Thompson Creek Metals Co. Inc. (TSX:TCM) has agreed to buy Terrane Metals Corp. (TSX-V:TRX) for $650 million in one of the biggest transactions in Vancouver’s mining scene so far this year.
Thompson will buy the Vancouver-based junior to get access to the Mount Milligan copper-gold project near Prince George, which is under construction and one of B.C.’s next major mines.
When BIV last spoke to Terrane president and CEO Rob Pease, he had just raised $100 million for Milligan’s $915 million price tag. (See “$100m deal helping Terrane Metals scale Mount Milligan” – issue 1067; April 6-12, 2010)
At the time, Pease said the company planned to fund approximately $500 million to $600 million of the project with a debt package.
The Thompson Creek buyout now means the remaining construction costs at Mount Milligan are fully funded. The project could be churning out ore by 2013.
“The combination of Thompson Creek and Terrane offers an excellent investment opportunity for shareholders,” Kevin Loughrey, Thompson’s chairman and CEO, said during a conference call Thursday morning.
Denver-based Thompson operates the massive Endako molybdenum mine in northern B.C., which is being challenged over a $498 million expansion. (See “First Nation files petition to challenge Endako mine expansion” – issue 1075; June 1-7, 2010)
In addition to buying Terrane, Thompson has entered into a gold stream agreement with Denver-based Royal Gold Inc. (NASDAQ:RGLD).
That deal means 25% of Mount Milligan’s gold will be sold to Royal for the life of the mine.
Boards members from both Thompson and Terrane unanimously approved the transaction. Vancouver-based precious metals producer Goldcorp Inc. (TSX:G), which owns 58% of Terrane, also supports the deal.
The buyout is expected to close in September.