TORONTO (miningweekly.com) – The world’s largest primary silver producer, London-listed Fresnillo, has agreed to buy Newmont Mining’s 44% stake in its Mexican joint venture for $450-million in cash.

The deal would secure Fresnillo a foothold in Mexico’s gold industry, giving it control over the Herradura, Noche Buena and Soledad Dipolos mines, the Mega Centauro and Centauro Deep advanced exploration projects and several key exploration prospects in the Herradura Corridor.

Fresnillo CEO Octavio Alvidrez said the move would lift the company’s 2018 gold output target by 50% to 750 000 oz. The deal would also add two-million ounces to its total gold reserves and 5.1-million ounces to its resource base.

"At a time when many industry peers are rationalising their portfolios, this transaction illustrates the ability of a conservatively managed business like Fresnillo to take advantage of long-term value opportunities by investing through the commodity price cycle. In line with our disciplined growth strategy, the acquisition is earning accretive and provides Fresnillo with significant exploration and development potential in a region where we are experienced operators,” Alvidrez said.

Subject to shareholder approval, the deal was expected to close in October.

Fresnillo also added that, owing to production delays at Herradura, the company had lowered its expected full-year output by between 4% and 8% to 450 000 oz of gold, noting, however, that it was confident of making up this year’s lost output next year.

Newmont, the world’s second-largest gold company by output, explained that the deal was in step with its policy of selling noncore assets, bringing the total capital generated from asset disposals to $1.3-billion since last year.

La Herradura had been in operation since 1998. Soledad-Dipolos was located 9 km north-west of La Herradura and started operations in January 2010. Noche Buena was located 23 km north-west of La Herradura and operations started in the first quarter of 2012. Penmont produced about 183 000 attributable ounces of gold last year.