South32 moves ahead with South Gorda buy

25th November 2021 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) – Diversified miner South32 on Thursday said that it would continue with the acquisition of a 45% interest in the South Gorda copper mine in Chile, after project partner KGHM Polska Miedz failed to exercise its pre-emptive rights to increase its shareholding in the project.

South32 in October entered into two binding conditional agreements with Sumitomo Metal Mining and Sumitomo Corporation for the acquisition of a 45% indirect interest in Sierra Gorda for an upfront cash consideration of $1.55-billion.

South32 has also agreed to provide Sumitomo with a contingent price-linked consideration of up to $500-million, payable at threshold copper production rates and prices in the years 2022 to 2025.

Construction at the Sierra Gorda openpit mine started in 2011, and the project was commissioned in 2014. The project is expected to produce 180 000 t/y of copper, 5 000 t/y of molybdenum, 54 000 oz/y of gold and 1.6-million ounces a year of silver in 2021.

Sierra Gorda has a copper/molybdenum/gold sulphide mineral reserve of more than one-billion tonnes, and a mine life of more than 20 years. There are a range of growth and improvement opportunities available to Sierra Gorda, including the capital efficient de-bottlenecking project that is underway to lift plant throughput by 6% to around 50-million tonnes a year and copper recoveries by around 2% to 85% in the medium term.

A feasibility study is also underway for a brownfield oxide project, which is assessing the opportunity to process material stockpiled at the mine, and potential exists for further exploration upside at the Pampa Lina deposit, and across the regional land package.

Completion of the transaction is expected early in 2022, subject to the satisfaction of the remaining conditions.