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TORONTO (Reuters) - Aston Bay Holdings Ltd BAY.V, a Canadian mineral exploration company, said on Wednesday it has signed a preliminary deal with Antofagasta Plc (ANTO.L) for the two to partner on Aston Bay's promising Canadian Arctic copper project.
The memorandum of understanding gives Antofagasta a path to an eventual proposed joint venture and the option to earn up to a 70 percent interest in the Storm project, which is controlled by Aston Bay.
In the first part of the deal, Antofagasta will invest a minimum of $10 million over six years and earn a 50.1 percent interest in Storm. In the second phase, the miner will invest another $6 million over three years and take the project through a feasibility study.
"Our agreement with Antofagasta will advance the Storm project without significant dilution expected for Aston Bay's shareholders and will leave Aston Bay with a meaningful interest in the project," said Aston's Chief Executive Officer Benjamin Cox, in a statement.
The two sides plan to sign a binding agreement by Dec. 1 to finalize the deal.
The latest agreement came just a day after First Quantum Minerals Ltd (FM.TO) agreed to buy Lumina Copper Corp LCC.V for about C$456 million ($420 million) in a bid to win control of the Taca Taca copper project in Argentina.
Despite a dearth of takeovers in the mining sector, copper assets have been at the center of many of the mining deals that have gone down within the last year.
In April, a Chinese consortium agreed to buy the Las Bambas copper mine in Peru from Glencore Xstrata Plc (GLEN.L) for $6 billion. And Canadian miner Hudbay Minerals Inc HBM.TO has been trying for months to buy rival Augusta Resource Corp AZC.TO so it can get hold of Augusta's Rosemont copper project in Arizona.
The deals underscore the scarcity of high-quality copper projects. The widely used industrial metal is expected to be in short supply over the long term, as the project pipeline has been significantly shrunken by lower prices and shareholder-mandated austerity among the world's top miners.
($1 = 1.0853 Canadian dollars)
Reporting by Euan Rocha; Editing by Jeffrey Benkoe