Colombia’s OP Gold Capital outbid U.S. copper giant Freeport-McMoRan (NYSE: FCX) for exploration rights in the country’s north, raising its offer to retain a 60-sq.-km block in Cesar.
OP Gold increased its proposed additional payment to the state to 2.5% from 1.5% after Freeport countered with 2%, according to the National Mining Agency’s final evaluation. As the original bidder, OP Gold had the right to improve its proposal.
The block was among eight copper, gold and polymetallic contracts signed Oct. 9 with five companies. Other winners included China’s Zijin Mining (HKEX: 2899; SSE: 601899) and Vancouver-based Copper Giant Resources (TSXV: CGNT; US-OTC: CGNRF), which announced Monday it had secured the 16-sq.-km Chaparral block in Tolima.
The awards show Colombia’s strategic mineral tenders drawing both domestic bidders and international miners, with competition improving the state’s return on at least one block. The contracts open ground for exploration, though discoveries, economic studies and further approvals would be needed before any new mines could follow.
Counteroffer
Freeport’s counteroffer for Block 2 met the tender requirements after the company supplied additional documentation. OP Gold then exercised its right to improve its proposal, exceeding Freeport’s economic offer by half a percentage point. Its winning proposal also included a social contribution of 1.5%, according to the agency’s evaluation.
OP Gold also secured Block 3. Carbones San Cayetano won Block 5 in La Guajira, while Mineros Aluvial, a subsidiary of gold producer Mineros (TSX: MSA; US-OTC: MNSAF), took Blocks 17 and 18 in Antioquia, the agency’s award register shows.
Zijin Mining, through its South American exploration subsidiary, secured Block 23 and Block 42 in Buriticá, Antioquia. Neither block attracted a counteroffer, according to the award resolutions.
“These contracts, which included strategic mining areas located in Cesar, La Guajira, Antioquia, Tolima and Huila, represent a very important step to continue promoting exploration projects and responsible use of mineral resources in the country,” Zijin-Continental Gold said in a Spanish-language LinkedIn post last week.
A ninth agreement signed at the same ceremony covered phosphates. Empresa de Fosfatos del Huila received Block 13_1 in a separate tender.
No acquisition fee
Copper Giant’s Libero Cobre subsidiary was awarded the Chaparral contract Aug. 24 and signed it Oct. 9, the company said Monday in a release. Registration in Colombia’s National Mining Registry is complete.
The company paid no acquisition fee to the agency. Its offer commits it to an exploration program and includes additional economic and social contributions of 1.5% and 2%, respectively, payable on production in addition to statutory royalties. An annual surface fee applies during exploration.
Chaparral has no estimated mineral resource or reserve, and Copper Giant has not carried out exploration there. Its assessment draws on government geological work that the company has not independently verified.
Copper Giant shares rose 1.2% to 85¢ Monday morning in Toronto, valuing the company at about $228 million (US$163 million). The stock has traded between 19¢ and $1.48 in the past year.
Mineros shares rose 0.7% to $8.57 Monday morning in Toronto, while Zijin closed down 5.8% at HK$27.74 in Hong Kong.
Copper Giant’s main project is Mocoa, a copper-molybdenum deposit in southern Colombia. Mocoa holds one of the largest undeveloped resources of its kind in the Americas, according to the company.
“Mocoa remains our priority and our program there is unchanged,” CEO Ian Harris said.