Ecora Resources PLC (TSX: ECOR) (LON: ECOR) is set to obtain a net smelter royalty (NSR) on an undeveloped Chilean copper project owned by Vancouver’s Los Andes Copper Ltd. (TSX-V: LA) OTCQX: LSANF).
Los Andes announced the US$20 million deal on Monday for its Vizcachitas operation in northern Chile. Through the deal, Ecora will be receiving a 0.25 per cent NSR on minerals sold from open-pit mining at the project and a 0.125 per cent NSR on profit derived from underground operations.
“This transaction further strengthens the company’s balance sheet to a point never seen before,” said Los Andes’ Chairman Eduardo Covarrubias.
“The energy transition is expected to drive copper demand to new levels and we are delighted to add Vizcachitas to our growing portfolio of copper royalties,” said Marc Bishop Lafleche, CEO of Ecora.
The new royalty agreement is second to a pre-existing 2 per cent NSR for open-pit mining and a 1 per cent NSR for underground operations provided to the mining-focused investment firm Resource Capital Fund VI L.P for US$14 million in 2020. The Los Andes-Ecora transaction is expected to close within the next two weeks with RBC Capital Markets acting as a financial advisor.
Map via Los Andes Copper
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Los Andes says its 100 per cent owned Vizcachitas project is one of the largest copper deposits in the Americas not controlled by major companies. The company says it will be Chile’s next major copper mining operation and Ecora has also described it as one of the world’s largest undeveloped copper projects.
Vizcachitas is estimated to contain 1.5 billion tonnes of measured and indicated mineral resources at a 0.44 per cent copper equivalent (CuEq) grade, as indicated in this year’s pre-feasibility study. In addition to copper, the project also hosts molybdenum and silver.
Chile produces approximately 28 per cent of the world’s copper, according to Natural Resources Canada and the United States International Trade Administration.
Los Andes shares dropped by 2.18 per cent Wednesday to $16.60 on the TSX Venture Exchange and have risen by over 25 per cent since the beginning of this year.
Ecora stock rose by 0.96 per cent to $2.10 on the Toronto Stock Exchange.
rowan@mugglehead.com
