M&A

South32 looks for more of Arizona

Diversified Australian miner South32 (ASX: S32) has bought another C$4.5 million worth of Arizona Mining (TSX: AZ) shares.

Staff reporter
 Arizona Mining will receive the 2018 Thayer Lindsley Award at next year’s PDAC for its Taylor zinc-lead-silver discovery at the Hermosa project in Arizona

Arizona Mining will receive the 2018 Thayer Lindsley Award at next year’s PDAC for its Taylor zinc-lead-silver discovery at the Hermosa project in Arizona

South32 picked up a 15% stake in the Toronto-listed zinc player for $110 million, or $2.45 per share, in May. Overnight the company exercised its top-up right to subscribe for another 1.43 million shares at $3.14 per share to maintain its 15% stake.

South32 is keen to further increase its interest in Arizona, which is worth C$935 million at current prices.

In September it entered into an over-the-counter equity forward contract to acquire up to another 15 million shares over 12 months to reach 19.9%. The 19.9% is the maximum allowed under the agreement.

Last month South32 CEO Graham Kerr noted there was no clear path to ownership of Arizona. The company does have a seat on the Arizona board, recently appointing former Coalspur CEO Gillian Winckler as its nominee.

"We like the deposit, we like the participation that we have," Kerr told reporters in late November.

"We have a good relationship with them and we'll see how the results and things pan out over time."

Arizona owns the Hermosa project, south of Tucson, containing the Taylor zinc-lead-silver sulphide deposit, which has measured and indicated resources of 72.4 million short tons at 10.5% zinc equivalent, and 38.6Mt of inferred resources at 11.6% zinc equivalent, using a 4% zinc cut-off.

A preliminary economic assessment released in April returned capital costs of US$457 million for a 19-year operation producing 287Mlb of zinc, 286Mlb of lead and 5.5 million ounces of silver per annum at all-in sustaining costs of 61c per pound of zinc.

The PEA returned a post-tax net present value of $1.3 billion, an internal rate of return of 42% and a 1.7-year payback.

Arizona is aiming to deliver a definitive feasibility study in the first half of next year, targeting first production in 2020.

Former Barrick Gold co-president Jim Gowans is CEO.

 

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

A growing series of reports, each focused on a key discussion point for the farming sector, brought to you by the Kondinin team.

editions

Mining Journal Intelligence Investor Sentiment Report 2024

Survey revealing the plans, priorities, and preferences of 120+ mining investors and their expectations for the sector in 2024.

editions

Mining Journal Intelligence Mining Equities Report 2023

Access an exclusive, inside look on the quarterly mining IPOs and secondary raisings data and mining equities performance tables with an annual Stock Exchange Comparisons supplement.

editions

Mining Journal Intelligence World Risk Report 2023 (feat. MineHutte ratings)

A detailed analysis of mining investment risks across 121 jurisdictions globally, built on 11 ‘hard risk’ metrics and an industrywide survey.

editions

Mining Journal Intelligence Global Leadership Report 2023: Social licence

Gain insights into social licence trends and best practices from interviews with 20+ top mining company executives and an industrywide survey.