Teck bulks up on AQM Copper stock
December 28, 2018Teck (TSX:TCK.B; NYSE:TCK) is strengthening its grip on the Zafranal copper project in Peru, buying up more shares in junior AQM Copper (TSXV:AQM).
Teck already owns 50 percent of the project, and just shy of 20 percent of AQM Copper, which effectively has a 30 percent carried interest in Zafranal to feasibility. Another partner, Mitsubishi, with AQM on the project, committed funds for prefeasibility and feasibility studies of the project.
The diversified miner said today it would buy a 10.5 percent stake in AQM Copper, bringing its total position in the junior to just over 30 percent.
Teck is buying 14.6 million shares at C$0.1037 a share and will thus spend about C$1.5 million.
Teck already owns 50 percent of AQM’s flagship Zafranal copper project.
Zafranal
The acquisition signals an increasing commitment to the Zafranal project by Teck.
In the grand scheme of things, Zafranal is a relatively recent copper porphyry discovery made, in fact, by Teck about a decade ago. Teck subsequently optioned out the project to AQM, headed up by President and CEO Bruce Turner, which fleshed out the scale of mineralization and produced a resource estimate on the project showing a sizeable copper-gold deposit.
The project holds 621 million tonnes @ 0.37 % copper and 0.07 g/t gold in measured and indicated resources assuming a 0.2% Cu cut-off grade.
The deposit made for a pretty strong preliminary economic assessment last year in which Teck, AQM and Mitsuibishi propose two scenarios for the mine, one involving 44,000-tonne-per-day concentrator and another at 80,000-tonnes-per-day. Respectively those scenarios, assuming $3/pound copper and $1,274 an ounce gold, yielded 18% and 17% internal rates of return and capital costs of $1.1 billion and $1.5 billion.
The deposit and mine set up have some nice features such as a low striping ratio at 0.7, a downhill run for trucks to dump waste rock from open pit operations and leachable near-surface oxides and seconary sulphides on top of more extensive hypogene resources below.
