Ivanhoe Electric, SQM sign exploration deal for Chile

Executive Summary

• Ivanhoe Electric Inc. has entered into a definitive collaboration and exploration agreement with Sociedad Quimica y Minera de Chile (SQM) to explore for copper deposits beneath electrically resistive caliche in northern Chile.
• SQM will provide an initial $9-million financing for the three-year exploration program, which covers 2,002 square kilometres of SQM's mining concessions.
• Ivanhoe Electric has the option to acquire a 50% interest in any qualifying copper deposit (defined as >1 million tonnes of contained copper or copper equivalent) by forming a 50/50 joint venture, paying a price equal to twice SQM's exploration expenditures to date.

Key Details

• Parties: Ivanhoe Electric Inc. and Sociedad Quimica y Minera de Chile (SQM), a major mining company with a market capitalization of approximately $24 billion.
• Objective: To explore for new copper deposits beneath highly electrically resistive caliche cover in the Atacama Desert using Ivanhoe Electric’s Typhoon geophysical surveying system and Computational Geosciences Inc.’s (CGI) data inversion software.
• Area of Interest: 2,002 square kilometres of SQM’s mining concessions located on major porphyry copper and polymetallic manto belts.
• Financing: SQM commits $9 million to finance joint exploration during an initial three-year term. Ivanhoe Electric is not required to provide financing prior to the formation of a joint venture.
• Qualifying Deposit Definition: Any deposit with the potential for at least one million tonnes of contained copper or copper equivalent, as determined by an independent geologist.
• Option to Form Joint Venture:
  • Ivanhoe Electric has the option to acquire a 50% interest in a qualifying deposit.
  • Exercise Price: Twice the total exploration expenditures financed by SQM to the date of exercise.
  • Payment Destination: The price is paid to a new joint venture company for further exploration and related activities.
  • Contribution: Upon JV formation, SQM contributes the relevant mining concessions and associated exploration data.
• Governance:
  • A management committee and technical committee, composed of equal members from both parties, will govern the collaboration.
  • A joint technical committee will develop work programs and budgets.
  • Ivanhoe Electric operates all Typhoon surveying; CGI performs data inversions; SQM operates drill programs within designated areas.
• Joint Venture Terms:
  • Financed pro rata by both parties, subject to a customary dilution formula.
  • Lock-up period: Neither party can transfer shares before the earlier of a first mineral resource estimate or the fifth anniversary of the JV establishment.
  • SQM has the option to operate the JV (if holding at least 50% equity) and appoint the general manager following development decisions.
  • Both parties entitled to proportional share of future production.
• Technology: Typhoon is a proprietary electrical geophysical surveying transmitter capable of outputs up to 200 amps and 10,000 volts, designed to penetrate resistive cover like caliche to detect underlying sulphide mineralization.

Notable Quotes

• Robert Friedland, Executive Chairman, Ivanhoe Electric: "We are proud to partner with SQM, one of Chile's great mining champions, to deploy our disruptive Typhoon and CGI technologies across northern Chile... Our Typhoon and CGI platform is uniquely capable of seeing through that cover to illuminate what other technologies cannot."
• Taylor Melvin, President and CEO, Ivanhoe Electric: "SQM's highly prospective mineral concessions and Ivanhoe Electric's powerful exploration technologies are a perfect combination to search for large-scale copper discoveries in Chile... underscores the confidence in our exploration platform and the capabilities of our team."
• Pablo Altimiras, CEO of SQM's Iodine and Plant Nutrition Division: "This collaboration with Ivanhoe Electric provides SQM with the technology platform to allow the exploration of caliche-covered mining areas... We are confident that this synergy will allow us to unlock the immense potential of our mining concessions and accelerate the discovery of the critical minerals essential for the global energy transition."