Chile-focused prospect generator Arena Minerals has landed a third major, Teck Resources, and a US$19.5-million commitment to help develop copper projects at its Atacama Copper project in northern Chile.
The agreement announced today will see Teck Chile spend US$19.5 million in two stages over 6 years to acquire up to a 60% interest in the Solitario and Paciencia North prospects. The deal also includes a $1-million private placement by Teck at a premium to Arena’s current share price.
The properties consist of two separate claim blocks in the northern portion of Arena’s 149,500-hectare Atacama Copper project, where majors have now committed to spending more than $30 million CDN in joint ventures.
It’s the third joint venture Arena has signed with a major on the property: both B2Gold and JOGMEC have been busy drilling to earn interests on their JV agreements with Arena, which cover 60,000 hectares and involve expenditures of more than US$36 million.
“We are pleased to be partnering with Teck in what is now our third joint venture agreement this year, and welcome Teck as a strategic shareholder,” said Will Randall, Arena Minerals’ president and CEO. “Bringing Teck in to the mix of partners is ideal for Arena and its shareholders, given the company’s international reputation, size and experience. Teck has been operating successfully in Chile for decades and their wealth of knowledge will no doubt add tremendous value to our ongoing exploration of the Atacama Property.”
As part of the deal, Teck will subscribe for 3,703,703 common shares of Arena Minerals at a price of 27 cents. With about 80 million shares outstanding and a stock price of 23.5 cents, Arena’s market cap is $18.4 million.
Analyst Michael Curran of Beacon Securities rates Arena a buy due to the “above-average prospectivity” of Arena’s Chilean land package for the discovery of large copper-gold-moly porphyry systems or epithermal gold-silver veins.
“We consider Arena’s low market capitalization and prospect-generator strategy as an attractive risk-reward opportunity for investors,” Curran said.
Arena optioned 80% of the large Atacama Copper land package in 2013 through an agreement with Sociedad Quimica y Minera de Chile, which has owned it for more than 70 years but is focused on industrial metals (nitrate and iodine).
The Antofagasta region is home to some of the world’s largest copper mines, including Escondida and Chuquicamata.
Including warrants, mining entrepreneur Ross Beaty owns about 12% of Arena’s outstanding shares. Beaty is also familiar with the Atacama desert: his Lumina Copper sold its Taca Taca copper-gold deposit to First Quantum Minerals for $470 million last year.
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