Barrick Gold has signed an agreement to divest its fully-owned Lagunas Norte mine in Peru to holding company Boroo.

Located in the District of Quiruvilca in the Santiago de Chuco province and the La Libertad region of north central Peru, the Lagunas Norte gold-silver mine commenced operations in March 2005.

The mine has been idle in recent years having been placed in care and maintenance in 2019.

The total consideration of the deal includes a payment of up to $81m plus Boroo’s assumption of Barrick Gold’s closure liability of $226m relating to the property backed by an existing bonding obligation of $173m.

Under the terms of the deal, Boroo will make upfront cash payment of $20m and $10m on the first anniversary of the closing of the deal.

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By GlobalData

Barrick Gold will also receive $20m from the investment holding company at the second anniversary of the deal’s completion.

Boroo will also pay a 2% net smelter return royalty (NSR) on gold and silver produced via the refractory sulphide ore project.

This payment, however, will end after one million ounces of gold has been produced and which may be bought for $16m by Boroo for a limited period of time after closing.

Boroo will also make a contingent payment of up to $15m, which will be based on the average gold price per ounce for the two-year period after the completion of the transaction.

The sale is a part Barrick Gold’s strategy to sell non-core interests.

As part of this strategy, the firm has realised nearly $1.5bn in proceeds from the sale of its non-core interests to focus its portfolio on tier one assets.

In a press statement, the company said: “The proposed acquisition would benefit the mine’s stakeholders in Peru by giving Boroo the opportunity to extend its life by accessing satellite resources and adapting the infrastructure.

“The Latin American region remains an important destination for Barrick, and the company will keep a team in Peru to continue to develop its portfolio of exploration assets and to pursue opportunities to find and operate world-class gold and or copper mines in that country.”

The transaction is subject to closing conditions.