Ivanhoe Electric and SQM Partner for Chile Copper Exploration
SQM and Ivanhoe Electric personnel observing an active Ivanhoe Electric Typhoon™ survey in the United States. Photo Credit: Ivanhoe Electric Inc.
Key Points
- Ivanhoe Electric and SQM have signed a three-year Collaboration and Exploration Agreement to search for copper beneath caliche cover across 2,002 km² of SQM mining concessions in northern Chile.
- SQM will fund at least $9 million for exploration, with Ivanhoe Electric contributing its Typhoon™ geophysical survey technology and Computational Geosciences Inc. (CGI) data inversion software.
- Ivanhoe Electric holds an option to form a 50/50 joint venture with SQM on any qualifying copper deposit — defined as one million tonnes of contained copper or equivalent — by paying twice SQM’s exploration costs to date.
- The concessions are situated on major porphyry copper and polymetallic manto belts in the Atacama Desert, adjacent to some of the world’s largest copper mines.
Agreement Overview
Ivanhoe Electric Inc. (NYSE American: IE; TSX: IE) and Sociedad Química y Minera de Chile (“SQM”) (NYSE: SQM; SSE: SQM-B, SQM-A) have executed a definitive Collaboration and Exploration Agreement to explore for copper in northern Chile1. The collaboration covers SQM’s caliche-covered mining concessions totalling 2,002 km², located along major porphyry copper and polymetallic manto belts in the Atacama Desert.
SQM is one of Chile’s largest mining companies with a market capitalisation of approximately $24 billion and holds one of the largest mining concession portfolios in the country. Its operations in the Atacama Desert produce potassium nitrate and iodine through the exploitation of caliche — a surface deposit of sediments cemented by salts that is highly electrically resistive and has historically impeded conventional geophysical surveying.
The collaboration will be governed by a joint Management Committee and Technical Committee with equal representation from both companies. SQM will fund a minimum of $9 million in exploration expenditures over the initial three-year term, while Ivanhoe Electric is not required to contribute funding prior to any joint venture formation.
Caliche Cover
Caliche is a hardened layer of sediment cemented by salts found at or near the surface of arid desert environments. In the Atacama Desert, thick caliche deposits are highly electrically resistive, preventing low-power geophysical transmitters from detecting copper sulphide mineralisation at depth. This has historically left large areas of prospective copper ground underexplored.
“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, one of the world’s most prolific copper regions. Vast areas of electrically resistive caliche conceal enormous geological potential beneath the surface. Our Typhoon™ and CGI platform is uniquely capable of seeing through that cover to illuminate what other technologies cannot.” — Robert Friedland, Executive Chairman of Ivanhoe Electric
Typhoon™ Technology Advantage
Ivanhoe Electric’s Typhoon™ system is a proprietary electrical geophysical surveying transmitter capable of a current output of up to 200 amps and a voltage output of up to 10,000 volts. Its switches and capacitance systems generate an exceptionally pure and stable signal, resulting in a high signal-to-noise ratio that enables penetration through resistive surface cover such as caliche.
Under the agreement, Ivanhoe Electric will operate all mutually approved Typhoon™ surveys across designated exploration areas, while CGI will perform all data inversions using its advanced 3D subsurface modelling and machine-learning software. SQM will operate drill programs within designated Typhoon™ exploration areas once drill targets have been identified, leveraging its local expertise and logistics network.
“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. Working with SQM to deploy our Typhoon™ and CGI technologies in one of the world’s most important copper-producing regions underscores the confidence in our exploration platform and the capabilities of our team.” — Taylor Melvin, President and CEO of Ivanhoe Electric
Key Terms and Joint Venture Option
A “Qualifying Copper Deposit” under the agreement is defined as any deposit with the potential for at least one million tonnes of contained copper or copper equivalent, as determined by an independent geologist. Upon identifying such a deposit, Ivanhoe Electric may exercise its option to acquire a 50% interest and form a 50/50 joint venture with SQM.
| Term | Details |
|---|---|
| Exploration Area | 2,002 km² of SQM mining concessions in northern Chile |
| SQM Funding Commitment | Minimum $9 million over initial three-year term |
| IE Upfront Funding | None required prior to joint venture formation |
| JV Option Trigger | Qualifying Copper Deposit of ≥1 million tonnes copper equivalent |
| JV Option Exercise Price | 2× SQM’s exploration expenditures to date, paid to the joint venture |
| JV Structure | 50/50, funded pro rata; equal board representation |
| Lock-up Period | Shares cannot be transferred before first mineral resource estimate or 5-year anniversary |
| JV Operator Option | SQM may operate if it holds ≥50% equity; SQM appoints General Manager |
The exercise price for the JV option will be paid directly to the new joint venture company to fund further exploration rather than as a direct payment to SQM. At the conclusion of the collaboration, all mining concessions and exploration data not contributed to a joint venture will remain SQM’s property.
“This Collaboration with Ivanhoe Electric provides SQM with the technology platform to allow the exploration of caliche-covered mining areas, which by their nature are tough to explore using traditional exploration methods. Our exceptional location for copper deposits, exploration expertise, logistics network, and operational footprint provide the perfect foundation to deploy these advanced geophysical capabilities.” — Pablo Altimiras, SQM’s Chief Executive Officer of the Iodine & Plant Nutrition Division
The collaboration represents a further expansion of Ivanhoe Electric’s international exploration partnerships, which already include a 50/50 joint venture with Saudi Arabian Mining Company (Maaden) covering approximately 48,500 km² in Saudi Arabia, and an exploration alliance with BHP established in 2024 to search for critical minerals in the United States.