a C$60-million transaction to buy an additional 12.5% interest in the Gibraltar copper mine, in Canada.

The company will acquire the additional stake from Japanese trading house Sojitz, which earlier this month said it is selling its interest in the mine due to unstable operations, declining grade and increased risk of environmental liabilities.

Gibraltar is operated through a joint venture which is owned 75% by Taseko and 25% by Cariboo Copper Corporation (Cariboo). Under the terms of the agreement, Taseko will acquire Sojitz's 50% interest in Cariboo, and will then hold an effective 87.5% interest in the Gibraltar mine.

The acquisition price consists of a minimum of C$60-million payable over a five-year period and potential contingent payments depending on Gibraltar mine revenues and copper prices over the next five years. An initial C$10-million will be paid to Sojitz upon closing and the remaining minimum amount will be paid in C$10-million yearly instalments over the next five years.

"This is a logical and beneficial transaction for Taseko, providing immediate 17% growth in our attributable copper production and earnings from mine operations. 

“Gibraltar is a high-quality asset with a long mine life in an excellent jurisdiction,” said Taseko president and CEO Stuart McDonald.

He added that the transaction was immediately accretive to Taseko and the deferred payment structure allowed the company to focus its financial capacity on the construction of the Florence Copper project, in the US.

In a statement, Sojitz CEO and COO Osamu Matsuura said that the company viewed Gibaltar as a “valuable long-life asset with a proven operating team”.

He noted that the transaction was consistent with the division's strategy to transition towards metal recycling and other midstream processing businesses.

Closing of the transaction is subject to customary conditions, including regulatory approvals, and is expected to occur in a timely manner.