Goldcorp Buys Xstrata Gold Mine for $513M

Canada's Goldcorp Inc. will acquire mining giant Xstrata plc's 70% stake in the El Morro gold project in Chile. The transaction will be made through a $513 million deal with New Gold Inc., Xstrata's partner in the project.
New Gold will exercise its right of first refusal to buy the 70% interest in the El Morro project now held by Xstrata Copper Chile, a wholly owned subsidiary of Xstrata, of Zug, Switzerland, New Gold said in a statement Thursday, Jan. 7.
Goldcorp will advance $463 million to New Gold to fund the purchase, after which it will buy the stake from New Gold and give it an additional $50 million cash payment.
Once the deal closes, Goldcorp will own 70% of the mine and New Gold will retain its existing 30%. Goldcorp has also agreed to amend some terms of the El Morro shareholders agreement, with respect to New Gold's capital funding obligations.
The deal is a result of Barrick Gold Corp. in October offering to buy Xstrata's 70% in El Morro. New Gold, as the existing partner, has a right of first refusal on the stake and decided to partner with Goldcorp rather than the Toronto company.
New Gold said the new financing terms will negate a capital expenditure of about $225 million, which along with the $50 million cash injection will significantly improve its financial flexibility.
"Our interest in El Morro continues to represent a very exciting growth project for the company, particularly with the meaningful economic enhancements this transaction provides," New Gold chief executive Randall Oliphant said in his company's statement.
El Morro is an advanced copper and gold project in north-central Chile that contains about 6.7 million ounces of gold and 5.7 billion pounds of copper in proven and probable reserves.
New Gold's financial adviser is BMO Capital Markets and its legal counsel is Lawson Lundell LLP. Goldcorp sought advice from GMP Securities LP and the law firm Cassels Brock & Blackwell LLP.