TORONTO (miningweekly.com) – Mergers and acquisitions activity in the mining space has continued, with base metals miner Taseko Mines on Tuesday announcing a takeover of Curis Resources, which is developing the in-situ copper recovery and solvent extraction and electrowinning (SX-EW) Florence copper project, in central Arizona.

Curis said the friendly tie-up would ensure access to existing financial resources to ensure the funding and development of the Florence project.

Under the definitive arrangement agreement, each Curis shareholder would receive 0.438 of a Taseko common share for each Curis share held, representing a price of $1.055 per Curis share, based on the 20-day volume-weighted average price of Taseko for the period ending September 5. Based on about 74.79-million shares outstanding, the deal was valued at around $78.9-million.

The offer represented a 21% premium to Curis’ 20-day volume-weighted average price ending September 5, and a 17% premium on the company’s per-share closing price on Monday.

After the deal had closed, former Curis shareholders would own about 12% of Taseko.

Pending shareholder and regulatory approvals, the deal was expected to close during October.

Taseko had last year lifted its Curis stake to 17%.

IN-SITU RESERVES

The Florence copper project is an advanced-stage copper development project, which has an estimated 340-million tons of probable mineral reserves, grading 0.358% total copper at a cutoff grade of 0.05% total copper, containing 2.42-billion pounds of copper.

Envisaged is a yearly production scenario averaging 55-million pounds of copper cathode for years one to six, optimum production averaging 85-million pounds of copper cathode during years 7 to 21, and a decline thereafter.

The estimated initial capital costs have increased to $208-million for the base case from the estimated $196-million announced on February 13.

Copper production is scheduled to start in 2016.

Following an extensive public consultation and review process, Curis had received a final amended aquifer protection permit (APP) from the state of Arizona’s Department of Environmental Quality.

This permit authorises the construction, operation and closure of a 24-well in-situ copper recovery operation.

The APP is one of two significant operating permits that the Florence project requires to proceed with the first phase of operations. The second is the underground injection control permit, which is in the final stages of review by the US Environmental Protection Agency.

SERENDIPITOUS UNION

Curis said that advancing Florence through the permitting, construction and commissioning phases would be greatly aided by the depth and breadth of experience of Taseko's management and board.

"With the announcement today of Taseko's all-share offer for Curis, I believe  there is an opportunity for shareholders of Curis to benefit from both retained exposure to our world-class Florence copper project and from Taseko's operating success at the Gibraltar copper/molybdenum mine.

"Taseko is financially strong and will allow us to forego the future dilution Curis shareholders would have faced to develop Florence on our own. The town of Florence and the stakeholders in the area will be well-served by Taseko and its excellent operating and environmental track record,” Curis president and CEO David Copeland said.

Taseko president and CEO Russell Hallbauer noted that the addition of the Florence copper project to Taseko strengthened the company's near-term development pipeline with an advanced-stage project. He added that the project was located in a favourable mining jurisdiction with access to key infrastructure, including power, rail, natural gas and roads.

“We believe our board and combined management teams have both the permitting and technical experience to advance this opportunity to production in a timely manner. From an operational perspective, Taseko has the technical experience to effectively build and operate the Florence SX-EW facilities. The SX-EW plant at our Gibraltar mine, which was restarted in 2007, is not unlike the facility which will be constructed at Florence. If our Gibraltar plant was processing the same oxide copper grade as Florence, it would produce at roughly half the capacity of Florence,” Hallbauer pointed out.

He added that Florence added diversity to the company’s pipeline of development projects, saying that there were few copper projects in secure jurisdictions which had first-quartile operating costs, such as Florence, and the timing of expected output from the project could be ideal for the next copper price cycle.

“Florence's low initial capital costs should allow us to manage the project's funding requirements through to production," Hallbauer asserted.

"With our Aley niobium project also entering the environmental-assessment phase, we could potentially have two projects ready for construction in the next 24 months. In an era with few economically viable projects available, we are in an enviable position," he stated.

Taseko’s flagship asset is its 75% stake in the Gibraltar copper/molybdenum mine, which produces about 165-million pounds of copper a year. It also fully owns the New Prosperity gold/copper and Aley niobium projects.

Curis’ TSX-listed stock rose 7% to C$0.97 apiece on Tuesday, while that of Taseko fell about 9% to C$2.11 apiece in early morning trade.