South32, Trilogy Metals to Form UKMP Joint Venture
Upper Kobuk Mineral Projects
South32 Limited and Trilogy Metals announced that South32 has exercised its option to acquire a 50 percent interest in a joint venture company that will own the Upper Kobuk Mineral Projects (UKMP).
Trilogy Metals will contribute all of its assets associated with the UKMP and South32 will contribute $145 million to the joint venture. Establishment of the joint venture is expected to occur 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.
Following formation, the joint venture will retain $87.5 million of the $145 million subscription payment to fund its activities and exploration programs with the balance of $57.5 million loaned back to South32. The loan will be repaid in installments, on notice by the joint venture as required to advance development studies, resource drilling, and regional exploration programs.
South32 CEO Graham Kerr said, “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. 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 CEO James Gowans said, “Having the support and partnership from a senior mining company like South32—both in terms of their financial support and technical expertise—is tremendous for Trilogy Metals. The Ambler Mining District has great potential that we expect will finally be realized 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.”
“This joint venture is an investment in the future—not only for the UKMP but for NANA shareholders and the people of Alaska,” said NANA president and CEO Wayne Westlake. “Continued exploration offers opportunities for economic growth, allowing NANA to further fulfill our mission to improve the quality of life for our people.”
The UKMP is located in the Ambler Mining District 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 resource1 in accordance with National Instrument 43-101 (NI 43-101). 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.
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. South32 cautions that the NI 43-101 Mineral Resources for Arctic and Bornite published by Trilogy Metals are foreign estimates and are not reported in accordance with the JORC Code. A Competent Person has not done sufficient work to classify the NI 43-101 Mineral Resources and Mineral Reserves as JORC Code Mineral Resources and Ore Reserves respectively in accordance with the JORC Code. It is uncertain that following evaluation and/or further exploration work that the NI 43-101 Mineral Resources and Mineral Reserves will be able to be reported as Mineral Resources and Ore Reserves in accordance with the JORC Code.
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