PERTH (miningweekly.com) – Diversified miner Rio Tinto has formed a joint venture (JV) with fellow major First Quantum over the development of the La Granja copper project, in Peru.

Following the completion of conditions including regulatory approvals from the government of Peru, First Quantum has acquired a 55% stake in the project for $105-million. It will invest up to a further $546-million into the JV 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.

As majority owner, First Quantum will now operate the La Granja project with initial work focussed on completing the feasibility study, as per the Transfer agreement signed with the government of Peru.

“La Granja has the potential to be a large, long-life operation and supply the copper that will be needed as the world transitions to the greener economy and where responsible mining will be the only acceptable way to produce metals,” said First Quantum CEO Tristan Pascall.

“Adding this major project to our portfolio will give First Quantum future optionality in the company’s project pipeline while we focus on strengthening the balance sheet in the interim. As operator, we will leverage our core strengths in mine design, project development and community engagement and look forward to developing our partnership with Rio Tinto.

“We appreciate the support from the government of Peru for the completion of this transaction.”

La Granja is a complex orebody located at high altitude in Cajamarca, 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.

“Developing La Granja would provide a significant new supply of copper and further strengthen Rio Tinto’s portfolio of materials needed for the energy transition. Our partnership with First Quantum will bring our combined development capabilities and deep knowledge of La Granja to progress the project,” Rio Tinto copper CEO Bold Baatar said.

Rio acquired the La Granja project from the government of Peru in 2006 and carried out an extensive drilling programme that significantly expanded the declared resource and understanding of the orebody, and established partnerships with host communities, and local and national governments.

First Quantum said in a statement that work over the initial years of the JV will continue to progress community engagement and the feasibility study.

The feasibility study will focus on developing an updated geological resource and reserve model, which will require additional infill drilling to upgrade inferred resources to measured and indicated categories. Additional metallurgical studies to establish optimal processing configurations are expected to be carried out in parallel, together with a high-level project layout and configuration of associated infrastructure requirements and logistical routes.