Lundin Mining Corp. has entered into an agreement with Yamana Gold to purchase its 100% ownership stake in Mineração Maracá Indústria e Comércio S/A, which owns the Chapada copper-gold mine located in Brazil, for an $800 million cash consideration. In addition, Yamana will retain a 2% net smelter return (NSR) royalty on future gold production from the Suruca gold deposit and receive contingent consideration of up to $125 million over five years if certain gold price thresholds are met and contingent consideration of $100 million on potential construction of a pyrite roaster.
“Chapada is a well-run, established operation with an experienced local workforce,” Lundin Mining President and CEO Marie Inkster said. “Leveraging our technical expertise, base metals focus and financial strength, we believe further opportunities exist to create meaningful stakeholder value.”
Located in Brazil’s Goiás state, Chapada is expected to produce approximately 54,500 metric tons (mt) of copper and 100,000 ounces (oz) of gold, or approximately 75,000 mt copper equivalent. In 2018, the operation produced approximately 58,600 mt of copper and 121,000 oz of gold.
Since production commenced in 2007 to the end of 2018, the operation has processed 225 million mt of ore grading 0.38% copper and 0.33 g/mt gold, producing approximately 743,500 mt of copper and 1.6 million oz of gold in concentrate.
The Chapada orebodies are part of a large copper-gold mineralized system located approximately 270 km northwest of the national capital of Brasilia. The operation is connected to the national grid via a private powerline with excess capacity for expansion. A traditional open-pit truck and shovel operation with a relatively low strip ratio and benefiting from an in-pit crusher, Chapada is currently producing from three open pits in close proximity.
The Chapada concentrator is a conventional crush, grind and flotation processing plant, producing a gold-rich copper concentrate. In 2018, the treatment plant processed an average of 63,000 mt/d with average copper and gold recoveries of 82% and 63%, respectively. Plant expansion opportunities to increase the processing rate to a range from 28 million mt/y to 32 million mt/y are currently being studied by Yamana and Lundin Mining.