The Australian mining company, South32, announced that it is investing $1.5 billion in a minority stake in the Canada-listed Arizona Mining Inc., which plans to mine silver, lead, and zinc in Arizona.
Under the agreement, which is worth around $81 million, South32 is going to buy 45 million shares of Arizona Mining at a price of $2.45 per share. All in all, the stake to be purchased represents around 15% of the latter’s outstanding shares.
According to a spokesperson from Arizona Mining, it would use the proceeds of the buy-out to develop its Hermosa Project in Arizona. Specifically, the company is planning to advance to the feasibility and permitting phase to mine the state’s silver, lead, and zinc-rich Taylor Deposit, which is valued at $1 billion.
Commenting on the project, South32 CEO Graham Kerr said:
“This is a highly prospective project and is another step in our strategy to identify opportunities outside of our current portfolio.”
The deal between the two companies came just two weeks after South32 abandoned its planned acquisition of Peabody Energy’s coal mine in New South Wales. If successfully closed, it would have been the first major deal made by the company since it spun off from BHP Billiton two years ago.