Pan American Silver Sells Peruvian Gold Mine to Zijin Mining

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--Pan American Silver (NYSE:PAAS) (Vancouver, British Columbia) has sold all its interest in the La Arena gold mine and La Arena II project to Jinteng Mining, a subsidiary of Zijin Mining Group (Longyan, China), for US$245 million and a contingent payment of US$50 million, Pan American announced on May 1.

The La Arena asset is located in Peru's La Libertad Province.

La Arena is an open-pit gold mine. In 2023, the mine produced 97,100 ounces. This year, according to Pan American, the mine has a production guidance between 83,000 ounces and 95,000 ounces, with a cost per ounce US1,400 to US$1,470.

The planned La Arena II project has gold-indicated and measured resources of 5,299,000 ounces. Industrial Info has assessed the project as having a low probability of moving forward as planned.

The transaction will grant Pan American a 1.5% life-of-mine gold net smelter return royalty for the La Arena II project. Also, upon the commercial production of La Arena II, Zijin will make a contingent payment of US$50 million in cash.

Pan American said it expects to conclude the full transaction on the La Arena asset by the third quarter of this year, with the completion of "customary conditions and receipt of regulatory approvals."

Pan American Chief Executive Officer Michael Steinmann said, "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."

With the purchase of La Arena, Zijin is strengthening its position in Peru, where it also owns the Rio Blanco copper-molybdenum mine. In the rest of South America, the Chinese miner owns a lithium asset in Argentina as well as gold mines in Suriname, Colombia and Guyana.

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