Teck inks JV deals with AbraSilver and Condor Resources in South America

Teck Resources (TSX: TECK.A/TECK.B; NYSE: TECK) will be part of two new copper-gold joint venture projects in South America, its partners announced on Tuesday. 

In Argentina, a Teck subsidiary has a deal to buy as much as 80% of AbraSilver Resource‘s (TSXV: ABRA; US-OTC: ABBRF) La Coipita project by spending US$20 million over five years. In Peru, Teck can acquire three-quarters of Condor Resources‘ (TSXV: CN) Cobreorco project for at least US$10 million.

La Coipita is a district-scale property consisting of over 700 sq. km in the western portion of Calingasta department, adjacent to the Chilean border in the country’s north. The project is located approximately 16 km north of the Los Azules deposit developed by McEwen Mining (TSX: MUX; NYSE: MUX) and 90 km from Los Pelambres (60% owned by Antofagasta in Chile).

“We are delighted about the opportunity to secure a significant exploration agreement with Teck to advance the large-scale La Coipita project, which is located in a prolific copper porphyry district. This strategic collaboration will mark a significant milestone for the project, and greatly enhance the potential for a major copper discovery,” AbraSilver CEO John Miniotis said.

The JV moves by Teck come just over six weeks after the Vancouver-headquartered company sold off its coal assets to Glencore (LSE: GLEN) and two Asian steelmakers for US$8.9 billion, as it focuses more on its pure metals division and on exploration in South America.

In Peru, Teck operates the Antamina copper and zinc mine; and in Chile it runs the Quebrada Blanca copper mine with Sumitomo Metal Mining, Sumitomo Corporation and Chilean state miner Enami, and the Carmen de Andacollo copper-gold mine which it holds in a 90/10 arrangement with Empresa Nacional de Minería. Teck also holds in Chile the NuevaUnión copper-gold-molybdenum exploration project in a JV with Newmont (NYSE: NEM). 

The option agreement with AbraSilver stipulates that Teck will have the option to acquire an 80% interest in La Coipita by funding cumulative exploration expenditures of US$20 million over a five-year period.

Other financial commitments include staged cash payments to, and an equity placement in, AbraSilver totalling US$3 million (including an initial payment of US$500,000), and up to US$6.3 million in optional cash payments to the underlying project vendors.

Initial drilling at La Coipita in the summer of 2022 encountered a continuous copper-gold porphyry zone of 226 metres grading 0.43% copper equivalent, marking a significant discovery on the project. Drilling last year focused on the Yaretas target, with one hole returning a broad interval of 694.3 metres grading 0.16% copper and 81 parts per million (ppm) molybdenum.

Following an initial transition period during which AbraSilver will support field operations, Teck will act as operator of La Coipita throughout the option period. Upon exercise of the option, the companies will form an 80/20 joint venture, and each party will fund its pro-rata share of future expenditures on the project.

La Coipita is one of several projects being advanced by AbraSilver throughout Argentina. Its main asset is the 100%-owned Diablillos silver-gold project in Salta province, which has measured and indicated resources of 53.3 million tonnes grading 87 grams silver per tonne and 0.79 gram gold containing approximately 148 million oz. of silver and 1.4 million oz. of gold.

Shares in AbraSilver were up 3% to 34¢ apiece on Tuesday afternoon in Toronto, valuing the company at $189.9 million. Its shares traded in a 52-week range of 25¢ and 46¢. 

Central Peru JV

In Peru, Teck will join forces with Condor Resources (TSXV: CN) at Condor’s wholly-owned Cobreorco copper-gold project in the central department of Apurimac. The property covers about 50 sq. km and has an exposed porphyry along with outcroppings of skarn-gossan with massive magnetite-iron oxide. The site has been worked by artisanal miners.

Teck has a first option to earn a 55% interest over three years by completing US$4 million in exploration and making cash payments to Condor of US$500,000. When the first option is complete, the two companies will form a JV. Teck can increase its interest to 75% over a further three years by spending US$6 million more for exploration and making additional payments totalling US$500,000.

Condor acquired the first 1.7 sq. km of the property in a sealed bid auction in 2018. Thereafter, the property has been enlarged through staking. Condor has conducted several sampling programs, and 32% of the channels tested contained more than 1,000 ppm copper and 44% contained at least 100 parts per billion gold. A drone-supported magnetic survey was done in 2020, and the initial review of the data suggests the presence of two potential intrusive systems that correlate with exposed surface copper-gold porphyry and skarn outcrops.

Baseline sampling of water, air, and soil has been completed by Condor and submitted to the Peruvian ministry of energy and mines. The company is in discussions with two local communities, whose permissions are necessary to obtain surface access permits for drilling.

Condor shares traded at 42¢ apiece on Tuesday in Toronto, giving the company a market capitalization of $60 million. Over a 52-week period, its shares traded between 10¢ and 57¢.