South32 exercises option to acquire 50pc interest in Trilogy joint venture

South32 announced on Friday that it has exercised its option to acquire a 50% interest in a joint venture company with Trilogy Metals.

The London-listed firm said the venture would own the Upper Kobuk Mineral Projects (UKMP) in northwest Alaska.

Trilogy Metals would contribute all of its assets associated with the UKMP, and South32 would contribute $145m to the joint venture.

Establishment of the venture was expected in February 2020, and followed an initial exploration partnership between South32 and Trilogy Metals over three field seasons to advance both parties' geological understanding of the UKMP.

Following formation, the venture would retain $87.5m of the $145m subscription payment to fund its activities and exploration programmes, with the balance of $57.5m loaned back to South32.

The loan would be repaid in instalments, on notice by the joint venture as required to advance development studies, resource drilling and regional exploration programs.

“Investing in exploration to create shareholder value is integral to our group's strategy,” said South32 chief executive officer Graham Kerr.

“Forming the UKMP Joint Venture will be another important milestone as we reshape and improve our portfolio, by adding high-quality copper and base metals development options.”

Kerr said the decision to exercise the option followed a successful exploration partnership with Trilogy Metals, adding that it was an “exciting” step forward.

“We look forward to furthering our partnership with Trilogy Metals and NANA Regional Corporation, the Iñupiat-owned Alaska native corporation in the region, as we work together to advance the Arctic and Bornite deposits and further test the significant regional potential across the Ambler Mining District.”

Trilogy Metals interim president and chief executive officer James Gowans added that having the support and partnership from a senior mining company such as South32, both in terms of its financial support and technical expertise, was “tremendous” for Trilogy Metals.

“The Ambler Mining District has great potential that we expect will finally be realised with the formation of the joint venture and when the Ambler Mining District Industrial Access Project, providing key infrastructure access, is approved.

“We are very excited to advance this partnership.”

At 1504 GMT, shares in South32 were down 1.93% at 147.1p.