Teck boosts stake in San Nicolas

Teck (TEK-T) has agreed to acquire an additional 25% carried interest in the San Nicolas copper-zinc deposit in Mexico’s Zacatecas state. In return, it will pay 1.8 million of its Class B shares to the vendor, San Luis.

An undisclosed additional payment will be made if the shares fail to reach an individual value of $22.50 within three years.

The deposit occupies the western portion of the project known as El Salvador, which comprises 225 sq. km. El Salvador was optioned from San Luis as a 55-45 joint venture between Teck and Western Copper Holdings (WTC-T). Teck can earn an additional 10% interest if it chooses to arrange Western Copper’s share of production financing, and it can buy a further 5% from Western Copper for a cash payment based on the project’s net present value at the feasibility stage.

As a result, Teck now can earn up to 81.25% of the San Nicolas deposit, with Western Copper holding the remainder.

Engineering work at San Nicolas is expected to cost $4 million this year. The work will include 10,000 metres of diamond drilling, pilot plant tests and orebody modeling. This will be followed by prefeasibility work and a final feasibility study.

Based on work to date, San Nicolas hosts a measured open-pit resource of 74.7 million tonnes grading 1.4% copper and 2.1% zinc, with a waste-to-ore stripping ratio of 4.3-to-1.