Patagonia Gold to sell Argentina gold mine for $15m

AIM-listed miner Patagonia Gold is to sell its Cap-Oeste Sur Este project (COSE) in Santa Cruz Province, Argentina to Minera Triton for $15m.

The company’s subsidiary Patagonia Gold SA has entered into a binding agreement with Minera Triton Argentina SA, a subsidiary of Nasdaq-listed Pan American Silver Corp to sell the project.

The sale is expected to complete around the end of May and on completion, Minera Triton will pay $7.5m in cash and the remaining $7.5m will be paid 12 months later on the starts of commercial production at COSE.

Minera Triton has also pay Patagonia a 1.5% net smelter returns royalty on production from COSE. If Minera Triton does not pay the deferred $7.5m within 12 months of completion, COSE will revert to back to Patagonia and Minera Triton will be entitled to have a 3% royalty.

The proceeds from the sale will be used for general working capital purposes and to reduce its debt.

Patagonia chief executive Christopher van Tienhoven said that he believes the sale “is a good opportunity for the development of COSE given the synergies with Pan American Silver's Manantial Espejo operation”.

The company has also been granted an exclusive option to buy from Minera Aquiline Argentina SA, another subsidiary of Pan American, the Calcatreu gold-silver asset in Rio Negro Province, Argentina for $15m within six months.

Van Tienhoven added: “Calcatreu presents a new opportunity for Patagonia Gold to develop and produce from an asset with a potential mine life of over five years."

Shares in Patagonia Gold were down 4.05% to 1.78p at 1343 BST.