Xstrata JV Secures Option To Purchase Argentine Copper-Gold Project

Xstrata Copper, a unit of Anglo-Swiss miner Xstrata PLC (XTA.LN), Goldcorp Inc. (GG) and Yamana Gold Inc. (AUY) Thursday reached an agreement that will provide Xstrata's joint venture, Minera Alumbrera, with an exclusive four-year option to purchase Yamana's Agua Rica gold and copper project in Argentina.

Under the option agreement, Goldcorp and Xstrata Copper will make cumulative payments of $110 million to Yamana in return for the option to buy all of the Agua Rica project. During the option period, the joint venture will be managed and all development costs, including the feasibility study, will be borne by Minera Alumbrera.

Agua Rica is a large-scale copper and gold deposit located about 35 kilometers from Alumbrera mine in north-west Argentina's Catamarca province, a mine which is owned by Minera Alumbrera.

Minera Alumbrera, a joint venture that is 50% owned and managed by Xstrata Copper, 37.5% owned by Goldcorp and 12.5% owned by Yamana, has carried out an analysis of the Agua Rica project. It has determined that the project has the potential to produce approximately 250,000 metric tons of copper and 140,000 ounces of gold a year for the first five years.

Once the option has been exercised, Yamana would receive $150 million and a further $50 million after the start of commercial production, in addition to the remaining option payments of $80 million.

Yamana would also retain the right to a deferred payment related to 65% of the payable gold production from Agua Rica to a maximum of 2.3 million ounces.

Xstrata Copper is spear heading the feasibility study on Agua Rica, which is due to be completed in 2013. Construction is due to start in the same year.

-By Alex MacDonald, Dow Jones Newswires; [phone]; [e-mail]