Most Recent Stories
World's richest man Carlos Slim bets on Mexican gold mining
Billionaire Carlos Slim's Minera Frisco is acquiring Mexican assets belonging to AuRico Gold for $750 million.
Posted: Wednesday , 10 Oct 2012
RENO (MINEWEB) -
Little more than a month after AuRico Gold announced the Ocampo mine would lose at least 40,000 to 45,000 ounces of gold equivalent production this year and as much as 50,000 GEO in 2013; AuRico announced it would sell Ocampo and adjacent exploration properties to Carlos Slim's Minera Frisco SAB
Billionaire Slim's third-largest holding, Frisco--spun off last year from his holding company Grupo Carso SAB--will acquire Ocampo, the exploration projects Venus and Los Jarros, all located in the Chihuahua State and a 50% interested in AuRico's Orion advanced development project in Nayarit State, Mexico, for a total cash consideration of $750 million.
"Upon closing of the transaction, the company expects to use the net proceeds from the transaction to eliminate certain debt obligations, invest in internal growth opportunities, provide sufficient working capital and liquidity for the company going forward and to undertake a significant return of capital to shareholders," said AuRico in a press release. The transaction is expected to close in December.
Ocampo's problems stemmed from what AuRico said is an "unusually high turnover of skilled labor," as well as "significantly reduced underground ore development in the Northeast underground mine."
The company hired two underground mining contractors to support an accelerated underground development program, which increased estimated capital expenditures for this year and next. Scotia Capital analyst Trevor Turnbull wrote in early September that the mine's cash costs were forecast to double this year and jump 30% in 2013.
AuRico CEO Scott Perry said, "Minera Frisco presented a compelling, all-cash offer that will strengthen the company's balance sheet and repositions AuRico to execute on its strategy of delivering consistent, reliable and sustainable production from our two core assets in Canada and Mexico."
"Following the transaction, the company will be well positioned to meet its key objectives of growing its profitability and cash flow through the long life, strong organic growth profile primarily driven by increasing production at Young-Davidson," Perry observed. "In addition, we have gained a solid partner to further evaluate and potentially advance the Orion project in the coming years through the joint venture with Minera Frisco."