Inmet sells Antamina stake to Noranda, Teck in $70m deal

Majors Rio Algom (ROM-T), Noranda (NOR-T) and Teck (TEK-T) are teaming up to develop the Antamina copper-zinc project in Peru.

Noranda and Teck have each agreed to buy half of Inmet Mining’s (IMN-T) 50% interest in Compania Minera Antamina (CMA), the Peruvian company established to develop and operate the mine. In return, Inmet will receive $70 million cash as well as a 3.33% net-proceeds royalty, to be paid equally by Noranda and Teck.

As well, Noranda and Teck are each acquiring a further 8.33% interest in CMA from half-owner Rio Algom by way of an earn-in on the project. During the earn-in period, which begins immediately, Noranda and Teck will be responsible for funding all project expenditures to a total of $91.6 million.

Thereafter, Rio Algom, Noranda and Teck will each hold a one-third interest in CMA and be given equal representation on CMA’s board and advisory committee. Each company will be responsible for one-third of the project’s total funding requirement, estimated at US$2.2 billion.

The transaction is scheduled to close on June 5, and is subject to approval by the Peruvian government.

A feasibility study on the Antamina project completed in March (T.N.M., March 23-30/98) calculated an open-pit reserve of 500 million tonnes grading 1.2% copper, 1% zinc, 12 grams silver per tonne, and 0.03% molybdenum, plus a further resource of 500 million tonnes at similar grades.

The study indicates that Antamina could produce 600 million lbs. copper and 360 million lbs. zinc annually over a 20-year mine life. The average cash cost, net of byproduct credits, would be about US40cents per lb. copper.