Rio Tinto, First Quantum to jointly develop major Peru copper project (NYSE:RIO)

Rio Tinto (NYSE:RIO) and First Quantum Minerals (OTCPK:FQVLF) said Thursday they agreed to form a joint venture to develop the La Granja copper project in Peru, one of the world’s largest undeveloped copper deposits.

First Quantum (OTCPK:FQVLF) will acquire a 55% stake in the project for $105M and commit to further invest as much as $546M into the JV, funding capital and operational costs to take the project through a feasibility study and toward development.

As majority owner, First Quantum (OTCPK:FQVLF) will operate the La Granja project with initial work focussed on completing the feasibility study.

La Granja is a complex orebody located at high altitude in northern Peru that has the potential to be a large, long-life operation, with a published indicated and inferred mineral resource totaling 4.32B metric tons at 0.51% copper.

The two companies also entered into a memorandum of understanding for global cooperation in exploration and project development of copper and other base metals, as well as for technical know-how around best-in-class mining.

Rio Tinto (RIO) was a beneficiary of China’s reopening and rising iron ore demand, but its stock has limited upside potential at current levels, Yiannis Zourmpanos writes in an analysis published recently on Seeking Alpha.