GOLDCORP INC. announced that it has entered into an agreement with Barrick Gold Corporation to leverage potential synergies within the Maricunga Gold Belt, located in the Atacama Region in northern Chile, through a 50/50 joint venture.
The Transaction is being effected through a number of steps, including:
The acqusition by Goldcorp of Kinross Gold Corporation’s 25% interest in Cerro Casale and 100% interest in the Quebrada Seca exploration project for (i) an initial cash payment of $260 million, (ii) the granting of a 1.25% royalty interest by Goldcorp on 25% of gross revenues from payable metal from Cerro Casale and Quebrada Seca, with Kinross foregoing the first $10 million payable, (iii) a contingent payment of $40 million payable after a construction decision at Cerro Casale, and (iv) the assumption of a $20 million obligation to Barrick payable on commercial production at Cerro Casale;
The acquisition by Goldcorp of an additional 25% interest in Cerro Casale from Barrick for (i) a deferred payment obligation of $260 million to be satisfied through the funding of 100% of Cerro Casale expenditures (as described below), (ii) the granting of a 1.25% royalty interest by Goldcorp on 25% of gross revenues from payable metal from Cerro Casale and Quebrada Seca, (iii) a contingent payment of $40 million payable after a construction decision at Cerro Casale, and (iv) the transfer to Barrick of a 50% interest in Quebrada Seca for no additional consideration, followed by the joint contribution by Goldcorp and Barrick of 100% of Quebrada Seca to the joint venture;
The acquisition by Goldcorp of Exeter Resource Corporation (“Exeter”) (TSX: XRC; NYSE-MKT: XRA; Frankfurt: EXB) and its 100%-owned Caspiche project (“Caspiche”) located in the Maricunga Gold Belt in Chile, approximately 10 kilometers to the north of Cerro Casale, for share consideration of approximately $185 million (on a fully diluted basis); and
The contribution of Caspiche into the joint venture with 50% of the acquisition cost, or approximately $85 million, applied to reduce the $260 million deferred payment obligation.
“With the formation of a 50/50 joint venture with Barrick, we envisage jointly advancing the Cerro Casale and Caspiche gold deposits in a similar arrangement to our NuevaUnión project in Chile with Teck Resources” said David Garofalo, President and Chief Executive Officer. “The joint venture with Barrick has the potential to allow us to consolidate infrastructure to reduce capital and operating costs, reduce the environmental footprint and provide increased returns compared to two standalone projects. With our combined technical and financial strength, we see significant potential to advance these projects and increase net asset value per share over time, delivering value for all partners and stakeholders.”
Under the terms of the joint venture, Goldcorp is required to spend a minimum of $60 million in the two-year period following closing of the Transaction, and a minimum of $80 million in each successive two-year period until the deferred payment obligation is satisfied. If Goldcorp does not spend the minimum in any two-year period, Goldcorp will instead be required to make a payment to Barrick equal to 50% of the shortfall (with a corresponding reduction in the deferred payment obligation).
Goldcorp is a senior gold producer focused on responsible mining practices with safe, low-cost production from a high-quality portfolio of mines.
1 Refer to Barrick and Kinross’ websites for further information on the Cerro Casale mineral reserves and mineral resources estimates (figures have been aggregated and rounded):
2 The mineral resource estimate for Caspiche has been derived from Exeter’s technical report entitled “Amended NI 43-101 Technical Report on the Caspiche Project” dated December 19, 2014, a copy of which is available on Exeter Resource Corporation’s website at (figures have been rounded):