Australia’s South32 (ASX, LON, JSE:S32) is investing some of its $1.5 billion of cash in a minority stake in Canada-listed Arizona Mining (TSX:AZ), which plans to develop a zinc-lead-silver project in Arizona.
As part of the deal, worth Cdn$110.3 million (about $81million), the Perth-based miner has agreed to purchase 45 million shares of the Canadian junior at a price of $2.45 per share. That represents about 15% of Arizona Mining’s outstanding shares.
The Canadian firm said it would use the proceeds to advance its Hermosa project, in particular to move to the feasibility and permitting stage the Taylor deposit, valued by RBC Capital Markets at Cdn$1.4 billion ($1bn).
“This is a highly prospective project and is another step in our strategy to identify opportunities outside of our current portfolio,” South32 chief executive officer, Graham Kerr, said in the statement.
The agreement comes only two weeks after South32 decided to ditch a $200 million planned acquisition of Peabody Energy’s coal mine in the eastern Australian state of New South Wales, which would have been the firm’s first major deal since spinning off from BHP Billiton (ASX:BHP) in 2015.