First Quantum to acquire Caravel stake

Global miner First Quantum Minerals is set to purchase a stake in West Perth copper junior Caravel Minerals, adding to its interests in Western Australia.

First Quantum has agreed to pay Caravel $1.25 million in exchange for a 12.9 per cent stake in the company, which is working towards development of its flagship copper project in the Wheatbelt town of Calingiri.

The transaction is proposed under a non-binding letter of intent signed by the two companies and would also involve First Quantum providing Caravel with technical support and personnel.

"The agreement with First Quantum represents a major milestone for the company and we greatly appreciate the significant financial and technical commitment," Caravel chief executive Marcel Hilmer said.

"It is clearly evident that First Quantum have formed the view that Calingiri has the potential to emerge as a major new copper mining district right on the doorstep of Perth."

Caravel has also agreed to provide First Quantum with a right of first refusal agreement on the Calingiri project.

First Quantum has its headquarters in Canada and is listed on the Toronto Stock Exchange and London Stock Exchange; however, its management team is based in Perth, where it also owns the Ravensthorpe nickel mine.

First Quantum purchased the Ravensthorpe mine from BHP Billiton for $US340 million in 2009, following a decision by BHP to mothball the mine due to a plunge in world nickel prices.

It achieved first production in 2011 and produced 32,000 tonnes of nickel at the mine during 2012.

First Quantum executive director and co-founder Martin Rowley was last week appointed chairman of West Perth lithium miner Galaxy Resources, and is a former Bond Group senior executive.

The company owns seven operating copper, nickel, gold, zinc and platinum group metals projects, the bulk of which are in Africa.

It is also developing new projects in Zamibia, Peru, and Panama that will lift its annual copper production capacity to more than 1.3 million tonnes per annum on completion.