In a strategic move that bolsters its international portfolio, Zijin Mining Group's subsidiary, Jinteng (Singapore) Mining, has agreed to acquire the La Arena mine in Peru from Pan American Silver for a total consideration of $295 million. This acquisition includes a $245 million upfront cash payment, a $50 million contingent payment, and a net smelter return (NSR) royalty on future gold production.
Key Terms of the Acquisition
The transaction involves an immediate cash payment of $245 million upon closing, which will provide Pan American with a 1.5% NSR royalty on La Arena II project's gold production. An additional $50 million will be paid upon the commencement of commercial production at La Arena II.
Expanding Gold Reserves
Pan American Silver, which has owned the La Arena mine and La Arena II project since 2019, has successfully expanded the mine's gold reserves, adding over 500,000 ounces. This strategic move has significantly extended the mine's operational life by five years.
Strategic Optimization and Portfolio Focus
Michael Steinmann, president and CEO of Pan American Silver, emphasized that the sale aligns with the company’s broader strategy of optimizing its portfolio following the Yamana transaction. The proceeds will be used to further strengthen the company's finances and prioritize investments in high-quality assets, reduce debt, and return capital to shareholders.
Future Development Potential
With the deal expected to close in the third quarter of 2024, pending regulatory approvals and customary conditions, Jinteng (Singapore) Mining will likely capitalize on the potential for further gold reserve extensions at the La Arena II project.
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