Photo by: Reuters
PERTH (miningweekly.com) – Diversified major Rio Tinto has struck a joint venture (JV) agreement with First Quantum Minerals to partner on the development of the La Granja copper project in Peru.
Under the proposed transaction, First Quantum will acquire a 55% stake in the project for $105-million, and commit to further invest up to $546-million into the JV to sole fund capital and operational costs to take the project through a feasibility study and toward development.
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. As majority owner, First Quantum will then operate the La Granja project with initial work focussed on completing the feasibility study.
The transaction is expected to complete by the end of the third quarter of 2023, subject to the satisfaction of regulatory approvals.
Rio Tinto acquired the La Granja project from the Peru government in 2006 and has since carried out an extensive drilling programme that significantly expanded the declared resource and understanding of the orebody, and established partnerships with host communities, and local and national governments.
The project is considered to be one of the largest undeveloped copper deposits in the world, hosting an indicated and inferred mineral resource of 4.32-billion tonnes at 0.51% copper.
“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 agreement with First Quantum that will bring our combined development capabilities and deep knowledge of La Granja to progress the project,” Rio Tinto copper CEO Bold Baatar said.
“This 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.”
First Quantum CEO Tristan Pascall said Rio’s work on La Granja had been extensive to date and that the company shared Rio’s view that the project had the potential to be a tier one copper mine.
“We look forward to working together to build on this foundation, leveraging First Quantum’s core strengths in mine design, project development and community engagement to progress La Granja to the next stage.
“First Quantum is excited about broadening our existing relationships in Peru and we are appreciative of the support provided by the Government of Peru to this important partnership for its future major investment in the country.”
First Quantum told shareholders that work over the initial years would continue to progress community engagement and the feasibility study. The feasibility study will focus on developing an updated geological resource and reserve model, which will require additional infill drilling to upgrade inferred resources to the measured and indicated categories.
Additional metallurgical studies to establish optimal processing configurations are expected to be carried out in parallel, together with a high-level project layout and configuration of associated infrastructure requirements and logistical routes.