RIO Rio Tinto Limited

By Rhiannon Hoyle

First Quantum Minerals Ltd. will buy a majority stake in Rio Tinto PLC's La Granja copper project in Peru, one of the largest undeveloped copper resources in the world, the companies said.

Canada's First Quantum will acquire a 55% interest in the project for $105 million. First Quantum also pledged to invest up to $546 million more to solely fund initial capital and operational costs.

La Granja could be a large, long-life mining operation, but is a complex deposit at high altitude in the Cajamarca region of northern Peru, said Rio Tinto.

The world's second-largest miner by market value acquired La Granja from Peru's government in 2006 and has since carried out an extensive drilling program, it said.

"La Granja is an exciting but complex project that has the potential to be a significant new source of the copper that is needed for the energy transition," said Rio Tinto's copper chief Bold Baatar. He said a joint venture with First Quantum would "bring our combined development capabilities and deep knowledge of La Granja to progress the project."

Getting La Granja into production would help Rio Tinto further bolster its copper-mining business, which the company has sought to expand with investments in Mongolia and the U.S. on expectations the industrial metal will be in high demand from manufacturers of electric vehicles and renewable energy infrastructure.

Rio Tinto and First Quantum have also penned a memorandum of understanding to cooperate more in developing projects for copper and other industrial metals globally, the companies said in separate statements.

First Quantum, as majority owner, would operate the La Granja project, which is located at an altitude of between 2,000 and 2,800 meters. The deposit has a published indicated and inferred mineral resource totalling 4.32 billion metric tons at 0.51% copper, the companies said. Initial work will focus on finishing a feasibility study.

"Rio Tinto's work on La Granja has been extensive to date and we share our partner's view that the project has the potential to be a tier-one copper mine," said Tristan Pascall, First Quantum's chief executive.

"This partnership will provide First Quantum access to an attractive copper project, offering additional future optionality in the company's project pipeline while we focus on strengthening the balance sheet in the interim," he said.

The deal is expected to be finalized by the end of the third quarter of 2023, the companies said.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

(END) Dow Jones Newswires

March 30, 2023 18:13 ET (22:13 GMT)

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