Highland Copper Co. Inc. said May 31 that it is acquiring mineral properties covering 447,842 acres in Michigan from Rio Tinto subsidiaries Kennecott Exploration Co. and Rio Tinto Nickel Co. for US$18.0 million.
The company paid US$2.0 million in cash upon closing, while its UPX Minerals Inc. subsidiary issued a secured US$16 million noninterest-bearing promissory note in favor of Rio Tinto Nickel. The note comprises US$1.0 million on the first anniversary of closing and US$3.0 million on each of the second, third, fourth, fifth and sixth anniversaries of the acquisition.
Highland Copper noted that the payments will be accelerated if it releases a feasibility study covering any portion of the new properties.
In addition, Rio Tinto Nickel will retain a 2% net smelter royalty on all mineral interests, half of which Highland can repurchase for US$8 million within 11 years of closing.
The acquisition includes all financial, geological, geophysical, geochemical, environmental and other technical information related to the properties.
Highland Copper is planning exploration budgeted at US$1.5 million over the next year, including data compilation, field mapping, soil surveys and ground-based geophysics.
The company is focused on the development of its Copperwood property, also in Michigan, and aims to form a joint venture on certain of the new properties upon the completion of data compilation.