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Pan American Silver Corp. (NYSE: PAAS) has agreed to sell its 100% interest in La Arena S.A. for US$245 million cash upfront and a US$50 million contingent payment to Zijin Mining Group Co., The sale includes the La Arena gold mine and the La Arena II project in Peru, with Pan American retaining a 1.5% gold net smelter return royalty for La Arena II. The transaction aims to optimize the company's portfolio, strengthen its financial position, and focus on capital allocation priorities.
Pan American Silver Corp. (NYSE: PAAS) ha concordato di vendere il suo 100% di interesse in La Arena S.A. per un pagamento in contanti di 245 milioni di dollari e un pagamento contingente di 50 milioni di dollari a Zijin Mining Group Co. La vendita include la miniera d'oro di La Arena e il progetto La Arena II in Perù, mantenendo Pan American un diritto di rendita netta dello 1,5% sullo smelter d'oro per La Arena II. La transazione ha lo scopo di ottimizzare il portafoglio della società, rafforzare la sua posizione finanziaria e concentrarsi sulle priorità di allocazione del capitale.
Pan American Silver Corp. (NYSE: PAAS) ha acordado vender su interés del 100% en La Arena S.A. por un pago inicial en efectivo de 245 millones de dólares y un pago contingente de 50 millones de dólares a Zijin Mining Group Co. La venta incluye la mina de oro La Arena y el proyecto La Arena II en Perú, reteniendo Pan American un derecho de regalía del 1.5% en las ganancias netas de fundición de oro para La Arena II. La transacción tiene como objetivo optimizar la cartera de la compañía, fortalecer su posición financiera y enfocarse en las prioridades de asignación de capital.
Pan American Silver Corp. (NYSE: PAAS)는 자신의 100% 지분을 Zijin Mining Group Co에 2억 4500만 달러의 현금과 5000만 달러의 조건부 지급금과 함께 La Arena S.A.에 팔기로 합의했습니다. 이 거래에는 페루에 있는 La Arena 금광과 La Arena II 프로젝트가 포함되어 있으며, Pan American은 La Arena II에 대한 1.5% 골드 정광로열티를 유지합니다. 이 거래는 회사 포트폴리오를 최적화하고 재정적 위치를 강화하며 자본 할당 우선 순위에 집중하려는 목적입니다.
Pan American Silver Corp. (NYSE: PAAS) a convenu de vendre ses 100% d'intérêts dans La Arena S.A. pour un paiement en espèces de 245 millions de dollars US et un paiement conditionnel de 50 millions de dollars US à Zijin Mining Group Co. La vente comprend la mine d'or La Arena et le projet La Arena II au Pérou, Pan American conservant une redevance de 1,5% sur le retour à la fonderie d'or pour La Arena II. La transaction vise à optimiser le portefeuille de l’entreprise, à renforcer sa position financière et à se concentrer sur les priorités d'allocation de capital.
Pan American Silver Corp. (NYSE: PAAS) hat zugestimmt, seinen 100%-Anteil an La Arena S.A. für eine sofortige Barzahlung von 245 Millionen US-Dollar und eine bedingte Zahlung von 50 Millionen US-Dollar an Zijin Mining Group Co. zu verkaufen. Der Verkauf umfasst die Goldmine La Arena und das Projekt La Arena II in Peru, wobei Pan American eine 1,5%ige Nettoschmelzrückvergütung für Gold für La Arena II behält. Das Geschäft zielt darauf ab, das Portfolio des Unternehmens zu optimieren, seine finanzielle Stellung zu stärken und sich auf die Prioritäten der Kapitalallokation zu konzentrieren.
Positive
Strengthening Pan American's financial position through the sale of La Arena for US$245 million cash upfront and a US$50 million contingent payment.
Optimizing the company's portfolio and delivering on capital allocation priorities by investing in high-quality assets, debt reduction, and returning capital to shareholders.
Potential for further extension of the La Arena mine life until 2026, with added gold reserves through successful exploration efforts.
Negative
Loss of full ownership of La Arena S.A. and the La Arena gold mine, impacting Pan American's operational scope and revenue sources.
Potential risks associated with the contingent payment of US$50 million from Zijin Mining Group Co., upon commercial production from La Arena II project.
Dependence on regulatory approvals and customary conditions for the completion of the transaction, which may pose delays or uncertainties.
Insights
From a financial perspective, the divestiture of La Arena by Pan American to Zijin is a notable liquidity event, injecting $245 million into Pan American's balance sheet. This capital infusion is significant as it provides the company with the flexibility to pursue strategic objectives, such as investing in assets with a higher return potential, reducing debt, or increasing shareholder return. The 1.5% net smelter return royalty (NSR) on the La Arena II project ensures Pan American retains exposure to the upside of future gold production. The contingent payment of $50 million serves as an additional financial lever, contingent on the start of commercial production at La Arena II. This transaction is a strategic repositioning for Pan American, indicating a focus on asset quality over quantity. Investors should monitor the deployment of these funds, as effective allocation could lead to increased shareholder value.
The sale of the La Arena mine reflects a strategic shift by Pan American to optimize its mining portfolio, a trend we have observed across the sector as companies aim to focus on core assets. The transaction also signals confidence in the La Arena II project, which is poised to continue under the direction of Zijin. The NSR royalty agreement indicates that Pan American believes in the long-term potential of the La Arena II project to generate revenue without bearing the operational costs. For stakeholders in the mining industry, these developments underscore the importance of operational efficiency and strategic asset management. The ability to divest non-core assets while maintaining a financial stake in their success can be seen as a savvy move to ensure sustainable growth in a volatile commodities market.
retains a 1.5% gold net smelter return royalty for the La Arena II project
VANCOUVER, British Columbia--(BUSINESS WIRE)--
Pan American Silver Corp. (NYSE: PAAS) (TSX: PAAS) ("Pan American") announces that it has agreed to sell its 100% interest in La Arena S.A. ("La Arena"), which owns the La Arena gold mine as well as the La Arena II project in Peru, to Jinteng (Singapore) Mining Pte. Ltd., a subsidiary of Zijin Mining Group Co., Ltd. (collectively, "Zijin") for US$245 million cash upfront and a US$50 million contingent payment.
"With the sale of La Arena, we continue to deliver on our strategy to optimize our portfolio, following the Yamana transaction, while maintaining future upside through the retention of royalties," said Michael Steinmann, President and Chief Executive Officer of Pan American. "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."
Under the terms of the agreement, at closing Zijin will pay US$245 million in cash and will grant Pan American a life-of-mine gold net smelter return royalty of 1.5% for the La Arena II project. Upon commencement of commercial production from the La Arena II project, the agreement provides for an additional contingent payment from Zijin of US$50 million in cash. The closing of the transaction is subject to customary conditions and receipt of regulatory approvals. Pan American expects the transaction to be completed in the third quarter of 2024.
The La Arena property is located in the La Libertad province of Peru and is comprised of the La Arena gold mine and the La Arena II project. Since acquiring the mine from Tahoe Resources Inc. in 2019, Pan American has successfully added 535,521 ounces of gold through exploration, and extended the mine life from 2021 to 2026, with the potential for further extension.
About Pan American Silver
Pan American Silver is a leading producer of silver and gold in the Americas, operating mines in Canada, Mexico, Peru, Brazil, Bolivia, Chile and Argentina. We also own the Escobal mine in Guatemala that is currently not operating, and we hold interests in exploration and development projects. We have been operating in the Americas for three decades, earning an industry-leading reputation for sustainability performance, operational excellence and prudent financial management. We are headquartered in Vancouver, B.C. and our shares trade on the New York Stock Exchange and the Toronto Stock Exchange under the symbol "PAAS".
Cautionary Note Regarding Forward-Looking Statements and Information
Certain of the statements and information in this news release constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian provincial securities laws. All statements, other than statements of historical fact, are forward-looking statements or information. Forward-looking statements or information in this news release relate to, among other things: the receipt of regulatory approvals and successful completion of the proposed sale of La Arena , as well as the anticipated terms and timing for the completion thereof; the anticipated use of proceeds, including investing in high-quality assets and providing returns to our shareholders; the anticipated benefits from the completion of the sale of La Arena; the anticipated commencement of production from the La Arena II project; and the impact of such transaction on Pan American’s future financial or operational performance.
These forward-looking statements and information reflect Pan American’s current views with respect to future events and are necessarily based upon a number of assumptions that, while considered reasonable by Pan American, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include: the ability to satisfy the closing conditions and receive regulatory approval to complete the sale of La Arena; the impact of inflation and disruptions to the global, regional and local supply chains; tonnage of ore to be mined and processed; future anticipated prices for gold, silver and other metals and assumed foreign exchange rates; the timing and impact of planned capital expenditure projects, including anticipated sustaining, project, and exploration expenditures; ore grades and recoveries; capital, decommissioning and reclamation estimates; our mineral reserve and mineral resource estimates and the assumptions upon which they are based; prices for energy inputs, labour, materials, supplies and services (including transportation); no labour-related disruptions at any of our operations; no unplanned delays or interruptions in scheduled production; all necessary permits, licenses and regulatory approvals for our operations are received in a timely manner; our ability to secure and maintain title and ownership to mineral properties and the surface rights necessary for our operations; whether Pan American is able to maintain a strong financial condition and have sufficient capital, or have access to capital through our corporate sustainability-linked credit facility or otherwise, to sustain our business and operations; and our ability to comply with environmental, health and safety laws. The foregoing list of assumptions is not exhaustive.
Pan American cautions the reader that forward-looking statements and information involve known and unknown risks, uncertainties and other factors that may cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements or information contained in this news release and Pan American has made assumptions and estimates based on or related to many of these factors. Such factors include, without limitation: the duration and effect of local and world-wide inflationary pressures and the potential for economic recessions; fluctuations in silver, gold and base metal prices; fluctuations in prices for energy inputs, labour, materials, supplies and services (including transportation); fluctuations in currency markets (such as the PEN, MXN, ARS, BOB, GTQ, CAD, CLP and BRL versus the USD); operational risks and hazards inherent with the business of mining (including environmental accidents and hazards, industrial accidents, equipment breakdown, unusual or unexpected geological or structural formations, cave-ins, flooding and severe weather); risks relating to the credit worthiness or financial condition of suppliers, refiners and other parties with whom Pan American does business; inadequate insurance, or inability to obtain insurance, to cover these risks and hazards; employee relations; relationships with, and claims by, local communities and indigenous populations; our ability to obtain all necessary permits, licenses and regulatory approvals in a timely manner; changes in laws, regulations and government practices in the jurisdictions where we operate, including environmental, export and import laws and regulations; changes in national and local government, legislation, taxation, controls or regulations and political, legal or economic developments in Canada, the United States, Mexico, Peru, Argentina, Bolivia, Guatemala, Chile, Brazil or other countries where Pan American may carry on business, including legal restrictions relating to mining, risks relating to expropriation and risks relating to the constitutional court-mandated ILO 169 consultation process in Guatemala; diminishing quantities or grades of mineral reserves as properties are mined; increased competition in the mining industry for equipment and qualified personnel; those factors identified under the caption "Risks Related to Pan American's Business" in Pan American's most recent form 40-F and Annual Information Form filed with the United States Securities and Exchange Commission and Canadian provincial securities regulatory authorities, respectively. Although Pan American has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Investors are cautioned against undue reliance on forward-looking statements or information. Forward-looking statements and information are designed to help readers understand management's current views of our near- and longer term prospects and may not be appropriate for other purposes. Pan American does not intend, nor does it assume any obligation to update or revise forward-looking statements or information, whether as a result of new information, changes in assumptions, future events or otherwise, except to the extent required by applicable law.
