TOKYO – Japanese trading house Sumitomo Corp on Thursday said it had agreed to buy a 5% stake in the Yanacocha gold mine in Peru for $48-million, as it looks to boost its assets in the metals sector.
Yanacocha, which has been in production since 1993, was Peru's largest gold mine until output began falling in recent years.
But Sumitomo said in a statement that the mine had "substantial future growth options" as it also contains copper deposits, and that the its life could be extended until 2039.
After Sumitomo's investment, the mine will be 51.35%-owned by US company Newmont Mining, with 43.65% held by Peruvian miner Buenaventura SAA. That will be down from the current 54.05% and 45.95% respectively.
Sumitomo said the mine had extensive sulphide gold and copper deposits located under the oxide gold deposit currently in production.
"The feasibility study for the development of sulphide gold and copper deposits is expected to be completed between 2019 and 2020," said a Sumitomo spokesman, adding that its main aim for joining the project was to expand its copper exposure.
The Japanese company has the option under some conditions to sell its stake to a joint venture between Newmont and Buenaventura if the sulphide deposits are not developed, the spokesman added, without giving further details.
Sumitomo plans to make a payment on June 22, but the deal will be closed when a local administrative registration procedure is completed, he said.
The move comes as Japanese trading companies are scouting for assets after they enjoyed their best profit in six years, driven by higher prices for commodities such as coking coal and copper.
Mitsubishi Corp said last week that it would rise its stake in the Anglo American's Quellaveco copper project in Peru by 21.9% for $600-million, taking its holding to 40%.