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Newcrest to acquire 70% of Imperial's Red Chris mine in US$806.5M deal

Newcrest Mining Ltd. entered into a US$806.5 million deal to acquire a 70% interest in Imperial Metals Corp.'s Red Chris copper-gold mine and surrounding tenements in British Columbia.

Imperial will retain the remaining 30% interest in the mine. The companies are targeting to close the deal by Aug. 15.

Upon deal closing, the companies' wholly owned subsidiaries will form an unincorporated joint venture, with Newcrest acting as the operator. Each party will contribute exploration and development expenditure according to its participating interest, while transfers of the joint venture interests will be subject to rights of first refusal.

Newcrest came to the decision following an intensive due diligence process, and has identified opportunities to expand Red Chris' resources along strike and at depth in areas that have been subject to limited drilling.

Red Chris is a copper and gold porphyry orebody with an operating open-pit mine and resources of about 20 million ounces of gold and 13 billion pounds of copper. The mine has the potential to become a tier-one asset through block caving, Newcrest noted in a March 11 release.

The property comprises 23,142 hectares of land with 77 mineral tenures. Newcrest believes it can unlock significant value from the deposit by applying its technical expertise in block caving, operations optimization and selective processing.

In February, Newcrest CEO Sandeep Biswas said the company would seek a potential acquisition if it delivers right value for investors, adding that the miner would prefer to increase its exposure through the purchase of assets rather than whole companies, Reuters reported.

Newcrest plans to fund the proposed acquisition from cash and committed undrawn bank facilities, together amounting to over US$3 billion as at the end of 2018.

Imperial said March 10 that it plans to use the proceeds to repay certain existing debt obligations in accordance with their maturity dates, with remaining funds to be used for working capital purposes.

Reuters reported in December 2018 that Imperial engaged Bank of Montreal to expedite a formal restructuring process that may include a US$1 billion company sale.