Glencore takes full ownership of Argentina copper project as Pan American sells noncore assets

31st July 2023

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online


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Canada-headquartered Pan American Silver on Monday announced the sale of three noncore assets for $539-million, including the disposal of its controlling interest in the MARA joint venture (JV) project, in Argentina.

The company will sell its 56.25% interest in MARA, acquired through its acquisition of Yamana Gold, to diversified major Glencore, which will now assume 100% ownership of the copper asset.

Glencore will pay Pan American Silver $475-million in cash and will grant the company a life-of-mine copper net smelter return (NSR) royalty of 0.75%.

MARA was initially established as a JV among Yamana, Glencore and Newmont, following the integration of the Minera Alumbrera plant and mining infrastructure and the Agua Rica project.

In September last year, Glencore acquired Newmont’s 18.75% interest in MARA, thereby increasing its interest in the project to 43.75% at that time.

MARA, located in the Catamarca province, has proven and probable mineral reserves of 5.4-million tonnes of copper and 7.4-million ounces of gold contained in 1.105-billion tonnes of ore. It has a 27-year mine life based on mineral reserves supported by more than 86 km of drilling.

The brownfield MARA project ranks as one of the lowest capital-intensive copper projects in the world today, owing to the existing well maintained Alumbrera processing plant and associated infrastructure. MARA is expected to be in the top 25 global copper producers when operational, with an expected average copper production over the first 10 full years exceeding 200kt per annum (with further material by-product credits).

Besides the MARA divestment, Pan American Silver also announced the sale of the Morococha mine to Peruvian company Alpayana, for $25-million in cash,  and its 57.75% interest in the Agua de la Falda (ADLF) project, in Chile to a subsidiary of Rio Tinto, for $45.55-million in cash and a NSR royalty of 1.25% on all precious metals and a NSR royalty of 0.2% on all base metals.

Pan American acquired its interest in ADLF through its acquisition of Yamana. The remaining 42.25% interest is held by Codelco.

“The sale of these noncore assets is aligned with our stated aim of optimising our portfolio following the Yamana acquisition. These transactions not only reaffirm our commitment to our core business, but also yield substantial and immediate value to our shareholders, while maintaining future upside through the retention of copper and gold royalties with strong counterparties,” president and CEO Michael Steinmann said.

He said the company would use the cash proceeds from the sale of these noncore assets to fully repay the amount drawn on its credit facility and increase its cash position.

“These transactions will also allow Pan American to reduce its annual project development, reclamation and care-and-maintenance costs, which for MARA and Morococha amounted to $15.7-million in the second quarter of 2023. This improved balance sheet strength creates enhanced opportunities for the company, providing increased capital to advance key strategic projects, including the La Colorada Skarn project.”

Edited by Creamer Media Reporter



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