Vancouver's Teck Cominco Ltd. (TSX:TCK.B) is selling its stake in a Chilean gold project in a cash and share deal worth about US$300 million.
Compania Minera Carmen de Andacolo, which is 90% owned by Teck, has agreed with Denver, Colorado-based Royal Gold Inc. (TSX:RGL) to sell its interest in gold production from the Andacollo mine in central Chile.
Teck will receive roughly US$270 million from the deal, while a Chilean state-owned entity that owns 10% of Andacolo will receive $30 million.
Tech plans to use funds from the deal to pay down the bridge loan for its acquisition of Fording Canadian Coal Trust, which closed last October.
The deal will also relieve Teck from a substantial financial obligation related to the expansion of the Andacollo mine originally planned for 2009.
Royal Gold will pay US$100 million in cash and approximately 4.45 million Royal Gold shares, valued at US$200 million based on the five-day trailing volume-weighted average price of US$44.90 per share.
If Royal Gold completes a public offering of shares before the closing of the deal, the cash portion of the purchase price will be increased by 50% and the stock portion will be decreased by 50%.
The deal, which is subject to customary closing conditions, is expected to close in 2009's second quarter.
Teck's share price range during the past week: between $6.87 and $8.77; 52-week high: $52.90; 52-week low: $3.35.