Fortescue Metals ups stake in Candente Copper

Cañariaco Norte copper project, 700 km northwest of Lima, Peru. (Image courtesy of Candente Copper.)

Australian iron ore major Fortescue Metals Group (ASX: FMG) has invested C$1.38-million ($984k) in Candente Copper (TSX: DNT), increasing its stake in the Canadian junior to 19.92%.

Through wholly-owned subsidiary Nascent Exploration, Fortescue has subscribed for 27.5-million at C$0.05 apiece in Candente, which owns a series of copper assets in Peru. Those include Cañariaco Norte, a large scale open-pit project, on the western side of the Peruvian Andes.

Candente owns a series of copper assets in Peru, including Cañariaco Norte, a large scale open-pit project

The world’s fourth-largest iron ore producer will allocate two engineers to work on a part-time joint technical committee with Candente’s staff, with a goal to identify the optimum strategy for the development of Cañariaco.

Fortescue was previously granted and retains the right to appoint one person as a director of Candente Copper, as well as certain preemptive rights. These rights include anti-dilution rights and a right-of-first refusal on any debt financing or royalty or stream agreements on any of Candente Copper’s assets.

The Cañariaco project has 7.5 billion pounds of measured and inferred resources and 1.4 billion pounds of inferred resources at 0.3% copper cutoff. The project also has 1.97 million ounces of gold and 54 million ounces of silver.

The mine is expected to produce 262 million pounds of copper, 39,000 ounces of gold, and 911,000 ounces of silver annually, over an initial 22-year life.

Last trading at C$0.07 on the Toronto exchange Friday, Candente Copper shares are up almost 7% for the day and 30% over the last 12 months. They have more than doubled in value so far this year.

Beyond iron ore

In the past two years, Fortescue has been looking to broaden its portfolio beyond iron ore. The miner has largely focused on early-stage copper-gold deposits both in Australia and South America.

Last year, it secured a farm-in and JV agreement with Tasman Resources over the Vulcan iron oxide-copper-gold-uranium (IOCGU) prospect, around 30 km north of BHP’s Olympic Dam mine, in South Australia.

Fortescue entered the Argentinean market in 2018 with the acquisition of an exploration company. It is also actively exploring the Santa Ana concession in Ecuador since April 2019 and has recently completed its first 3,500m drilling program in the search for copper.

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