Although still subject to a due diligence review, the Canadian subsidiary of a Malaysian mining company has offered to buy a 25% interest in the Andacollo gold project in central Chile.
The project is owned 100% by Dayton Mining (TSE), which accepted the offer after considering a number of joint venture proposals over the past several months.
Malaysia Mining, 52% owned by trust and Crown corporations established by the Malaysian government, agreed to pay $22.6 million for the 25% interest, payable as $11.3 million in cash on closing and $11.3 million from its share of cash flow with interest.
The company also agreed to supply Dayton with a US$20-million line of credit for project financing. A bank project loan is being arranged for the balance of US$15 million, and Malaysia Mining will participate in financing 25% of the joint venture project.
“The joint venture gives Dayton shareholders the benefit of a strong cash position and 75% of the cash flow from Andacollo without further share dilution,” stated Dayton President Wayne McClay. “It also gives the project the support of a strong corporate sponsor.”
Andacollo is projected to produce 140,000 oz. gold annually at an average cost of US$165 per oz. using open pit mining and heap leach processing methods. The property is road accessible and near infrastructure that supports a mining operation.
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