Newcrest Mining to partner Imperial Metals in Red Chris copper gold mine

Mining acquisition news : Australian mining company Newcrest Mining has signed a deal to acquire 70% stake in the Red Chris copper gold mine and surrounding tenements in British Columbia, Canada from Imperial Metals for $806.5 million.

The Red Chris copper gold mine, which is located on the northern edge of the Skeena Mountains in British Columbia, was brought into production in July 2015.

Imperial Metals acquired the Red Chris copper gold deposit some 12 years ago. The Canadian mining company will hold on to a 30% stake in the copper gold mine to create a joint venture with Newcrest Mining. The Australian mining company will become the new operator of the copper gold mine, which is 18km southeast of the Iskut town.

Imperial Metals plans to use the proceeds from the transaction to repay some of its existing debt obligations as per their maturity dates. The Canadian mining company will use the remaining amount for working capital purposes.

Brian Kynoch – Imperial Metals President said: “This transaction presents a compelling opportunity for all stakeholders as it allows Imperial to significantly strengthen its balance sheet while forging a strategic partnership with a leading global mining company.  We believe that this joint venture partnership will enable Imperial to unlock significant value at Red Chris by leveraging Newcrest’s unique technical expertise in block caving operations.

“With a stronger financial position and highly actionable path to exploiting the underground mining potential of Red Chris, Imperial will be in a much stronger position to create value and opportunities for its shareholders, stakeholders and the Tahltan Nation.”

Construction on the Red Chris mining project started in 2012 and was wrapped up in late 2014 with a total of $492.5 million spent on the development.

According to Imperial Metals, the Red Chris mine, during the initial nine months of the calendar year 2018, yielded 44.8 million pounds of copper to go along with 29,569 ounces of gold.

The Red Chris project is an open pit mine, which has mineral resources of 20 million ounces of gold and 13 billion pounds of copper. About 500 personnel are employed for the mine’s operations.

Newcrest Mining intends to optimize the current open pit mine plan. The Australian mining company is looking to take up initiatives to enhance operational productivities and milling recoveries.

As per the company, the open pit mine, which has an 11mtpa processing plant and associated infrastructure, presents an opportunity for brownfield expansion in the long run.

Newcrest Mining has already identified opportunities to expand the mineral resources of the Red Chris copper gold mine along strike and at depth in areas where deep drilling could not be done till date.

Historical shallow drilling indicates potential to exploit more deep discoveries in the larger tenement package, said Newcrest Mining.

Sandeep Biswas – Newcrest Managing Director and CEO said: “We are delighted to add this joint venture into the Newcrest portfolio.  We believe we can bring our unique technical capabilities to unlock the full value potential of this orebody in one of the premier gold districts in the world.  We have identified a clear path to potentially turn Red Chris into a Tier 1 operation.

“The geology of Red Chris is similar to our Cadia orebodies in Australia and we will be applying our considerable experience in exploration, open pit mining, caving and processing to maximize the value of Red Chris and the opportunities in the surrounding region.

“We look at this opportunity in the same way as we do with Cadia, where we have proven we can create significant value from deep underground porphyry orebodies. We are pleased to be establishing a joint venture with Imperial and look forward to building a collaborative relationship with Tahltan Nation and the Government of British Columbia.”

The deal is expected to be wrapped up in Q3 CY 2019 should it meet the preceding customary conditions such as all the required regulatory approvals.