Xstrata Copper, Goldcorp, and Yamana Gold have reached a definitive agreement providing Minera Alumbrera Sucursal Argentina the exclusive option to acquire Yamana’s 100% interest in the Agua Rica project. Agua Rica is a feasibility stage project in the province of Catamarca, Argentina, located approximately 35 km from the currently operating Alumbrera mine. Minera Alumbrera is a joint venture operation between Xstrata Copper (manager and 50% owner), Goldcorp (37.5% owner) and Yamana (12.5% owner) that currently operates the Alumbrera mine.
Under the terms of the agreement, Minera Alumbrera holds an exclusive four-year option to acquire Yamana’s interest in the Agua Rica project for cumulative payments made by Goldcorp and Xstrata Copper of $110 million. During the option period Minera Alumbrera will manage the Agua Rica project and fund a feasibility study and all development costs. The respective ownership interests in Minera Alumbrera would remain unchanged and apply to the Agua Rica project.
The formal documentation includes the Feasibility Services Agreement under which Minera Alumbrera took control of Agua Rica as of August 31, 2011. In addition, the shareholder and management agreements for Minera Alumbrera were amended to facilitate the potential integration of the combined projects. As required, Goldcorp and Xstrata Copper have made a payment of $20 million to Yamana on execution of the definitive agreements, in addition to the $10 million paid previously.
Minera Alumbrera can elect to exercise the option at any time during the four-year period. Upon approval to proceed, Yamana would receive $150 million and a further $50 million on commencement of commercial production in addition to the remaining option payments of $80 million, all as previously disclosed. Yamana would also retain the right to a deferred payment related to 65% of the payable gold production from Agua Rica to a maximum of 2.3 million oz.
An independent feasibility study has commenced under the direction of Xstrata Copper, as the manager of Minera Alumbrera. Fluor Canada Ltd. has been retained to conduct the study which is expected to be complete in early 2013. At the same time, Minera Alumbrera will work with stakeholders, including Yacimientos Mineros de Agua de Dionisio to assess the optimum potential development of Agua Rica and complete Environmental Impact Studies. Subject to a positive feasibility study, the option being exercised, and all necessary corporate and government approvals, a construction decision is expected to follow with construction potentially starting in 2013.
