US-based mining firm Newmont has signed a $300m agreement with Compañia de Minas Buenaventura to acquire its stake in the Minera Yanacocha gold mine in Peru.

According to the contract, Newmont will purchase Buenaventura’s 43.65% stake in the project by paying $300m upfront, along with up to $100m in contingent payments based on higher metal prices.

At the same time, Newmont will transfer its 47% stake in the La Zanja gold and silver joint venture (JV) to its partner Buenaventura.

In exchange, Newmont will receive royalties on future production from the La Zanja operation. The company will also make a $45m contribution towards the future closing costs of the JV.

Newmont president and CEO Tom Palmer said: “Newmont has successfully operated in Peru for more than 30 years and has deep knowledge of the asset and the value it brings to Newmont stakeholders. Buenaventura has been an exceptional partner and we look forward to continuing a strong relationship.

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Said to be South America’s largest gold mine, the Yanacocha operations are situated between 3,500m and 4,100m above sea level.

The operation is currently a JV between Newmont (51.35%), Minas Buenaventura (43.65%) and Sumitomo Corporation (5%).

Located in the province and department of Cajamarca, around 800km north-east of Lima, the mine started production in 1993.

Newmont said it will now continue to advance its sulfides project, which will develop the initial phase of sulfide deposits at the Yanacocha property.

In a press statement, Newmont said: “Newmont may also have an opportunity to fully consolidate ownership of Yanacocha, as Sumitomo is assessing whether to exercise a right in its 2018 purchase agreement to return its 5% interest to Yanacocha in exchange for the original purchase price.”