November 2016: Teck Resources Limited (TSX: TCK; NYSE: TCK) is looking to take a majority stake in the Zafranal Cu-Au Project in Arequipa, Peru, after reaching a deal to acquire mining junior AQM Coppper (TSXV: AQM).
TCK already owns 50% of Zafranal while AQM (in which TCK already holds a 30% stake) indirectly owns another 30%. The balance of shares are owned by Japan’s Mitsubishi Materials Corporation.
Under the deal, TCK will pay C$0.23 per share for the remaining 70% of AQM shares it does not currently own, a 53% premium to AQMs closing price on November 18th and valuing AQM at C$35M.
TCK discovered Zafranal in 2003 during an exploration program covering Peru’s porphyry copper belt. However, in 2009, AQM signed an option agreement with TCKs Peruvian subsidiary to acquire 51% of the project for US$5M plus US$7.5M in exploration work. The agreement was subsequently modified giving AQM a 50% stake in the Zafranal JV in exchange for 5M shares and a commitment to spend US$10.7M.
AQM has carried out more than 137,000m of drilling at Zafranal since 2010. Covering 32,000h, the project hosts reserves estimated at 401Mt @ 0.4% Cu & 0.07g/t Au while a PFS completed last May proposed a mine that would produce 3.1Blb Cu & 484,000oz Au over a 19-year mine life.
“Zafranal will be better-positioned for future development in the hands of a major with significant cash resources, such as TECK,” said AQM CEO Bruce Turner.