Goldcorp sells Camino Rojo gold-silver project in Mexico to Orla Mining

Camino Rojo is located about 50 km (31 miles) from Goldcorp’s flagship Peñasquito mine (pictured). (Image courtesy of Goldcorp via Flickr.)

Canada’s Goldcorp (TSX:G) (NYSE:GG) the world’s number four bullion miner in terms of output, is selling its Camino Rojo gold and silver project in Mexico to Orla Mining (TSX-V:OLA), adding to the list of operations it has been unloading in recent months to focus on highly profitable, core assets.

As part of the deal, the Vancouver-based gold producer will receive 19.9% of the outstanding common shares of Orla; a 2% net-smelter-return royalty on revenues from all metal production from the project, with the exception of metals produced under a joint venture with the junior miner.

Early this year, Goldcorp sold its Los Filos gold-and-silver mine, also in Mexico, and its Guatemalan Cerro Blanco gold-silver project.

Goldcorp will also have an option to acquire up to a 70% interest in future sulphide projects and the right to nominate a director to Orla’s board for as long as the gold giant’s equity ownership position is greater than 10%.

“We are very excited to now have both Goldcorp and Agnico Eagle as strategic shareholders and partners. They are first class gold companies and their ongoing support will prove invaluable as we advance our asset base,” Marc Prefontaine, CEO of Orla, said in a separate statement.

Camino Rojo, in the state of Zacatecas, is located about 50 kilometers (31 miles) from Goldcorp’s flagship Peñasquito mine.

It is not the first project Goldcorp unloads in recent months. Early this year, it sold its Los Filos gold-and-silver mine, also in Mexico, to Leagold Mining Corp  (TSX-V: LMC-H) for about $438 million worth of cash, stock and other assets.

It also agreed to sell its Guatemalan Cerro Blanco gold-silver project to Bluestone Resources Inc. (TSX-V: BSR).

Goldcorp expects to produce approximately 2.5 million ounces of gold in 2017 and has set itself some ambitious targets for the next five years. The company expects gold production to increase 20% to approximately 3 million ounces, excluding potential production from its Canadian projects and its NuevaUnión joint venture in Chile.

The company also has aggressive cost cutting plans and forecasts AISC to drop by a fifth to around $700 per ounce over the next five years. Reserves are expected to increase 20% to 50 million ounces over the next five years from the conversion of existing resources at its Century project in Ontario and flagship mines Peñasquito and Pueblo Viejo.

The deal with Orla is expected to close in the second half the year.

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