TSX-listed Trilogy Metals Inc. (TSX, NYSE) has revealed that BHP-offshoot South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) has exercised its option to acquire a 50% interest in a joint venture company that will own the Upper Kobuk Mineral Projects (UKMP) in northwest Alaska.
Trilogy Metals will contribute all of its assets associated with the UKMP and South32 will contribute US$145 million to the Joint Venture, which is expected to be established in February 2020 and follows an initial exploration partnership between South32 and Trilogy Metals over three field seasons to advance both parties’ geological understanding of the UKMP.
South32 Chief Executive Officer, Graham Kerr, said that following formation, the Joint Venture will retain US$87.5 million of the US$145 million subscription payment to fund its activities and exploration programmes with the balance of US$57.5 million loaned back to South32.
The loan will be repaid in instalments, on notice by the Joint Venture as required to advance development studies, resource drilling and regional exploration programmes.
“Investing in exploration to create shareholder value is integral to our Group’s strategy. Forming the UKMP Joint Venture will be another important milestone as we reshape and improve our portfolio, by adding high-quality copper and base metals development options,” Mr Kerr said.
“The decision to exercise the option follows a successful exploration partnership with Trilogy Metals and is an exciting step forward.
“We look forward to furthering our partnership with Trilogy Metals and NANA Regional Corporation, the Iñupiat-owned Alaska Native corporation in the region, as we work together to advance the Arctic and Bornite deposits and further test the significant regional potential across the Ambler Mining District.”
Trilogy Metals Interim President and Chief Executive Officer, James Gowans said that having the support and partnership from a senior mining company like South32 – both in terms of their financial support and technical expertise – was significant for Trilogy Metals.
“The Ambler Mining District has great potential that we expect will finally be realised with the formation of the Joint Venture and when the Ambler Mining District Industrial Access Project, providing key infrastructure access, is approved. We are very excited to advance this partnership.”
The UKMP is located in the Ambler Mining District in Alaska and includes the high grade, polymetallic Arctic deposit, the Bornite copper deposit and a highly prospective regional exploration portfolio.
Arctic is a polymetallic volcanogenic massive sulphide (VMS) style deposit that has a reported reserve and resource. Current activities at Arctic are focused on advancing development studies and permitting, following release of a pre-feasibility study by Trilogy Metals in April 2018.
Bornite is a carbonate hosted copper deposit that has a reported resource2 in accordance with NI 43-101. The 2020 field season will include further exploration drilling at Bornite and regional activity across the highly prospective Ambler VMS and carbonate hosted copper belts.
Mr Kerr said South32 expects to release initial JORC compliant Mineral Resource estimates for Arctic and Bornite in the March quarter 2020 following establishment of the Joint Venture.