Mar 11 2019
An agreement has been made by Imperial Metals Corporation to sell a 70% interest in its Red Chris copper and gold asset in British Columbia, Canada to Newcrest Mining Limited for US$806.5 million in cash, while holding a 30% interest in the mine. The company and Newcrest will form a joint venture for the running of the Red Chris asset in the days ahead, with Newcrest serving as operator. The consideration payable will be conditional on customary adjustments for specific assumed equipment loans, working capital, and non-financial debt at closing.
This transaction presents a compelling opportunity for all stakeholders as it allows Imperial to significantly strengthen its balance sheet while forging a strategic partnership with a leading global mining company. We believe that this joint venture partnership will enable Imperial to unlock significant value at Red Chris by leveraging Newcrest’s unique technical expertise in block caving operations. With a stronger financial position and highly actionable path to exploiting the underground mining potential of Red Chris, Imperial will be in a much stronger position to create value and opportunities for its shareholders, stakeholders, and the Tahltan Nation. Imperial’s portfolio of assets will include a 100% interest in the Mount Polley mine, a 100% interest in the Huckleberry mine and a 30% interest in the Red Chris mine together with a high potential suite of both advanced and early stage exploration projects including an approximately 50% interest in the Ruddock Creek lead/zinc property and a 100% interest in the Giant Copper property.
Brian Kynoch, President, Imperial Metals Corporation.
We are delighted to add this joint venture into the Newcrest portfolio. We believe we can bring our unique technical capabilities to unlock the full value potential of this orebody in one of the premier gold districts in the world. We have identified a clear path to potentially turn Red Chris into a Tier 1 operation. The geology of Red Chris is similar to our Cadia orebodies in Australia and we will be applying our considerable experience in exploration, open pit mining, caving, and processing to maximize the value of Red Chris and the opportunities in the surrounding region. We look at this opportunity in the same way as we do with Cadia, where we have proven we can create significant value from deep underground porphyry orebodies. We are pleased to be establishing a joint venture with Imperial and look forward to building a collaborative relationship with Tahltan Nation and the Government of British Columbia.
Sandeep Biswas, Managing Director and CEO, Newcrest Mining Limited.
Transaction Overview and Timing
The sale is conditional on customary conditions precedent such as all obligatory regulatory approvals and the assignment or transfer of material permits and contracts. Closing is expected to take place in the third quarter of 2019 with an outside date for closing of August 15th, 2019.
On closing of the asset acquisition, an unincorporated joint venture between wholly-owned subsidiaries of Newcrest and the company will be struck. The operator of the joint venture will be Newcrest. Both parties to the joint venture will support the exploration and development expenditures based on its participant interest (Newcrest 70%, Imperial 30%). Dilution provisions apply if a party does not assist a program and budget.
Use of Proceeds
Imperial Metals Corporation plans to use the proceeds from the sale to repay some current debt obligations in keeping with their maturity dates, with remaining funds to be used for working capital purposes.
Advisors
BMO Capital Markets is serving as financial advisor to the Imperial Metals Corporation in connection with the transaction. The legal counsel for Imperial Metals Corporation on the transaction is Borden Ladner Gervais LLP.