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AngloGold eyes Argentina projects in partnership with Latin Metals

The Organullo gold project is one of the three assets AngloGold may get involved with. (Image courtesy of Latin Metals.)

Canada’s Latin Metals (TSX-V: LMS) (OTCQB: LMSQF) has inked a potential partnership deal with one of the world’s biggest gold miners – AngloGold Ashanti (NYSE: AU) (JSE: ANG) – for its projects in Argentina. 

The Vancouver-based miner and the South African gold giant entered into a non-binding letter of intent on Tuesday regarding Latin Metals’ Organullo, Ana Maria and Trigal gold projects in Salta Province, northwestern Argentina. 

If the parties sign a definitive agreement, AngloGold will be granted the option to earn an initial 75% interest in the projects by making cash payments to Latin Metals in the aggregate of $2.55 million. It would also have to spend $10 million on exploration within five years of the execution and delivery of a final deal. 

If the parties sign a definitive agreement, AngloGold could earn an initial 75% interest in three gold projects by paying $2.55m in cash plus $10m on exploration

“Securing joint venture partners is a key part of Latin Metals’ prospect generator operating model and we are pleased to have entered into the LOI with AngloGold, as a potential partner for our projects in Salta province,” CEO Keith Henderson said in the statement. 

“Relatively advanced-stage exploration projects like Organullo require significant expenditures to assess the full potential of the project, which expenditures would otherwise need to be financed through dilutive equity financing,” Henderson noted. 

Under the terms of the preliminary agreement, Latin Metals would retain a minority, but key position and will have the opportunity to participate with the multinational in a future joint venture, he said. 

Shifting focus

AngloGold has been shifting focus from the home country to more profitable mines in Ghana, Australia and Latin America as the industry in South Africa dwindles amid power cuts, soaring costs and the geological challenges of exploiting the world’s deepest deposits. 

Its new chief executive Alberto Calderón, who assumed the role on Monday, has vowed to take risks in his native Colombia where is moving forward with key expansions. These include the Gramalote joint venture with B2Gold (TSX:BTO) (NYSE:BTG), which is at the centre of long-dragged out mining rights dispute with Canada’s Zonte Metals that remains active

Calderón is expected to revive the company’s fortunes after lacking permanent leadership for a year. He will have to begin by taking on the company’s battle to repatriate more than $461 million of its profit from the Democratic Republic of Congo and resolve challenges with value-added tax with the government in Tanzania. 

He may also have to decide whether AngloGold should move its primary listing from Johannesburg — a topic discussed for years

Analysts say the new leader will need time to also bring existing projects to fruition, including the Quebradona copper mine in Colombia, which is deemed by the government as a project of national strategic interest. 

First production at the mine, which will produce gold and silver as by-products, is not expected until the second half of 2025. Throughput during the estimated 21-year mine life is put at around 6.2 million tonnes of ore per year with an average grade of 1.2% copper. The firm expects annual production of 3 billion pounds (1.36Mt) of copper, 1.5 million ounces of gold and 21 million ounces of silver over the mine life.