Magma and Chase to exploit Philippine copper

An agreement with Magma Copper (NYSE) will enable Chase Resource (TSE) to advance its Taysan copper project in the Philippines.

Subject to the completion of a due diligence review and regulatory approval, Magma will buy a 25% interest in the property plus a 19.9% equity interest in Chase. The aggregate purchase price for the stock and property interest is US$15 million.

Chase has 13.1 million shares outstanding. As a result, if no more stock is issued before the deal is completed, Magma will be issued 3.3 million shares, giving it the 19.9% equity interest.

Magma has until Oct. 6 to exercise its purchase option, and has already paid Chase US$500,000 as an advance. If Magma proceeds, it will be able to buy an additional 26% interest in the project for a further US$15 million, following completion of a US$7-million feasibility study.

As operator, Magma will finance the feasibility study. It will also arrange project financing and fund up to half of Chase’s equity portion in a future mine.

Chase holds a 35% interest in the Philippine company that owns the Taysan deposit and can purchase the remaining 65% interest for US$1.6 million in additional option payments. During the course of its involvement, Magma will be required to meet the underlying property payments, as well as cover other property holding costs.

The Taysan contains a proven and probable reserve of 336 million tonnes grading 0.31% copper and 0.31 gram gold per tonne. The due diligence review is under way.