Barrick Gold Corporation recently reported that it has arrived at a consensus to sell its 100% interest in the Lagunas Norte mine in Peru to Boroo Pte Ltd for a total consideration of up to $81 million.
The consideration is in addition to the assumption by Boroo of Barrick’s closure liability with respect to Lagunas Norte of $226 million backed by an ongoing $173 million bonding obligation.
The total consideration includes an up-front cash payment of $20 million, extra cash consideration of $10 million, which must be paid on the first anniversary of closing, $20 million payable on the second anniversary of closing, and a 2% net smelter return royalty (NSR) on gold and silver generated via the refractory sulfide ore project (PMR).
This project will come to an end as soon as the production of one million ounces of gold is done and which might be bought by Boroo for a limited duration following the closing for $16 million, apart from a contingent payment of up to $15 million, which is in accordance with the average gold price per ounce for the two years instantly after closing (Average Gold Price).
The contingent payment is payable two years after closing. The value of this payment is $5 million if the Average Gold Price is greater compared to $1,600 and less than $1,700; $10 million if the Average Gold Price is greater than $1,700 and less than $1,800; and $15 million if the Average Gold Price surpasses $1,800.
Moreover, Boroo will assume 100% of the $173 million reclamation bond obligations for Lagunas Norte in two tranches: 50% on closing and 50% before one year of closing. The contingent payments, the delayed payments, and the obligation to substitute the second tranche of the reclamation bond obligations will be secured.
According to Barrick president and chief executive Mark Bristow, the sale was in accordance with Barrick’s policy of selling non-core interests—a process that has yielded about $1.5 billion—to concentrate its portfolio on Tier One assets.
The planned acquisition would help the stakeholders of the mine in Peru by providing Boroo the chance to expand its life by accessing satellite resources and adjusting the infrastructure.
The Latin American region tends to stay as a significant destination for Barrick, and the company will maintain a team in Peru to continue to advance its portfolio of exploration assets and to look for chances to discover and operate first-class gold and/or copper mines in that country.
The transaction pertains to closing conditions.