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Investing.com-- South32 Ltd (ASX:S32) shares rose on Tuesday after the Australian miner agreed to sell its stake in Canada’s Trilogy Metals Inc (TSX:TMQ) to U.S. President Donald Trump’s Department of War.
South32 rose 4.3% to A$2.930 in Australian trade, outpacing a 0.3% drop in the ASX 200 index. U.S.-listed shares of Trilogy Metals Inc (NYSE:TMQ) more than doubled in aftermarket trade, following the deal.
Trilogy on Monday announced that it, South32, and their50/50 joint venture Ambler Metals had agreed to a $35.6 million investment by the U.S. DOW in the Canadian critical metals miner. The DOW will take a roughly 10% stake in Trilogy under the deal.
South32 will receive about $17.8 million for selling roughly 8.2 million shares in Trilogy to the DOW. The company also sold a 10-year call option to acquire an additional 6.2 million shares in Trilogy once a road to the Ambler district is built.
South32 will retain 10.4 million shares in Trilogy, or a 6.3% stake.
Trump on Monday said he had signed an executive order allowing the building of an access road to the Ambler mining district in Alaska, with the goal of sourcing copper and other critical metals.
Trilogy said it and South32 will invest the funds towards advancing mineral projects held by Ambler Metals.
The DOW investment is the latest move by the Trump administration to secure more metal supplies in North America and reduce reliance on China. Last week, the U.S. agreed to buy a direct stake in American Lithium Corp (TSXV:LI), and had earlier this year directly invested in MP Materials Corp (NYSE:MP). The deals were tied to securing more supplies of lithium and rare earth minerals, respectively.