TORONTO (miningweekly.com) – Canadian base metals miner First Quantum on Tuesday announced that it would buy copper explorer Lumina Copper for about C$470-million in a cash and scrip deal that would give it control of the Taca Taca copper/gold/molybdenum project, in Argentina.

The proposed transaction to buy Lumina is another step in First Quantum's long-stated objective to geographically diversify through acquiring world-class, early-stage copper assets.

The project, which is located about 120 km east of the world's largest copper mine Escondida, in Chile, had an indicated mineral resource estimate of about 21.15-billion pounds of copper, 5.56-million ounces of gold and 615.8-million pounds of molybdenum. The deposit remained open in some areas to depth and along the southern boundary of the north-eastern limb.

“In our view, [First Quantum is] the most capable company in the world to develop Taca Taca into a major copper mine. This transaction provides Lumina shareholders with the option to retain exposure to Taca Taca's future development in the hands of a world-class mine development and operating team through ownership of First Quantum's shares,” Lumina founder and chief shareholder Ross Beaty said.

“Taca Taca will significantly add to First Quantum's development pipeline and is at the stage where we can apply our resources and development expertise to realise its full potential and further add to First Quantum's copper production profile. Once the acquisition of Lumina has been completed we will immediately review the Taca Taca project to determine the most efficient and economical timing for its development in the context of the projects that we are currently developing,” First Quantum chairperson and CEO Philip Pascall said.

Under a court-approved plan of arrangement, Lumina shareholders may choose to receive either C$5 in cash and 0.2174 of a First Quantum common share, or 0.4348 of a First Quantum common share and C$0.01 in cash, for each Lumina common share held, subject to proration if the total number of First Quantum shares Lumina shareholders choose to receive exceeds 9.67-million.

Lumina shareholders may also choose to receive C$10 in cash, subject to proration to the amount of cash, if the total cash Lumina shareholders elect to receive exceeds C$222.39-million.

The C$10-a-share price for each Lumina share represented a 34% premium to the volume-weighted average trading price of its common shares on the TSX-V of C$7.44 for the 20 trading days to Monday, and a 28% premium to the closing price of C$7.80 a share on Monday.

The boards of both companies had unanimously approved the transaction.

Lumina had also agreed to pay First Quantum a termination fee of about C$16.25-million, under certain circumstances.

Vancouver-based First Quantum in March last year closed a C$5.1-billion hostile takeover bid for Inmet Mining that gave it control of the 26-billion-pound Cobre Panama copper project, in Panama, one of the world’s largest base metals development projects. Similar to its Taca Taca intentions, the company went to work immediately after closing the deal to review the project, drive down costs and improve efficiencies.

LSE- and TSX-listed First Quantum's current operations include the Kansanshi copper/gold mine in Zambia, the Las Cruces copper mine in Spain, the Guelb Moghrein copper/gold mine in Mauritania, the Ravensthorpe nickel/cobalt mine in Western Australia, the Kevitsa nickel/copper/platinum group metals mine and the Pyhäsalmi copper/zinc mine in Finland, and the Çayeli copper/zinc mine in Turkey.

While Lumina’s TSX-V-listed shares jumped 23.33% to C$9.62, First Quantum’s stock ended the day down 1.62% at C$21.30 apiece.