Pan American to buy Morococha silver mine

A binding agreement sets the stage for Pan American Silver (PAA-T) to buy the Morococha silver mine, 150 km northeast of Lima, Peru.

The proposed acquisition reflects Pan American’s goal of becoming the world’s leading silver producer.

“It’s a perfect fit with our existing Peruvian asset base,” says Pan American President Ross Beaty. “I particularly like the mine’s great exploration potential, which we intend to evaluate aggressively.”

Beaty describes Morococha as a “rare opportunity” because of its low costs, long life, and strategic location in mining-friendly Peru. It is a mere 80 km from the company’s Huaron operation, an underground vein mine which produces about 4.5 million oz. silver annually from concentrates.

Morococha, too, is an underground vein mine, with a history of past production. It has produced about 3.5 million oz. silver annually, plus significant amounts of zinc, copper and lead.

Cash costs, net of byproduct credits, were below US$3 per oz. silver.

The mine has proven and probable reserves of 9.2 million oz. silver within a broader resource that hosts about 45.7 million additional ounces (mostly in the inferred category).

Pan American will pay $35 million to acquire a Peruvian company that will hold the mining units and related infrastructure (including processing plants) that comprise the Morococha project.

Once the deal is completed, Pan American intends to test a large network of veins and replacement bodies within a land package covering 66.5 sq. km of historically productive and prospective concessions.