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Goldcorp, Xstrata, Yamana Gold enters agreement for Agua Rica project

Last updated: 13:22 08 Mar 2011 EST, First published: 14:22 08 Mar 2011 EST

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Goldcorp (TSE:G, NYSE:GG) said Tuesday that it has entered into a letter of intent with Xstrata (LON:XTA) and Yamana Gold (TSE:YRI) under which their joint venture operation, Minera Alumbrera Limited Sucursal (MAA), will have an option to acquire Yamana's Agua Rica project.


MAA is a 50% owned by Xstrata, 37.5% owned by Goldcorp, with the rest is owned by Yamana. The joint venture currently operates the Alumbrera mine in Argentina. Yamana's Agua Rica project is located 35 km southeast of the Alumbrera mine.


Under the letter of intent, MAA will be granted an exclusive four-year option to acquire Yamana's interest in the Agua Rica project for up to $110 million of option payments from Goldcorp and Xstrata. 


Goldcorp will finance 42.86% of the option payments while Xstrata will finance the rest. 


If Goldcorp and Xstrata exercises the option and construction of the Agua Rica project receives approval, Yamana would receive $150 million and on commissioning, an additional $50 million.  Yamana also has the right to a payment for 65% of the payable gold production from Agua Rica up to a maximum of 2.3 million ounces.


During the option period, MAA will manage the Agua Rica project as well as fund all the development costs and a feasibility study. 


The ownership interests in MAA would remain unchanged and apply to the Agua Rica project.


The deal remains subject to a binding agreement.

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