Yamana Gold Inc. is selling a majority stake in its Agua Rica project in Argentina to two major producers, Xstrata and Goldcorp Inc. , who will integrate it into a nearby mining operation.
The Toronto-based mining company said Tuesday it will receive $310-million (U.S.) in staged payments, plus a revenue stream based on gold sales and retain 12.5 per cent ownership stake of Agua Rica.
Yamana currently owns 100 per cent of Agua Rica. After the proposed transaction, Xstrata Queensland Ltd. would own 50 per cent, Vancouver-based Goldcorp would own 37.5 per cent and Yamana would own the rest.
Agua Rica will be integrated into the Alumbrera project, which has an operating mine 35 kilometres away. Alumbrera is also 50 per cent Xstrata-owned with Goldcorp owning 37.5 per cent and Yamana 12.5 per cent.
Yamana will receive $110-million in initial payments over three years and $200-million in further payments in return for selling 87.5 per cent of Agua Rica.
The initial payments begin with $10-million by next Tuesday, $20-million after formal transaction documents are completed and further payments of $20-million, $30-million and $30-million on anniversaries of the closing date.
The further payments include $150-million upon approval to proceed with construction and $50-million upon achieving commercial production.
Yamana will also receive payments based on a percentage of gold sales.
"We are pleased to come to an agreement with Xstrata and Goldcorp with respect to Agua Rica," Peter Marrone, Yamana's chairman and CEO said in a statement.
"After reviewing a number of strategic alternatives for Agua Rica, it was clear that this transaction provides the best opportunity for development of Agua Rica and the greatest value potential to all parties. We are pleased with the value we will receive for Agua Rica in addition to maintaining exposure to a significant portion of the gold at the project."