Goldcorp Selling its Los Filos Mine and Cerro Blanco Project

Bluestone sees significant near-term upside potential for the Los Filos gold mine
in Mexico. (Photo: Goldcorp)
In separate announcements in mid-January, Goldcorp reported it has entered into agreements to sell its Los Filos gold mine in Mexico to Leagold Mining and its Cerro Blanco gold-silver project in Guatemala to Bluestone Resources. The Los Filos transaction is valued at approximately $438 million, consisting of $279 million in cash (subject to certain closing adjustments), $71 million in Leagold common shares, and tax receivables valued at approximately $88 million. The common shares issued to Goldcorp will represent approximately 30% of the issued and outstanding shares of Leagold.

Consideration for the Cerro Blanco transaction includes $18 million in cash, a 1% net smelter return royalty on future production, and common shares of Bluestone representing approximately 9.9% of the company’s issued shares. Goldcorp will receive an additional $15 million in cash upon declaration of commercial production at Cerro Blanco.

The Los Filos mine is located in the Nukay mining district of central Guerrero state in southern Mexico, approximately 230 kilometers (km) south of Mexico City. Mining operations include two open-pit mines — Los Filos and El Bermejal — and one underground mine. Production during the first nine months of 2016 totaled 194,000 oz of gold, down from 198,000 oz in the comparable 2015 period.

Proven and probable reserves at Los Filos total 34.56 million mt grading 1.29 g/mt of gold and 7.05 g/mt of silver and containing 1.43 million oz of gold and 7.83 million oz of silver. Mine production capacity totals about 70,000 mt/d. Ore is processed by static heap leaching. Goldcorp President and CEO David Garofalo said, “The divestiture of Los Filos is consistent with our strategy of focusing on our core camps to drive increasing net asset value per share.”

Leagold CEO Neil Woodyer said, “The Los Filos gold mine represents an exceptional opportunity to acquire a quality operation with scale that generates free cash flow and has an identified future growth project. Los Filos has near-term upside potential from optimizing the current operations under a focused management team and from the development of a new underground mine at El Bermejal. Additionally, there are several exploration opportunities within the area of current operations that could extend mine life.”

Regarding the Cerro Blanco transaction, Bluestone has engaged JDS Energy & Mining to complete an NI 43-101 preliminary economic assessment of the project prior to closing. Bluestone CEO and Chairman John Robins said, “Cerro Blanco represents a unique and transformational acquisition for Bluestone. The project is fully permitted for production, designed and developed to world-class standards, and hosts very high gold grades, with strong potential to expand existing resources. We are excited to have Goldcorp as a partner and shareholder in the development of Guatemala’s next low-cost, underground gold mine.”

As part of the agreement, Goldcorp has granted Bluestone a right of first refusal with respect to certain assets and equipment at Goldcorp’s Marlin mine, also located in Guatemala. The Marlin mine will continue reclamation and re-vegetation activities over the next three years, followed by ongoing monitoring and maintenance activities as planned. The last ore production will be processed in early 2017.

As featured in Womp 2017 Vol 02 -