Pan American Silver sells La Arena gold project in Peru to Zijin Mining for $295 million
Pan American Silver (NYSE: PAAS) (TSX: PAAS) said on Wednesday it has agreed to sell its 100% interest in La Arena S.A, which owns the La Arena property in Peru, to Jinteng Mining Pte. in Singapore, a subsidiary of Zijin Mining Group for $245 million cash upfront and a $50 million contingent payment. The transaction is expected to close in Q3 2024.
The La Arena property is in the La Libertad province of Peru and is comprised of the La Arena gold mine and the La Arena II project, which is in advanced exploration. The open-pit mine has been in operation since 2011.
Since acquiring the mine from Tahoe Resources in 2019, Pan American said it has added 535,521 ounces of gold through exploration, and extended the mine life from 2021 to 2026, with the potential for further extension.
Under the terms of the deal, Zijin will grant Pan American a life-of-mine gold net smelter return royalty of 1.5% for the La Arena II project.
“With the sale of La Arena, we continue to deliver on our strategy to optimize our portfolio, following the Yamana transaction, while maintaining future upside through the retention of royalties,” Pan American CEO Michael Steinmann said in a news release.
“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.”
By market close Wednesday, Pan American Silver shares had advanced 0.70% on the NYSE. The company has a $6.8 billion market capitalization.