(Yicai) Nov. 7 -- Zijin Mining Group said the Chinese metals miner has won approval to acquire the La Arena gold mine in Peru for at least USD245 million to expand its resource base. The company’s shares declined.

Jinteng Singapore Mining, a wholly-owned unit, will buy all of the La Arena gold mine and its second-phase project from Canada’s Pan American Silver, its Fujian province-based parent company said in a statement late yesterday.

The deal also includes a contingent payment of USD50 million upon the start of commercial production for the second phase and a 1.5 percent royalty on net gold smelting revenues.

The transaction has been green-lighted by the Chinese authorities and has secured approval under the Investment Canada Act, Zijin Mining noted.

Zijin Mining’s shares [SHA: 601899] closed down 1.3 percent at CNY17.09 (USD2.39) each today. The wider Shanghai market gained 2.6 percent.

The La Arena mine, located in Peru’s La Libertad department, began operations in 2011 and processes 36,000 tons of ore a day, producing about 3 tons of gold a year.

The La Arena II project will develop a copper-gold porphyry deposit in the northeastern area of the mine and is still in preliminary study. Further exploration and feasibility studies are required for this phase.

Zijin Mining’s technical team estimates that once La Arena II reaches full production, it could yield about 100,000 tons of copper and 3.8 tons of gold annually.

The company believes the acquisition will enhance its output of mined copper and gold, supporting its five-year production targets, though there is some uncertainty regarding the feasibility of the La Arena II project.

Editor: Tom Litting