Australia鈥檚 Golden Rim Resources (ASX: GMR) has executed an option with Teck Resources (TSX: TECK.A聽| TECK.B) (NYSE: TECK), Canada鈥檚 largest聽diversified miner, to develop the Loreto copper project in Chile.
The asset is located 120 km north of Teck鈥檚 Quebrada Blanca, the miner鈥檚 main growth project, and it is surrounded by operations run by BHP and Codelco, Golden Rim said.
The deal grants Teck鈥檚 subsidiary Teck Chile options to earn up to a 75% interest in Loreto by providing Golden Rim with $600,000 in staged cash payments. The Vancouver-based miner will also have to spend $17 million on exploration.
鈥淕olden Rim believes that Loreto could well represent the last unexplored outcropping Oligocene-Eocene porphyry system in northern Chile,鈥� managing director Craig Mackay聽said in the statement.
The company noted that mineral concessions at its adjacent Paguanta project are not included in the agreement, adding it was pursuing an alternative deal for the asset.
Teck is currently expanding its Quebrada Blanca mine. The project, dubbed Quebrada Blanca Phase 2 (QB2), is slated to begin operations in the second half of the year,聽doubling the company鈥檚 copper production by 2023.听
The company recently flagged costs at the almost-finished expansion could rise by up to $500 million to between $900 million and $1.1 billion.
The project will allow Teck to extend the aging mine鈥檚 life by 28 years and boost production to 300,000聽tonnes聽of copper a year from 287,000聽tonnes聽in 2017.听
The mining giant is聽, which will double Quebrada Blanca鈥檚 capacity to 600,000聽tonnes聽of copper a year. The potential extension will make the mine Chile鈥檚 second-largest copper operation, after Escondida. It would also situate it among the world鈥檚 top five copper mines.