BHP has taken a key step towards reaching an $US82 million ($114.5 million) earn-in and joint venture agreement with Luminex Resources at the Tarqui copper project in Ecuador, South America.
The companies have entered into a non-binding letter of intent for the proposed arrangement, which could be confirmed within three months.
BHP will have the right to earn a 70 per cent interest in the project by investing $US75 million in exploration and paying Luminex $US7 million in cash.
Vancouver-based Luminex has agreed to work exclusively with BHP to negotiate and complete a binding agreement for the partnership at the Tarqui 1 and 2 mining concessions over the next three months.
BHP would manage the JV company and exploration program at Tarqui upon completion of the agreement.
Luminex chief executive officer Marshall Koval said Tarqui was an exciting copper prospect that the Canadian company would pursue with BHP over the coming years.
“Luminex is excited to advance Tarqui with an organisation like BHP that has the opportunity and commitment to supplying future global copper demand and a strong focus on responsible development in Ecuador,” Koval said.
The earn-in is expected to take place over three stages, with BHP to initially earn a 51 per cent interest by spending $US25 million on exploration and paying Luminex $US2.4 million in cash within the fourth anniversary of signing the agreement.
BHP would earn an additional 9 per cent interest once $US35 million had been invested in exploration and $US7 million of cash had been paid to Luminex within the sixth anniversary of the agreement.
The final 10 per cent would be earned once $US75 million had been spent on exploration.
BHP would have the right to accelerate the earn-in by completing the exploration investment and providing the required cash to Luminex earlier than the outlined time period.
Luminex already has partnerships in Ecuador with Anglo American and First Quantum Minerals.