Vancouver’s Goldcorp Inc. (TSX:G) has closed the sale of its San Dimas gold-silver mine in Mexico to Toronto’s Primero Mining Corp. (TSX-V:P) for US$510 million.
The acquisition transforms Primero, formerly Mala Noche Resources Corp. (TSX-V:MLA), into a producing gold and silver company. The San Dimas project produced 113,000 ounces of gold and 5.1 million ounces of silver in 2009.
In consideration for the producing mine, Goldcorp was paid US$216 million in cash, 31.1 million Primero shares, a $60 million convertible note bearing 3% interest per year and a $50 million promissory note bearing 6% interest per year.
Goldcorp will become one of the largest shareholders of Primero as a result of the deal, owning approximately 36% of Primero’s issued and outstanding common shares.
Chuck Jeannes, Goldcorp’s president and CEO said, “We look forward to participating in the future success of Primero and San Dimas through our significant ownership interest in the company.”
In conjunction with the deal, Vancouver’s Silver Wheaton Corp. (TSX:SLW) has amended its silver purchase agreement related to the San Dimas mine. Instead of delivering all of the silver produced at San Dimas, Primero will deliver the first 3.5 million ounces of silver produced to Silver Wheaton, plus 50% of any excess silver produced for the first four years following the closing of the deal.
The new deal benefits Primero, which will be able to increase its cash flow by around $20 million a year from direct silver sales until 2014. Silver Wheaton will then receive six million ounces of silver plus 50% of any excess production starting in the fifth year after the deal closes.
Goldcorp’s share price range during the past week: between $39.76 and $41.61; 52-week high: $48.37; 52-week low: $35.12.
Silver Wheaton’s share price range during the past week: between $19.39 and $20.38; 52-week high: $22.64; 52-week low: $10.10.