“San Nicolás is a high-quality project, located in a leading mining jurisdiction, with high grades, extremely competitive capital intensity, and first quartile costs,” said
“This is a unique opportunity to create a long-term partnership between two high quality mining companies working together to de-risk and optimize a world class VMS deposit in a premier mining jurisdiction,” added
Transaction Highlights
- Agnico Eagle will subscribe for
US$580 million ofMSN shares, giving Agnico Eagle a 50% interest in MSN. The subscription proceeds received from Agnico Eagle will be used byMSN to fund the firstUS$580 million of post-closing costs with subsequent funding to be contributed according to each partner’s ownership percentage. Agnico Eagle’s contributions will be made as study and development costs are incurred – there is no up-front payment from Agnico Eagle - The
US$580 million share subscription implies a notionalUS$290 million acquisition cost to Agnico Eagle for 50% of the San Nicolás project plus the contribution by Agnico Eagle of 50% of the firstUS$580 million of project costs for its own account - Agnico Eagle’s funding in the first two years is expected to be approximately
US$50 million - Establishes a 50/50 joint venture between two Canadian-based global mining leaders each with demonstrated track record of successful joint operations
- Governance arrangements with equal representation from Teck and Agnico Eagle, to leverage and implement each shareholder’s skillsets
- Agnico Eagle to be deemed to be a 50% shareholder in
MSN for governance purposes upon closing of the Transaction, which is expected in the first half of 2023
San Nicolás Project Highlights
- Located in
Zacatecas , a major mining state inMexico , with significant geological potential and numerous poly-metallic and precious metals opportunities. In addition,Zacatecas has excellent access to infrastructure and a skilled workforce - San Nicolás is the largest undeveloped volcanic-hosted massive sulfide deposit (“VHMS”) deposit in
Mexico and is one of the largest undeveloped VHMS deposits globally. As atDecember 31, 2021 , Teck estimated San Nicolás to contain 105.2 million tonnes of proven and probable mineral reserves at average grades of 1.12% copper, 1.48% zinc, 0.4 g/t gold and 22 g/t silver, or more than 2.0% on a copper equivalent basis - Prefeasibility study completed by Teck in
March 2021 describes attractive economics and project parameters:- The project contemplates a modern truck-and-shovel open pit, processing, and flotation operation
- First production expected in 2026, with an estimated mine life of 15 years and meaningful potential for mine life extension and regional exploration upside
- Expected to produce 63 thousand tonnes per annum (ktpa) of copper and 147 ktpa of zinc in concentrate over its first five years of production
- Average life of mine head grades of 1.13% copper and 1.49% zinc
- Average C1 operating costs of
US$(0.16) /lb copper andUS$0.44 /lb copper over the first five years of production and life of mine, respectively, net of by-products US$842 million development capital cost estimate- 2.6 year payback and 33% after-tax Internal Rate of Return (IRR) based on
US$3.50 /lb copper andUS$1.15 /lb zinc
- Teck and Agnico Eagle anticipate that development capital costs could be in the range of
US$1,000 million toUS$1,100 million , based on current cost environment and estimate accuracy. With development capital costs in this range, and assuming spot prices of approximatelyUS$3.57 /lb copper andUS$1.46 /lb zinc, the estimated payback period would be 2.5 to 2.8 years with an estimated after-tax IRR of 33% to 30%.
San Nicolás Study Status
A detailed plan to complete a feasibility study, permitting, and community engagement has been developed, with initial work underway since
The feasibility study is expected to be completed early in 2024 with project sanction thereafter subject to receipt of permits.
About the Transaction
Agnico Eagle will subscribe for
Funding requirements beyond this initial subscription amount will be funded by Teck and Agnico Eagle in proportion to their shareholdings in
Closing of the Transaction is subject to customary conditions precedent, including receipt of necessary regulatory approvals, and is expected to occur in the first half of 2023.
Additional Information on the San Nicolás Project
For further details on the San Nicolás project, please refer to the Supplemental Information slides in the Investors section of Teck’s website (https://www.teck.com/investors/events-&-presentations/presentations-webcasts/supplemental-information-for-investors).
About Teck
As one of Canada’s leading mining companies, Teck is committed to responsible mining and mineral development with major business units focused on copper, zinc, and steelmaking coal, as well as investments in energy assets. Copper, zinc, and high-quality steelmaking coal are required for the transition to a low-carbon world. Headquartered in
About Agnico Eagle
Agnico Eagle is a senior Canadian gold mining company, producing precious metals from operations in
Teck Media Contact
Public Relations Manager
604.699.4368
chris.stannell@teck.com
Teck Investor Contact:
Senior Vice President, Investor Relations & Strategic Analysis
604.699.4621
fraser.phillips@teck.com
Agnico Eagle Investor Contact:
Corporate Director, Investor Relations
416.457.9464
jeanmarie.clouet@agnicoeagle.com
Forward Looking Statements
This news release contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward-looking information as defined in the Securities Act (
Forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of Teck, Agnico Eagle or the joint venture to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that may cause actual results to vary include, but are not limited to, changes in general economic conditions or commodity prices, unanticipated permitting, development or construction issues including delays in receiving permits or other regulatory approvals, or withdrawal or suspension of permits, unanticipated geotechnical conditions or other factors affecting construction plans and budgets including supplier, transportation, logistics or labour issues, adverse weather or natural disaster, community unrest, access issues, failure of plant and equipment, disruption of financial markets, the accuracy of our mineral estimates (including with respect to size, grade and recoverability) and the geological, operations and price assumptions on which these are based, other circumstances interfering with the closing of the Transaction, including an inability to satisfy the conditions to closing, including receipt of any regulatory approvals and failure by Teck or Agnico Eagle to fund as required by the agreements. Economic projections for the San Nicolás project are presented on a 100% basis and, except as otherwise noted, assume
Teck and Agnico Eagle caution you that the foregoing list of important factors and assumptions is not exhaustive. Other events or circumstances could cause actual results to differ materially from those estimated or implied by these forward-looking statements. Certain of these risks are described in more detail in the Annual Information Form of Teck and/or Agnico Eagle and in their respective subsequent quarterly report filings with Canadian securities administrators and the
Source:
2022 GlobeNewswire, Inc., source