Newmont buys Buenaventura’s stake in Yanacocha for US$300 million

Newmont Corporation Y Buenaventura Mining Company SAA announced the conclusion of a definitive purchase agreement, through which the former acquires its peer’s 43.65% stake in Minera Yanacocha, located in Cajamarca.

Newmont will acquire Buenaventura’s interest for US$300 million, plus contingent payments linked to higher metal prices of up to US$100 million. According to the company, the acquisition is in line with the company’s strategy to consolidate areas and enhance its “ownership of world-class assets.”

At the same time, Newmont will transfer to Buenaventura its interest in the Joint Venture La Zanja in exchange for royalties on any possible future production from this operation. Newmont will also contribute US$45 million to Buenaventura to be applied to the closure of La Zanja.

Newmont, which has operated in Peru for more than 30 years, said it has a “deep understanding of the asset” (Yanacocha) and the value it brings to all of its stakeholders. In this sense, the president and CEO of Newmont, Tom Palmerwelcomed the fact that Buenaventura had been an “exceptional partner” and said that he hoped that both firms would maintain a “solid relationship”.

“This acquisition gives us control of the Yanacocha area, where we are working to position the Sulphides project for profitable production and value generation for decades to come. We are committed to continuing to promote sustainable development in Peru, working closely with the communities of the Cajamarca region, and the Peruvian government,” he said in a statement.

The announcement is in line with what was announced by the former Minister of Economy, Peter Franckelast September, when he pointed to Sulfuros as one of the large-scale projects considered in the Multiannual Macroeconomic Framework (MMM) 2022-2025, which will boost private investment in the coming years.

Newmont goes all out with Sumitomo

Newmont may have the opportunity to acquire the remaining 5% of the Yanacocha property held by Japan’s Sumitomo Corporationas said company is evaluating exercising a right in its 2018 purchase agreement to return its interest in the mine, in exchange for the original purchase price.

Until before executing the purchase of the 43.65% stake of the Peruvian Buenaventura in Yanacocha, Newmont, based in Denver, USA, managed 51.35%.

Yanacocha, the largest gold mine in South America, is located in the province and department of Cajamarca. Its area of ​​operations is 45 kilometers north of the Cajamarca district, between 3,500 and 4,100 meters above sea level. Its activity takes place in four basins: Quebrada Honda, Río Chonta, Río Porcón and Río Rejo.

Investments in Yanacocha for 2022

With the acquisition, Newmont is updating previously issued attributable capital development guidance to consider the project Yanacocha Sulfides. All other long-term outlook metrics in the guidance remain unchanged from what was announced on December 2, 2021.

“Newmont continues to advance the Yanacocha Sulphides project at the rate that the pandemic allows, investing more than US$500 million during 2022, while a full financing decision is expected at the end of this year,” the company said.

Yanacocha Sulfides It is a US$ 2,100 million project that aims to allow the continuity of the open pit gold mine. The first phase of the deposits will be developed through an integrated processing circuit that includes an autoclave to produce 45% gold, 45% copper and 10% silver.

The project is expected to add an average annual consolidated production of 525,000 gold equivalent ounces per year with all-in sustaining costs of between $700 and $800 per ounce for the first five full years of production (2027-2031).

Likewise, an investment decision is expected in the second half of 2022 with a development period of three years. For the company listed on the New York and Toronto stock exchanges, Yanacocha Sulfuros will increase the importance of copper in the portfolio, thus supporting the transition to a green economy

The first phase focuses on the development of the Yanacocha Verde and Chaquicocha deposits to extend Yanacocha’s operations through 2040, with the second and third phases having the potential to extend the life of the mine for multiple additional decades.