Highland Copper Co. has entered into a binding letter agreement with Copper Range Co. (CRC), a subsidiary of First Quantum Minerals, to acquire all of CRC's rights, title and interest in the White Pine copper project, located in Michigan’s Upper Peninsula, USA.
“Since our capital raise in May 2012, the company has been establishing itself as an emerging copper exploration and development company focused in northern Michigan, an area that we consider to be highly prospective,” said Dave Fennell, executive chairman of Highland. “The acquisition of White Pine is complementary with our existing Keweenaw project, particularly given the extensive infrastructure in place from past operations, and is a significant step towards further establishing Highland as a leader in the region."
CRC acquired the original White Pine mine in 1937. Subsequent drilling revealed the widespread nature of the mineralization and underground mining by room-and-pillar methods followed by flotation of sulfides began in 1952. Mining ceased in 1995 due largely to depressed copper prices, although significant amounts of mineralization remained, particularly to the northeast of the mine. Production from 1952 to 1995 was 198 million tons averaging 1.14% copper for approximately 4.5 billion lb of copper. Although silver was consistently alloyed with the copper, silver was generally not recovered and was incorporated into the copper as "fire-refined" copper until an on-site electrolytic refinery was completed in 1982.
In 1995, CRC, then a subsidiary of Inmet Mining Corp., closed the White Pine mine. The total non NI 43-101 compliant in-situ resource estimated at that time was 208 million tons averaging 1.04% copper (approximately 4.3 billion lb of copper). Of this total, 144.9 million in-situ tons averaging 1.02% copper for approximately 3 billion lb of copper were located in a deposit northeast and separated from the old workings.
In consideration for White Pine, Highland will issue to CRC 3 million of its common shares, representing 5.4% of Highland’s issued and outstanding common shares. Highland will also undertake to pay to CRC an amount equal to $0.005 (one half of one cent) for the first 1 billion lb of proven and probable reserves of copper and $0.0025 (one quarter of one cent) for each additional pound of proven and probable reserves of copper, payable in cash or in common shares of Highland, at the option of CRC. Highland will also grant to CRC a participation right pursuant to which CRC will have the right to maintain its pro rata ownership interest by participating in further issuances of common shares by Highland.
Highland and CRC will work toward executing a definitive asset purchase agreement and completing an interim closing by January 31, 2014, and a final closing by December 31, 2015.