Positive

Details & Analysis

TKO announced that it has received a 25-year renewable mining lease for the Prosperity gold-copper project. The mining lease provides the company with mineral tenure security and the right to use the land for mining purposes. BMO Research views this as a positive step towardachieving a full mining licence. The granting of a full mining licencewould require federal environmental approval, which is expected inQ3/10. BMO Research expects the construction of the project to begin in H2/10, with commissioning in H2/12. Commercial production is expectedto start in 2013. Capital expenditure for the project is expected to beC$815M. TKO sold a 25% interest in Gibraltar mine in Q1/10 to aJapanese consortium and agreed to sell 22% of future gold productionfrom the Prosperity project to Franco-Nevada (FNV). These transactions together will fund 80% of the capex requirement and the remaining 20%will be funded through internal accruals. Prosperity is a significant asset with contained recoverable metal of 8Moz gold and 3.6Blb copper.