BHP Billiton set to fund Aston Bay's Storm copper project
28/01/2016 19:39
By Euan Rocha
TORONTO, Jan 28 (Reuters) - The Canadian arm of mining giant
BHP Billiton BHP.AX has signed a letter of intent to help fund
exploration at Aston Bay Holdings Ltd's BAY.V Storm copper
project, Aston Bay said on Thursday.
Under terms of the preliminary deal, BHP could earn a 75
percent interest in Storm, located in Canada's far north
territory of Nunavut, if it spends a minimum of C$40 million on
exploration over the next few years.
Vancouver-based Aston Bay, a small exploration company, will
have no required exploration expenses for four years from the
date a definitive agreement is signed. The two sides expect to
finalize a deal in the second quarter, said Aston Bay.
A definitive deal would be a huge boost for Aston Bay, which
like many of its small peers has seen its share price pummeled
amid the rout in commodity prices. The price of copper CMCU3
continues to languish around levels not seen since the tail end
of the financial crisis in 2009.
Such earn-in agreements allow mining majors to secure stakes
in promising early-stage projects for relatively limited
up-front risk. They were fairly common when metal prices soared
through much of the last decade, but have become rare in the
last few years for both base metal and precious metal assets.
The latest move by BHP comes close on the heels of similar
moves by rival Rio Tinto RIO.L RIO.AX , which recently inked
similar deals involving the copper assets of two Canadian
juniors.
The developments indicate the majors are beginning to be
concerned about their long-term copper project pipeline as
supply-demand fundamentals in the commodity remain fairly tight
despite the slide in the price of copper. urn:newsml:reuters.com:*:nL8N15A2SW
In November, Avala Resources Ltd AVZ.V announced an
earn-in agreement with Rio on its Lenovac project, located in
Serbia, coming days after Rio signed a similar deal with
Reservoir Minerals Inc RMC.V on its Timok Magmatic Complex in
Serbia.
Both assets are located near the promising Cukaru Peki
deposit in Serbia, part of a joint venture Reservoir has with
Freeport-McMoRan Inc FCX.N . That deposit has shown promising
results, leading to heightened interest in the region.
(Editing by Jeffrey Benkoe)
((euan.rocha@thomsonreuters.com; +1 416 941 8185; Reuters
Messaging: euan.rocha.reuters.com@reuters.net))
Keywords: BHP BILLITON LTD ASTON BAY/JOINTVENTURE