Zijin Mining : to Acquire La Arena Copper-Gold Mine in Peru

On November 7, Zijin Mining, a major global metals miner, announced that it has offered to acquire a 100% interest in the La Arena Copper-Gold Mine in Peru from Pan American Silver Corp. The La Arena project consists of two phases, La Arena I and La Arena II. The core asset is the La Arena II project, which has 2.785 million tonnes of copper resources and 196.5 tonnes of gold resources.

The consideration for the transaction includes a one-off payment of US$245 million at closing, an additional contingent payment of $50 million upon the commencement of commercial production in the La Arena II project, and a 1.5% net smelter return (NSR) royalty for Pan American on the gold produced from the La Arena II project.

According to the announcement, the transaction now has all of the necessary approvals from the relevant Chinese government agencies and the requisite approvals under the Investment Canada Act.

details of the specific resources of the La Arena II project

The La Arena project is situated in the La Libertad region in northern Peru, part of the renowned Andean mountain range. The project spans a porphyry copper-molybdenum-gold mineralization belt and features two types of deposits: a high-sulfidation epithermal gold deposit in the southwest and a porphyry copper-gold deposit in the northeast. The ore bodies are distributed vertically, with gold at the top and copper at the bottom.

According to the reserve report as of June 30, 2024, Phase I is an open-pit, heap-leach gold mining project. It currently processes 36,000 tonnes of ore per day and produces approximately 3 tonnes of gold annually, with a remaining life of three years. The life of the project is expected to be extended with the extraction of gold ore from La Arena II.

The La Arena II project, currently in the studies stage, aims to develop the northeastern porphyry copper-gold deposit. The deposit contains 2.785 million tonnes of copper resources(including measured, indicated and inferred) at an average grade of 0.334% and 196.5 tonnes of gold resources at an average grade of 0.236 grams per tonne.

According to preliminary research by Zijin Mining's technical team, the La Arena II project is expected to involve open-pit mining and flotation processes, designed for a processing capacity of 33 million tonnes per annum. The mine construction period is estimated at three years, with a production period of 19 years. After reaching its designed throughput, the project is expected to produce approximately 100,000 tonnes of copper and 3.8 tonnes of gold annually.

The La Arena project is situated at altitudes ranging between 3,000 and 3,600 meters above sea level, with an average annual rainfall of about 1,124 millimeters. The mine site benefits from convenient transportation links, with national and provincial highways passing through it. It is about 175 kilometers from the port of Salaverry and 150 kilometers from Trujillo, Peru's third-largest city. The region has a stable and ample power supply.

Zijin's research team believes that the La Arena project, located in a world-renowned mineralization belt, possesses substantial copper and gold resources, with significant potential for resource expansion. The project has relatively well-developed infrastructure, and the mine's long lifespan promises favorable economic returns. Additionally, the project is located in an area with a long history of mining activity and many producing mines. Zijin plans to maintain and strengthen relations with neighboring communities and contribute to local economic and social development.

In the first three quarters of this year, Zijin Mining produced 790,000 tonnes of mined copper and 54 tonnes of mined gold, representing year-on-year increases of 5% and 9%, respectively. This transaction, once completed, will further bolster Zijin's resource base, enhance its copper and gold output, and help accelerate the achievement of its five-year production targets.