South32 offloads stake in Canadian critical minerals explorer Trilogy Metals to Trump’s Department of War

Perth-headquartered miner South32 has done a deal with the US government’s Department of War to sell a near $US18 million ($27m) stake in a Canadian explorer that’s on the hunt for critical minerals in Alaska. The US government overnight Monday announced it would take a 10 per cent equity stake in Vancouver-based Trilogy Metals as part of a $US35.6m investment to secure critical energy and mining projects in the far northern state. South32 is a 50:50 joint venture partner with Trilogy in the Ambler Metals joint venture — an early stage exploration project in north-west Alaska that contains known copper, zinc and silver resources. President Donald Trump said the White House was reversing a Biden-era decision to reject Ambler Road, a project to help access vast critical mineral deposits in the Northern Brooks Range to open up critical energy and mining projects. The 340km highway would connect a remote mining district with deposits of copper, cobalt, gallium, germanium and other minerals. “This was something that should have been long operating and making billions of dollars for our country and supplying a lot of energy and minerals and everything else,” Mr Trump said during an event in the Oval Office. Trilogy has mining claims in remote areas of Alaska, including its joint venture with South32. The US deal also includes warrants to purchase an additional 7.5 per cent of the Vancouver-based company. South32 chief executive Graham Kerr welcomed the deal. “We see great value in the US government’s intention to develop the Ambler mining district,” Mr Kerr said. “It is our aim to unlock the potential we see in this region, and secure critical mineral supply chains for the US and create enduring economic activity and shared value for Alaska, particularly for communities in the surrounding region.” Under the terms of the US investment, South32 will sell just over 8 million shares in Trilogy to the DOW for $US17.8m. It also comes with a 10-year call option to DOW to acquire an additional 6,161,678 shares of Trilogy from South32 price at US1¢ a share, following completion of the Ambler Road. South32 said it would reinvest the $US17.8m into Ambler Metals to support exploration and development. Its interest in the explorer remains unaffected and it still holds 10,379,741 shares in Trilogy, which last changed hands for $C2.93. Critical investments The planned investment is the latest example of the Trump administration taking stakes in North American critical minerals companies to help counter China’s dominance in the industry. Just last week, the US agreed to acquire a direct interest in Lithium Americas, which is developing the Thacker Pass lithium project in Nevada. In July, the US Defense Department agreed to a $US400m equity investment in Gina Rinehart-backed MP Materials to fund a plant for rare-earth magnets. US shares of Trilogy soared more than 150 per cent in after-market trading following the announcement of the deal. The company didn’t immediately respond to requests for comment. Interior Secretary Doug Burgum said Ambler Road will be a toll road constructed from gravel, and will be sensitive to environmental concerns. Trump said the effort will include the construction of two bridges. The Interior Department blocked construction during former President Joe Biden’s term, saying that the road would impact wildlife including caribou. Mr Trump’s move directs the Bureau of Land Management, National Park Service, and US Army Corps of Engineers to reissue any necessary permits needed to build the road. Billionaire John Paulson is a top shareholder in Trilogy, with an 8.7 per cent stake through his investment fund Paulson & Co, according to the latest data compiled by Bloomberg. with Bloomberg