TORONTO — First Quantum Minerals Ltd. has signed a deal for an option to acquire a 50 per cent stake in Northern Dynasty Minerals Ltd.’s controversial Pebble copper-and-gold mine project in Alaska.
Under the agreement, First Quantum (TSX:FM) will pay US$150 million in four equal payments over four years in exchange for the option to acquire a 50 per cent stake in the Pebble Limited Partnership for an additional US$1.35 billion.
The four-year agreement may be extended by two years for an additional cost that may be applied against the US$1.35 billion cost to exercise the option.
Northern Dynasty (TSX:NDM) has struggled to advance the project in the Bristol Bay area of Alaska, home to a major salmon fishery that environmentalists and Indigenous people have fought to protect.
It has been looking for a partner since 2013, when a subsidiary of London-based Anglo American PLC announced it was withdrawing from the project.
The company’s fortunes improved after Donald Trump was voted U.S. president and its stock shot up, but was later targeted by a short seller in February.
The company unveiled plans for what it says will be a smaller, safer project earlier this year in hopes of moving it forward.
“The option agreement is an important opportunity to carry out a detailed assessment of the Pebble Project which is widely acknowledged to be one of the outstanding unmined copper projects in the world,” First Quantum chairman and chief executive Philip Pascall said in a statement.
“We are very aware of the environmental and social sensitivity of this project and will utilize the lengthy option period to apply our extensive project development and operating experience to ensure that this project can be developed with the support of stakeholders.”
Northern Dynasty shares fell 12 per cent to $2.48 on the TSX Monday, while First Quantum shares were flat at $17.14.
The Canadian Press