Zijin takes control of Pan American’s gold mine in Peru

Jinteng Mining, a subsidiary of China’s Zijin Mining Group, officially became on Tuesday the new owner of Canadian miner Pan American Silver’s (TSX, NYSE: PAAS) La Arena open-pit mine and project in Peru.

The deal, first announced in May, received the approval from Ottawa in November. Under the agreement, Zijin will pay $245 million in cash to Pan American, along with a 1.5% life-of-mine gold net smelter (NSR) return royalty from the La Arena II project. Additionally, Zijin will make an extra contingent cash payment of $50 million once commercial production begins.

Pan American retains the right to receive 60% of the future copper concentrate produced from La Arena II under commercial terms. This arrangement aims to supply the North American markets when production gets underway.

The La Arena property, situated in Peru’s La Libertad province, includes the La Arena copper-gold mine and the La Arena II project, which is currently in advanced exploration. The open-pit mine has been operational since 2011. It currently processes 36,000 tonnes of ore per day and produces nearly three tonnes of gold annually, with a remaining life of three years. 

Since acquiring the mine from Tahoe Resources in 2019, Pan American added 535,521 ounces of gold through exploration and extended the mine life from 2021 to 2026, with further extension potential.

Pan American has silver and gold mines across the Americas, with active operations in Canada, Mexico, Peru, Brazil, Bolivia, Chile and Argentina. The company also owns the Escobal mine in Guatemala, which remains closed pending the completion of an ongoing consultation process for a potential restart of operations.