NYSE- and TSX-listed Pan American Silver on Wednesday announced the sale of its interest in LA Arena in Peru to a subsidiary of Zijin Mining for up to $295-million.
“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,” said president and CEO Michael Steinmann.
“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.”
Under the terms of the agreement, at closing Zijin will pay $245-million in cash and will grant Pan American a life-of-mine gold net smelter return royalty of 1.5% for the La Arena II project.
Upon commencement of commercial production from the La Arena II project, the agreement provides for an additional contingent payment from Zijin of $50-million in cash.
Pan American expects the transaction to be completed in the third quarter of 2024.
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. Since acquiring the mine from Tahoe Resources in 2019, Pan American has successfully added 535 521 oz of gold through exploration, and extended the mine life from 2021 to 2026, with the potential for further extension.