Pan American Silver Sells $593 Million in Assets to Bolster Balance Sheet

By Robb M. Stewart

Pan American Silver has struck deals totaling $593 million to sell a number of assets as it moves to strengthen its balance sheet and focus on core assets following the acquisition this year of Yamana Gold.

The Canadian precious metals miner said Monday it agreed to sell its Mara project in Argentina, Morococha mine in Peru and Agua de la Falda project in Chile but will retain future upside through copper and gold royalties.

The cash proceeds will allow Pan American to repay the amount drawn on its credit facility and increase its cash position, while reducing annual project development, reclamation and care and maintenance costs, which for Mara and Morococha totaled $15.7 million in the second quarter of this year, the company said. The strengthened balance sheet will provide increased capital to advance key projects, it added.

Pan American said it reached a binding agreement to sell its slightly more than 56% stake in the Mara project to Glencore, which already has an almost 44% interest in Mara, for $475 million in cash and a life-of-mine copper net smelter return royalty of 0.75% that Pan American will have the right to freely transfer. The stake in Mara was picked up by Pan American with its acquisition of Yamana, which closed at the end of March.

The company said it entered a binding agreement with Rio Tinto to sell its almost 58% interest in Agua de la Falda, a Chilean company that holds the historical Jeronimo project and several adjoining concessions, for $45.6 million in cash. Pan American was also granted a royalty of 1.25% on all precious metals and royalty of 0.2% on all base metals on production from certain mineral concessions.

Pan American said it also has a binding deal to sell its roughly 92% interest in Minera Argentum, its Peruvian subsidiary that owns the Morococha mine, to Peru's Alpayana for $25 million. Pan American placed the Morococha mine on care and maintenance in early 2022 while it evaluated alternative strategic opportunities for the asset following the closure of the Amistad processing plant under an agreement with Aluminum Corporation of China.

Also during the second quarter of the year, Pan American said it sold a number of noncontrolling equity investments for a total of $47.1 million.

Write to Robb M. Stewart at [e-mail]

(END) Dow Jones Newswires

July 31, 2023 07:19 ET (11:19 GMT)

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