Yamana Gold Inc. (AUY) and its joint-venture partners in the
producing Alumbrera mine in Argentina have struck an agreement
which will see Yamana's nearby development-stage Agua Rica project
ultimately integrated into Alumbrera.
The Toronto-based miner's Alumbrera partners are Xstrata PLC
(XTA.LN) and Goldcorp Inc. (GG). Subject to Xstrata and Goldcorp
exercising their option to have Alumbrera acquire Agua Rica, and
following the integration, Xstrata, Goldcorp and Yamana would
respectively own 50%, 37.5% and 12.5% of the combined project.
Those are the stakes the companies now own in Alumbrera, a large
and low-cost gold and copper mine in western Argentina.
Given that Yamana would own 12.5% of the combined project, it's
effectively selling 87.5% of Agua Rica. It will receive initial
payments totaling $110 million from the two partners. Upon approval
to proceed with construction at Agua Rica, it will get another $150
million, and a final $50 million once commercial production is
achieved.
The deal includes a deferred consideration revenue stream from
the project, which Yamana said will allow it to retain positive
exposure to the majority of the significant gold resources at Agua
Rica.
According to Yamana's website, Agua Rica is a large-scale
copper, gold, silver and molybdenum deposit expected to produce 370
million pounds of copper and 148,000 ounces of gold annually during
the first 10 years of production.
The companies expect significant synergies from the move, which
comes at a time of strong global demand and prices for both copper
and gold.
-By Carolyn King, Dow Jones Newswires; 416-306-2100;
carolyn.m.king@dowjones.com
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