Canadian mining company Pan American Silver has agreed to divest its 100% interest in La Arena to Jinteng (Singapore) Mining, a subsidiary of China-based Zijin Mining Group, for up to $295m.
La Arena owns the La Arena gold mine and the La Arena II project in Peru.
Under the terms of the agreement, the Chinese mining company will pay $245m upfront and grant Pan American a net smelter return royalty of 1.5% for the La Arena II project.
Once the La Arena II project begins commercial production, the agreement provides for an additional contingent payment from Zijin of $50m in cash.
The transaction is expected to be completed in the third quarter of 2024, subject to customary conditions and receipt of regulatory approvals.
Pan American president and CEO Michael Steinmann said: “With the sale of La Arena, we continue to deliver on our strategy to optimise our portfolio, following the Yamana transaction, while maintaining future upside through the retention of royalties.
“Proceeds from the transaction will further strengthen our financial position and allow us to deliver on our capital allocation priorities of investing in high-quality assets, debt reduction and returning capital to our shareholders.”
The La Arena property is located in the La Libertad province of Peru and comprises the La Arena gold mine and the La Arena II project.
Pan American acquired the property from Tahoe Resources in 2019.
The company said that successful exploration has added more than 500,000oz of gold and extended the mine’s life by five years, from 2021 to 2026, with potential for further extensions.
Last month, Pan American Energy completed the second phase of the drilling programme on its Big Mack lithium project, located around 80km north of the town of Kenora, Ontario, Canada.
The Phase-2 drilling primarily focused on areas with no previous drilling data, and the targets were identified using 2023 geochemical surface sampling and detailed magnetic survey results.
It also targeted prospective areas extending along strike and down dip of previously identified mineralisation.
The drilling programme was carried out by local drilling contractor Fullforce Diamond Drilling, with support from geoscience technology firm Axiom Exploration.