Peruvian mining firm Compania de Minas Buenaventura has acquired the 51% stake of the Chucapaca gold project from its South African joint venture (JV) partner Gold Fields.

Buenaventura, which had been managing the project, previously owned a 49% stake in Canteras del Hallazgo JV, and following the acquisition the company will be the sole owner of the undeveloped gold mine in southern Peru.

As per the deal, Buenaventura will pay $81m in cash and a 1.5% royalty payment to Gold Fields on future sales of gold, copper and silver produced at the mine.

Gold Fields CEO Nick Holland said: “We are pleased to have agreed terms with Buenaventura to sell our controlling stake in Chucapaca.

“This acquisition…will permit the maximisation of shareholders’ value, adding precious metal resources to our portfolio.”

“The royalty agreement provides us with future upside, as we see Buenaventura, with its local expertise and experience, advancing this project fairly quickly.”

Buenaventura plans to convert the open pit project into an underground mine, which according to Gold Fields’ estimates would require an investment of more than $1.2bn.

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Buenaventura chairman and CEO Roque Benavides said: “Chucapaca, as an underground mining project located in Peru, offers important potential to continue growing in terms of gold resources and future production.

“This acquisition fits perfectly with Buenaventura’s expertise to develop underground mining operations that will permit the maximisation of shareholders’ value, adding precious metal resources to our portfolio.”

Once operational, the Chucapaca project is expected to produce 500,000oz of gold a year.

In 2013, the Chucapaca was estimated to contain 6.1 million ounces of gold mineral resources.