VANCOUVER - In order to secure future growth, Thompson Creek Metals is making a bid to acquire Terrane Metals. Thompson Creek operates primary molybdenum producers in British Columbia (the Endako mine and the Davidson development) and Idaho (the Thompson Creek mine). Terrane's key asset is the Mt. Milligan copper-gold project, in central British Columbia, being readied for production in 2013.
Thompson Creek has offered to purchase 100% of Terrane for $0.90 in cash and 0.052 of a Thompson Creek common share per share of Terrane. Thompson Creek has also entered into a 25% gold stream sale arrangement with Royal Gold, for 25% of the Mt. Milligan output, a condition already met.
Goldcorp, which holds 58% of the outstanding Terrane shares has agreed to support Thompson Creek's proposal. Goldcorp stands to receive $250.5 million in cash and 13.9 million common shares representing 8% of Thompson Creek.
Upon closing, Thompson Creek will assume 100% ownership of the Mt. Milligan project, located approximately 150 km northeast of the Endako Mine. Mt. Milligan contains proven reserves of 274.6 million tonnes averaging 0.21% Cu and 0.44 g/t Au and probable reserves of 207.8 million tonnes averaging 0.19% Cu and 0.32 g/t Au, totalling 2.1 billion pounds of contained copper and 6.0 million ounces of contained gold.
Mt. Milligan will be a conventional truck and shovel open pit with a 60,000 t/d copper flotation process plant. The average annual production over the 22-year estimated mine life is expected to be 81 million lb of copper and 194,000 oz of gold. The project is expected to provide approximately 400 direct permanent jobs and significant long-term economic benefits for the region.
Thompson Creek intends to fund the remaining Mt. Milligan construction costs over the next 2.5 years from cash balances of the two companies, cash flow, proceeds from the gold stream transaction, and loans.