Mining giant BHP Billiton buys into Nunavut copper project

Samples of copper-bearing chalcocite and malachite found at Aston Bay’s Storm copper project on Somerset Island. (IMAGE FROM ASTON BAY CORPORATE PRESENTATION)

Aston Bay’s Storm copper project is located on the northwest corner of Somerset Island. (IMAGE FROM ASTON BAY CORPORATE PRESENTATION)

Despite plummeting mineral prices, the mining giant BHP Billiton has agreed to spend $40 million over the next nine years to help a small junior exploration firm called Aston Bay Holdings Ltd. develop a copper-zinc project on Nunavut’s Somerset Island, north of Taloyoak.

In a Jan. 28 news release, Aston Bay said if BHP spends the money, they’ll get a 75 per cent interest in the scheme, called the Storm Copper Project.

BHP will also give Aston Bay $325,000 in cash.

Right now, the two firms have signed a letter of intent only, and they’ll sign a “definitive agreement” later this year.

Aston is still in the process of completing the acquisition of a 100 per cent interest in the Storm property from Commander Resources. In exchange for Commander’s interest, they’ll transfer 11 million Aston shares to Commander over the next four years.

The Storm property covers 345,033 acres on the northwest corner of Somerset Island.

Drilling and other exploratory work in the past suggests the site may contain a viable copper deposit.

An adjacent zinc-silver property, about 20 kilometres away, called the Seal Zinc Prospect, is located at Aston Bay on the coast “and is being investigated as a potential direct-ship project,” the company said.

Both sites will require extensive exploration and drill sample analysis to determine if they contain viable resources.

Copper prices have plunged dramatically in recent years. Since 2011, prices have dropped from $4.50 a pound to about $2 a pound, the infomine.com website reports.

As of Feb. 2, Aston Bay’s shares were trading for 19 cents on the TSX and the firm’s market value stood at around $8.6 million.

This agreement suggests that BHP may be taking a second look at potential mineral projects in northern Canada.

At one time, BHP owned a 51 per cent interest in Peregrine’s Chidliak diamond project near Iqaluit, but Peregrine bought them out in 2011.

In 2013, BHP unloaded its 80 per cent interest in the Ekati diamond mine in the Northwest Territories in a deal with Dominion Diamond Corp.