Fresnillo to buy out Newmont in Mexican gold joint venture

Precious metals miner Fresnillo has proposed to spend $450m on buying out its joint venture (JV) partner to take full ownership of certain assets in the Herradura Corridor, one of Mexico's most prospective gold belts.

The company already owns 56% of the Penmont JV but has offered to purchase Newmont's 44% stake in the Herradura, Noche Buena and Soledad Dipolos mines, the Mega Centauro and Centauro Deep advanced exploration projects and a number of other exploration prospects.

Fresnillo hopes that by taking a 100% stake in the JV will enable it, with current operations, to increase its 2018 gold production target of 500,000 ounces to 750,000 ounces.

The two companies have signed a binding agreement for the deal, though the transaction would be subject to the approval by Fresnillo's shareholders.

The miner said that deal would be immediately accretive to earnings, while costs on current and future production are expected to be low.

It believes the transaction holds "significant" exploration and developments upside potential, and will add 2m ounces to reserves and 5.1m ounces to its resource base.

Chief executive Octavio Alvidrez said the acuisition would "significantly enhance our gold production and be central to our growth".

"Acquiring full control of the Penmont assets would enable us to both maximize the value of current producing mines which we have extensive experience in operating, and unlock further long-term value from Herradura as a highly prospective region where we have a strong track record of exploration success."