Mining News: Terrane seeks partner to build mine

Terrane Metals Corp. has decided to move ahead with construction of a C$900 million open-pit copper-gold mine at the Mt. Milligan Project in north-central British Columbia.

Robert Pease, Terrane’s president and CEO, told investors Jan. 12 that the junior is talking with Japan’s Mitsubishi Corp. and Sumitomo Corp., as well as other companies, in search of financing alternatives for the project, which has a C$172 million construction budget for 2010.

Terrane plans to start construction at Mt. Milligan in July, and will need to complete financing arrangements by year’s end, Pease told reporters in New York.

Terrane’s 2008 option agreement with Goldcorp Inc. that provided for a one-time opportunity to convert its 59 percent equity interest in Terrane into a participating joint venture has expired. As part of that agreement, Terrane obtained a $40 million credit facility guaranteed by Goldcorp, which has been extended to May 7.

Though Mt. Milligan is an “outstanding asset,” Goldcorp President and CEO Chuck Jeannes said the company believes the best way to continue participating in the project is through its ownership interest in Terrane Metals. With the project’s ownership clarified, Pease said Terrane can move forward with arranging financing alternatives for development of the project.

Terrane has indicated that it wants to sell part of Mt. Milligan to raise more capital, and would give the buyer rights to metal produced there, he told investors.

“Terrane shareholder value is firmly underpinned by a 6 million-ounce, low-cost and construction-ready reserve,” Pease said.

Mt. Milligan will be a conventional truck-shovel open pit mine with a 60,000-metric-ton-per-day copper flotation process plant.

A 2009 feasibility update study forecast average annual production of 262,100 ounces gold and 89 million pounds copper for the first six years of a 22-year mine life. Net of a copper credit, gold production cash cost is negative US$8 per ounce, assuming an average copper price of US$2 per pound.

The project will provide about 400 direct permanent jobs and significant long-term economic benefits for the region. Terrane is also advancing the Berg copper-molybdenum-silver exploration project in central British Columbia.

—Rose Ragsdale