Canada approves Pan American’s sale of Peru mine to Zijin

Canada has approved Pan American Silver’s (TSX: PAAS; NYSE: PAAS) sale of its La Arena open-pit mine and project in Peru to Jinteng Mining, a subsidiary of China’s Zijin Mining Group.

The approval, granted under the Investment Canada Act, includes a joint commitment by Pan American and Zijin to establish an offtake agreement for the La Arena II project. This deal will allow the Vancouver-based company to secure 60% of the future copper concentrate produced from La Arena II on commercial terms, with the intent to supply the North American markets once commercial production begins.

Upon closing, Zijin will pay US$245 million in cash and grant Pan American a 1.5% life-of-mine gold net smelter return royalty from the La Arena II project. Once commercial production begins, Zijin will make a further contingent cash payment of US$50 million.

The La Arena property is located in Peru’s La Libertad province. It comprises the La Arena gold mine and the La Arena II project, which is in advanced exploration. The open pit mine has been in operation since 2011.

Since acquiring the mine from Tahoe Resources in 2019, Pan American said it’s added to resources and reserves through exploration and extended the mine life from 2021 to 2026, with the potential for further extension.

Pan American Silver 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 is closed pending the completion of an ongoing consultation for a possible restart of operations.