Goldcorp's Mexico sell-off continues

By
Wednesday, June 21, 2017

Goldcorp will sell its Camino Rojo oxide project – its second Mexican divestment this year.

Latin America's top gold miner plans to sell the Zacatecas state project to Orla Mining for 31.9mn Orla shares, the two Vancouver-based companies said Wednesday in separate statements.

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Goldcorp will retain a 2.0% net smelter return royalty from future metal production in the deal, which is worth Cdn$35.1mn (US$26.3mn) based on Orla's June 20 closing price.

SULFIDE JV

The deal also includes an agreement on a potential sulfide ore project at Camino Rojo.

If a sulfide mine is deemed viable in a prefeasibility study, Goldcorp has an option to enter a JV with Orla, the latter said in a release.

Goldcorp would earn a 70% interest in a mine in which ore is processed using existing infrastructure at its nearby Peñasquito operation, or 60% in a standalone project.

The Canadian major previously planned to use Camino Rojo as an additional source of ore feed at Peñasquito.

The company sold its Los Filos gold mine in Mexico and Cerro Blanco project in Guatemala earlier this year as part of a plan to divest non-core assets.

RESERVES

Camino Rojo's oxide reserves contain 1.7Moz gold, Orla said. The acquisition also includes 4.0Moz gold in measured and indicated resources in oxide ore, and Orla's possible 30% stake in the sulfide project.

"This transaction adds an advanced oxide heap leach project with significant gold reserves and resources in a favorable mining jurisdiction and Orla is now better positioned to create strong value for our shareholders," CEO Marc Prefontaine said.

Camino Rojo also benefits from a 200,000ha land package, with the potential to find additional oxide and sulfide resources, and agreements with local landowner cooperatives, or ejidos, already in place, Orla said.

The company is well funded to advance Camino Rojo and its Cerro Quema gold project in Panama to the next stages, Prefontaine added.

TIMELINE

The transaction is expected to close in H2, with a construction decision planned for 2019, following completion of a PEA and prefeasibility or feasibility study, Orla said in a presentation.