Yamana Gold Inc. said on Wednesday that it will build its precious-metal mine in Argentina, becoming one of the few companies to develop a project amid weak commodity prices.
The Toronto-based company said it would spend $398-million to build the gold and silver Cerro Moro mine. That is a third higher than its previous estimate of $300-million because the mine's plant will now be bigger than the original proposal.
The decision to proceed with Cerro Moro comes as other companies such as Kinross Gold Corp. and Barrick Gold Corp. have postponed projects in order to conserve cash.
The slump in bullion prices has forced the gold industry to cut costs and retool their portfolios by buying better mines and divesting expensive operations.
Last year, Yamana bought half of a large gold mine in Quebec and tried to sell some of its mines in Brazil. After failing to sell them, Yamana decided to create a wholly owned subsidiary within the company to house its non core mines.
The miner expects to spend about $30-million on Cerro Moro this year and plans to start production at the mine in the latter half of 2017.
The company recently raised $300-million in capital to pay down debt.