South32 to develop base metals project following $US1.3bn acquisition

Image: Arizona Mining

South32 has completed a $US1.3 billion ($1.8 billion) acquisition of Arizona Mining, paving the way for it to develop the Hermosa base metals project in the United States.

The Hermosa project in Arizona, about 13km north of the Mexican border, was the key target for South32 in the all-cash deal.

South32 plans to start development of Hermosa “in the coming weeks” by implementing  new studies for optimisation, further exploration, and preparation for test drilling.

“The acquisition of Arizona Mining adds to our portfolio one of the most exciting base metal projects in the industry,” South32 chief executive officer Graham Kerr said.

“Our deep understanding of the high-grade Hermosa project and surrounding land package, together with our extensive experience at Cannington (in Australia), positions us well to being the project to development and deliver significant value to our shareholders.”

Hermosa hosts two major deposits, Taylor and Central. The Taylor deposit, a zinc, manganese and silver oxide-bearing greenfield development project, has a measured and indicated mineral resource of 101 million tonnes (Mt) at 10.4 per cent zinc equivalent.

Arizona grew the Taylor deposit in 2016-17 through a drilling program that revealed significant mineralisation of zinc, lead and silver.

South32, which previously held a 17 per cent stake in Arizona, announced plans to acquire the remaining 83 per cent of the company in June.

Arizona Mining is a US-focused Canadian miner which focus primarily on zinc, as well as lead and silver. Its subsidiary, Arizona Minerals, purchased the mining area from Grupo Mexico subsidiary Asarco in 2006.

The company was delisted from the Toronto Stock Exchange (TSX) on Friday August 10 due to the completion of the South32 deal. Arizona received $C6.20 per share as part of the deal, a 50 per cent premium on the company’s closing price as of June 15.