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Fresnillo to buy control of Penmont mining joint venture

Published: 05:14 12 Sep 2014 EDT

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Fresnillo (LON:FRES) has agreed to buy the remaining 44% stake it doesn’t own in the Penmont mining joint venture with Newmont Mining for US$450mln.

The cash deal, which is subject to shareholder approval, would enable the world's largest silver producer and second largest gold producer in Mexico, to integrate the La Herradura, Soledad-Dipolos and Noche Buena mines.

It would also give the company greater access to gold and silver projects in the region.

The joint venture comprises the Herradura, Noche Buena and Soledad Dipolos mines as well as the Mega Centauro and Centauro Deep advanced exploration projects. 

VSA Capital, a stockbroker, said in a research note that the deal was a “positive step” towards Fresnillo reaching its goal of 750,000 ounce per annum (ozpa) of gold production by 2018 from its current guidance of 500,000 ounces.

VSA kept its “hold” recommendation on Fresnillo and target price of 900p.

Shares in London-listed Fresnillo were unchanged at 822.75p.

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