Taseko Mines Ltd. has signed agreements with Mitsui & Co. (USA) Inc. to form a strategic partnership to develop the company’s Florence Copper project, located in Arizona USA.
Mitsui has committed to an initial investment of $50 million, 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 $50 million for a 10% equity interest in Florence Copper. The equity option is exercisable by Mitsui within a 3-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 an offtake contract for 81% of the copper cathode produced at Florence during the initial years of production. The parties intend to use this period to develop premium sales channels for ‘green copper’ in the United States, leveraging Mitsui’s existing U.S. cathode trading business and the unique environmental benefits of Florence Copper, which is expected to be the lowest carbon- and energy-intensity copper producer in North America.
“Mitsui’s investment will complement Taseko’s financing requirements and construction timeline and advance our goal of ensuring the copper produced at Florence is recognized for its unique low-carbon profile that will advantage U.S. manufacturers and consumers,” said Stuart McDonald, president and CEO of Taseko. “In the future, Taseko and Mitsui will collectively evaluate additional investments toward establishing Florence Copper as a zero-carbon copper producer (Scope 1 and 2).”
Florence Copper uses in-situ recovery (ISR) to extract copper from an ore body without disturbing much land. The commercial facility is expected to have a production capacity of 85 million lb/y of copper. It will consist of a commercial-scale SX/EW plant and the associated infrastructure needed to pump raffinate from 80 injection and recovery wells.
“When in production, Florence Copper will significantly expand our U.S. cathode trading business, while providing an environmentally sound, domestically produced product that can be marketed on the basis of its low-carbon advantages,” said Sayu Ueno, president and CEO of Mitsui & Co. (USA). “We believe Florence Copper will be a preferred source of ‘made-in-the-US’ copper for many end users in North America.”
Under the terms of the initial $50 million copper stream agreement, Mitsui’s first deposit payment of $10 million will be available for drawdown after receipt of Florence Copper’s underground injection control (UIC) permit, with additional $10 million installments 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 $50 million 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 lb of copper have been delivered under the agreement. Mitsui’s offtake entitlement would also reduce to 30% until the copper stream deposit has been reduced to nil.