A Canadian mining company has reached an agreement with a Chinese firm that will bring $700-million in financing for a possible open-pit molybdenum mine near Boise, Idaho.
Vancouver-based American CuMo Mining Corp. said it reached the deal with Hong Kong-based MCC8 Group Co. Ltd.
American CuMo said it marks a major step in paying for a feasibility study and will keep local control of the project with its subsidiary, Boise-based Idaho CuMo Mining Corp.
The area northeast of Boise contains the largest unmined deposit of molybdenum in the world, the company said.
Estimates run from at least two billion tons to as much as four billion tons of molybdenum, copper and silver worth up to $60-billion at current prices.
Estimates put the deposits at 65 per cent molybdenum, 32 per cent copper and 3 per cent silver, Shaun Dykes, American CuMo's president and chief executive officer, said Thursday.
He said at least $100-million from the agreement will be used to better understand the deposits so a decision can be made on whether to move forward with the mine. The rest of the money would cover the start of mine construction, if approved.
"As of today there's no decision with mining," Dykes said.
The total cost of getting the mine operating could reach $2.5-billion, he said.
MCC8 Group Co. Limited, on its website, describes itself as an international company specializing in mining operation and investment management. Officials said it has 10,000 full-time employees and its activities include project management of overseas mineral exploration and development.
The deal gives the company 80 per cent of net proceeds from the joint venture.
"Our team looks forward to working with Idaho CuMo Mining Corp., the state of Idaho, and community stakeholders to promote a sustainable project and to create good-paying Idaho jobs," William He, president and CEO of MCC8 Capital Limited, said in a prepared statement.
Molybdenum has a variety of uses but mainly as an alloy to make steel, cast iron and other metals.
American CuMo officials say the mine would create as many as 5,000 jobs during construction and 1,000 jobs for 100 years during production.
Three environmental groups have filed a federal lawsuit challenging U.S. Forest Service approval of the company's exploratory drilling.
They say the project threatens groundwater as well as a rare flower called Sacajawea's bitterroot that the groups say grows only in about 30 locations in the mountains of central Idaho.
The mining company intervened on the side of the Forest Service in April. It's not clear when a ruling will be made.
Trevor Burns, chief financial officer for American CuMo Mining, said the project will have a positive effect on the environment because remediation work would include cleaning up areas mined for gold in previous decades before stricter environmental regulations were in place.