Mining giants Rio Tinto PLC (LSE:RIO) and First Quantum Minerals PLC (TSX:FQM) have inked a joint venture agreement aimed at unlocking the potential of the La Granja copper project in Peru, one of the world's largest undeveloped deposits of its kind.
Located in Cajamarca, Northern Peru, La Granja has the potential to become a significant, long-life operation with a published Indicated and Inferred Mineral Resource totalling 4.32 billion tonnes at 0.51% copper.
In the proposed transaction, First Quantum will acquire a 55% stake in the project for US$105mln and commit to investing up to US$546mln to fund capital and operational costs for the feasibility study and project development.
After the completion of the sole funding commitment, both companies will share outlay on a pro-rata basis according to their project ownership.
The deal is expected to close by the end of the third quarter, pending regulatory approvals. First Quantum, as majority owner, will operate the La Granja project, focusing initially on completing the feasibility study.
In a statement, Rio Tinto Copper chief executive, Bold Baatar, said: "La Granja is an exciting but complex project that has the potential to be a significant new source of the copper that is needed for the energy transition."