Diversified major Rio Tinto has agreed to divest a 55% stake in the La Granja copper project in Peru to First Quantum Minerals for $105m.

The two companies will also form a joint venture (JV) to advance the development of the project, which is said to host one of the world’s largest undeveloped copper deposits.

The La Granja project has an indicated and inferred mineral resource of 4.32 billion tonnes at 0.51% copper.

According to the agreement, First Quantum will also invest up to $546m into the JV to fund the feasibility study and construction of the project.

Subject to certain conditions, including regulatory approvals by the Peruvian Government, the transaction is planned to be completed before the end of Q3 2023.

Rio Tinto acquired the La Granja project in 2006 from the government. The company has since carried out an extensive drilling programme at the mine, which has significantly expanded the declared resource and knowledge of the orebody.

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By GlobalData

Rio Tinto Copper CEO Bold Baatar said: “This partnership underscores not only La Granja’s potential to be a significant copper producer but Peru’s position as one of the world’s most important mining investment destinations.

“Developing La Granja would also further strengthen Rio Tinto’s copper portfolio following the acquisition of Turquoise Hill Resources and the commencement of underground mining at Oyu Tolgoi in Mongolia.”

Furthermore, Rio Tinto has signed a memorandum of understanding (MoU) with First Quantum to jointly undertake the global exploration and development of copper and other base metals.

As part of the collaboration, the firms will also share information and technical knowledge pertaining to mining, processing and decarbonisation.