Quadra Ends Plan for Chile Copper Venture With Chinese State Grid Operator
Stock Chart for KGHM International Ltd (QUX)
A memorandum of understanding between the companies to help finance the Sierra Gorda project expired June 15, Vancouver- based Quadra said today in a statement. State Grid had agreed in March to form a venture that would control Sierra Gorda and Quadra’s Franke mine in Chile. A plan for State Grid to buy shares representing a 9.9 percent stake in Quadra will also be unwound, Quadra said.
“We intend to remain on our previously stated development timeline,” Quadra Chief Executive Officer Paul Blythe said in the statement. The company has the financial resources to continue the project, he said.
State Grid wasn’t willing to put up enough money to advance development of the $2 billion Sierra Gorda mine before the issuance of project permits, Quadra said.
“The risk to funding the Sierra Gorda project has increased,” Greg Barnes, a Toronto-based analyst at TD Securities, said today in a note to clients. While Barnes said his analysis suggests Quadra could fund the project from its own cash flow, “this would not be a prudent strategy given the size of the project.”
Quadra fell 10 cents to C$12.48 at 4:10 p.m. in Toronto Stock Exchange trading. The shares have declined 14 percent this year.
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