Canadian mining company Teck Resources Ltd. has announced that Japanese firms Sumitomo Corp. and Sumitomo Metal Mining will acquire an indirect 30% stake in Compañia Minera Teck Quebrada Blanca S.A. (QBSA) in Chile, which owns the Quebrada Blanca Phase 2 (QB2) project.

QBSA will use the initial proceeds of the transaction, in an operation valued at US$1.2 billion, to finance the construction of the QB2 project, located in the far north of the country, according to Teck. The project was approved by the Teck board and it will start producing in the second half of 2021. Full production is expected in the middle of 2022.

“QB2 is one of the world’s premier undeveloped copper assets and this transaction further confirms the value of the project,” said Don Lindsay, president and CEO of Teck. “This partnership significantly de-risks Teck’s investment in the project, enhances our project economics, and preserves our ability to continue to return capital to shareholders and reduce bonds currently outstanding.”

The cost of capital for the development of QB2 was initially estimated at US$4.74 billion, with an average annual copper production equivalent to 316,000 tons of fine copper during the first five years. The project has an initial mine life of 28 years utilizing less than 25% of the current reserve and resource, the company said.

Once the transaction is approved, the project ownership will be 60% in the hands of Teck, 30% to be shared between Sumitomo Metal Mining and Sumitomo Corp., and the remaining 10% will belong to the Chilean state mining company Enami.

Closing of the transaction is subject to customary conditions and is expected to occur before the end of April 2019.