Taseko Mines (TGB) has signed agreements with Mitsui & Co. (MITSY) to form a strategic partnership to develop the company’s Florence Copper project in Arizona. Mitsui has committed to an initial investment of $50M, with proceeds to be used for construction of the commercial production facility. The initial investment will be in the form of a copper stream agreement on 2.67% of the copper produced at Florence Copper. In addition, Mitsui has the option to invest an additional $50M – for a total investment of $100M – for a 10% equity interest in Florence Copper. The Equity Option is exercisable by Mitsui within a three-year period following completion of construction of the commercial production facility. If Mitsui elects to exercise its Equity Option the Copper Stream will terminate. As part of the arrangement, Taseko and Mitsui have entered into an offtake contract for 81% of the copper cathode produced at Florence during the initial years of production. Mitsui’s first deposit payment of $10M will be available for drawdown after receipt of Florence Copper’s Underground Injection Control permit, with additional $10M instalments available each quarter thereafter to fund project construction. Mitsui will receive 2.67% of the copper metal produced at Florence and pay a delivery price equal to 25% of the market price of copper delivered under the contract. If Mitsui elects to exercise its Equity Option and invest an additional $50M in the Project, these additional funds and the Copper Stream will be converted into a 10% equity interest in Florence Copper. At that time, the initial offtake agreement will cease and be replaced with a marketing agency agreement. If the Copper Stream is not converted into an equity interest Taseko will have the right to buy-back 100% of the Copper Stream, otherwise, it will terminate when 40 million pounds of copper have been delivered under the agreement.
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