First Quantum Minerals Ltd. signed a framework agreement with Northern Dynasty Minerals Ltd. for a potential option deal between a First Quantum unit and Northern Dynasty over the latter's Pebble copper project in Alaska, the companies said in separate Dec. 18 statements.

The First Quantum unit will pay US$150 million in equal tranches of US$37.5 million for the initial four-year option period, with an early payment anticipated within five business days of executing the framework agreement.

Option payments are earmarked solely for progressing permitting at Pebble.

The agreement will entitle First Quantum to earn a 50% interest in Pebble Limited Partnership, which owns the Pebble project, after investing an additional US$1.35 billion in the operating company.

First Quantum can extend the option period by two years by making additional option payments to be determined later, which would be offset against the US$1.35 billion investment.

The option agreement is expected to be finalized and executed early in the second quarter of 2018, subject to First Quantum's due diligence and regulatory approvals.

"The option agreement is an important opportunity to carry out a detailed assessment of the Pebble project which is widely acknowledged to be one of the outstanding unmined copper projects in the world, estimated to contain some 26 million tonnes of copper, 70 million ounces of gold and 1.5 million tonnes of molybdenum in measured and indicated resources," First Quantum CEO Philip Pascall said.

"We are very aware of the environmental and social sensitivity of this project and will utilize the lengthy option period to apply our extensive project development and operating experience to ensure that this project can be developed with the support of stakeholders."