Goldcorp Inc (TSE:G, Mkt cap 15.88B, Div/yield 0.03/0.54, EPS 0.25, Shares 853.81M) and fellow gold miner Barrick Gold have teamed up in an attempt to tap into one of the world's biggest undeveloped gold projects in Chile's Atacama Desert.
The equal-split joint venture will see Vancouver-based Goldcorp make several acquisitions as part of the deal, resulting in a total investment commitment of US$520 million, the Financial Times reports.
The deal to develop projects in Chile's Maricunga gold belt in the north of the country follows years of budget cuts by gold miners due to low gold prices.
David Garofalo, chief executive of Goldcorp, said the Cerro Casale and Caspiche projects allow the company to consolidate infrastructure to reduce capital and operating costs, reduce the environmental footprint and provide increased returns.
To facilitate the 50/50 split, Goldcorp will buy out Kinross Gold Corp's 25% stake in Cerro Casale – which is majority owned by Toronto-based Barrick – and other assets in a deal that includes US$260 million cash. It has also agreed to pay the first US$260 million of Barrick's costs towards developing Cerro Casale as part of an agreement for an additional 25% stake.
Goldcorp will also contribute two other adjacent exploration developments, the Caspiche and Quebrada Seca projects, as part of the joint venture.
Barrick president Kelvin Dushnisky said Goldcorp will bring a "fresh perspective" to Cerro Casale, as well as "the potential for synergies in the district".
It's estimated that Cerro Casale has 23 million ounces of gold reserves and 5.8 billion pounds of copper, with Barrick yet to make attempts to mine any of it having cited unfavourable economics for several years.
The deal with Goldcorp follows a regulatory filing on March 23 which revealed that Barrick would look for alternative ways to develop the project.
Goldcorp Inc. is a gold producer engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the United States, Mexico, and Central and South America. The Company is engaged in the sale of gold, silver, lead, zinc and copper. The Company's segments include Red Lake Gold Mines Ontario Partnership (Red Lake), Goldcorp Canada Ltd./Goldcorp Inc. (Porcupine), Musselwhite, Les Mines Opinaca Ltee (Eleonore), Minera Penasquito S.A. de C.V. and Camino Rojo S.A. de C.V. (Penasquito), Desarrollos Mineros San Luis S.A. de C.V. (Los Filos), Montana Exploradora de Guatemala S.A. (Marlin), Oroplata S.A. (Cerro Negro), Corredor SpA (Project Corridor), Minera Alumbrera Limited (Alumbrera), El Morro and Pueblo Viejo Dominicana Corporation (Pueblo Viejo). The Company's principal product is gold dore with the refined gold bullion sold primarily in the London spot market. More from Reuters »
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