Toronto- and Sydney-listed Capstone Copper has struck a deal with Orion Resource Partners to sell a 25% interest in its Chilean Santo Domingo and Sierra Norte projects in a transaction worth up to $360-million.

The agreement, announced on Monday, derisks Capstone’s capital burden ahead of a final investment decision (FID), while adding to its ability to accelerate development and exploration in the Mantoverde–Santo Domingo district. 

Under the terms, Orion will pay $225-million upon a positive FID at Santo Domingo, contribute a further $75-million within six months, and deliver up to $60-million in contingent payments tied to project milestones.  Concurrently, Orion will subscribe for $10-million of new Capstone shares – at a 5% premium to the recent volume-weighted average price – providing immediate capital support for new exploration at both projects. 

“Santo Domingo represents the next pillar of transformational growth in the world-class district we are building in the Atacama region of Chile. Backed by industry-competitive capital intensity and first quartile cash costs, Santo Domingo is key to continuing our growth trajectory … Our same team that successfully built and ramped-up Mantoverde will support construction and ramp-up of Santo Domingo, which is 35 km away from Mantoverde," said Capstone CEO Cashel Meagher.

Orion chief investment officer Istvan Zollei said the group was confident in Capstone’s ability to build and operate Santo Domingo as a high-quality, diversified copper operation, producing the metals the world needs for the clean energy transition.

The deal is structured to reduce Capstone’s equity commitment to the project to about $400-million, assuming pro rata contributions and project financing. 

Capstone retains a buy-back right, allowing it to reconsolidate full ownership once commercial production is achieved, under terms that ensure Orion receives a stipulated return.

Upon closing, Orion's stake in Capstone will increase from 11.9% to 12.0% following the share subscription.