Xstrata JV Secures Option To Purchase Argentine Copper-Gold Project
September 01 2011 - 4:04AM
Dow Jones News
Xstrata Copper, a unit of Anglo-Swiss miner Xstrata PLC
(XTA.LN), Goldcorp Inc. (GG) and Yamana Gold Inc. (AUY) Thursday
reached an agreement that will provide Xstrata's joint venture,
Minera Alumbrera, with an exclusive four-year option to purchase
Yamana's Agua Rica gold and copper project in Argentina.
Under the option agreement, Goldcorp and Xstrata Copper will
make cumulative payments of $110 million to Yamana in return for
the option to buy all of the Agua Rica project. During the option
period, the joint venture will be managed and all development
costs, including the feasibility study, will be borne by Minera
Alumbrera.
Agua Rica is a large-scale copper and gold deposit located about
35 kilometers from Alumbrera mine in north-west Argentina's
Catamarca province, a mine which is owned by Minera Alumbrera.
Minera Alumbrera, a joint venture that is 50% owned and managed
by Xstrata Copper, 37.5% owned by Goldcorp and 12.5% owned by
Yamana, has carried out an analysis of the Agua Rica project. It
has determined that the project has the potential to produce
approximately 250,000 metric tons of copper and 140,000 ounces of
gold a year for the first five years.
Once the option has been exercised, Yamana would receive $150
million and a further $50 million after the start of commercial
production, in addition to the remaining option payments of $80
million.
Yamana would also retain the right to a deferred payment related
to 65% of the payable gold production from Agua Rica to a maximum
of 2.3 million ounces.
Xstrata Copper is spear heading the feasibility study on Agua
Rica, which is due to be completed in 2013. Construction is due to
start in the same year.
-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328;
alex.macdonald@dowjones.com
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