Rio Tinto and First Quantum Minerals (FQM) have entered into an agreement to form a joint venture that will work to unlock the development of the La Granja copper project in Cajamarca, Northern Peru, one of the largest undeveloped copper resources in the world.

Source: FQM

La Granja is a porphyry copper deposit located at high altitude in Cajamara, Northern Peru, that has the potential to be a large, long-life operation, with a published Indicated and Inferred Mineral Resource totalling 4.32 billion tonnes at 0.51% copper (130 Mt at 0.85% Cu Indicated Mineral Resources and 4,190 Mt at 0.50% Cu Inferred Mineral Resources).

Porphyry copper deposits account for approximately 60% of global copper production, and are typically mined using open-pit methods. Extraction of the copper from the complex mineral bodies usually entails leaching technology.

USGS map of global mineral resources.

Under the proposed transaction, First Quantum will acquire a 55% stake in the project for $105 million, and commit to further invest up to $546 million into the joint venture to sole fund capital and operational costs to take the project through a feasibility study and toward development. Upon completion of the sole funding commitment, all subsequent expenditures will be applied on a pro-rata basis according to the share ownership of the project.

The transaction is expected to complete by the end of Q3 2023, subject to the satisfaction of regulatory approvals. As majority owner, First Quantum will then operate the La Granja project with initial work focussed on completing the feasibility study.

Source: FQM

Rio Tinto acquired the La Granja Project from the Government of Peru in 2006; BHP Billiton had previously owned the deposit. Rio Tinto has since carried out an extensive drilling program that significantly expanded the declared resource and understanding of the orebody, and established partnerships with host communities, local and national governments.

La Granja is an exciting but complex project that has the potential to be a significant new source of the copper that is needed for the energy transition. We are pleased to enter into this agreement with First Quantum, that will bring our combined development capabilities and deep knowledge of La Granja to progress the project.

This partnership underscores not only La Granja’s potential to be a significant copper producer, but Peru’s position as one of the world’s most important mining investment destinations. Developing La Granja would also further strengthen Rio Tinto’s copper portfolio following the acquisition of Turquoise Hill Resources and commencement of underground mining at Oyu Tolgoi in Mongolia.

—Rio Tinto Copper Chief Executive Bold Baatar

Rio Tinto and FQM have also entered into a memorandum of understanding for strategic cooperation globally in copper and other base metals exploration and project development, as well as for sharing information and technical know-how around best-in-class mining, processing, and decarbonization.