Amarc Resources (AHR.V) has announced it was able to attract Thompson Creek Metals (TCM.TO, NYSEMKT:TC) as joint venture partner for its IKE copper-silver-molybdenum exploration project in British Columbia, Canada.
As per the agreement, Thompson Creek can earn a total 50% stake in IKE and it is allowed to obtain an initial 30% stake by spending C$15M on exploration activities before the end of 2019 (of which $3M has already been committed to be spent before the end of this year). Once Thompson Creek will have obtained its 30% stake, it can elect to earn an additional 20% ownership in the property by completing a bankable feasibility study within two years after deciding to continue the development of the project.
When we saw the headlines we were expecting a mediocre deal, but it sure looks like Amarc’s negotiators have outperformed themselves. Letting another company spend C$15M for an initial 30% stake and get the project to a construction decision by giving up just half of the project is a good deal in this market. On top of that, if the copper and gold price doesn’t improve, we think there’s a very realistic chance Thompson Creek will be unable to complete its earn-in on the property as the company’s financial situation is in dire shape.
Disclosure: The author holds no position in Amarc Resources. Please see our disclaimer for current positions.