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Hochschild Mining (HOC) to buy Amarillo Gold (AGC) for $106m

By Angela Barnes

12:20, 30 November 2021

Hochschild Mining logo on a smartphone on a trading screen background
Hochschild will acquire a 100% interest in Amarillo’s Posse Gold Project – Photo: Shutterstock.

Hochschild Mining said on Tuesday that it is set to acquire Amarillo Gold, which will include it taking over the flagship Posse Gold Project located in Goiás State, Brazil.

In addition, it said shareholders of Amarillo will receive stock in a newly formed company, Lavras Gold Corp, which will hold a stake in the Lavras do Sul project, around C$10m (US$7.8m) of cash and a 2.0% net smelter revenue royalty on certain exploration properties owned by Amarillo – and located outside the current Posse resource and mine plan at Amarillo’s Mara Rosa property.

“The net acquisition cost to Hochschild, including the cash offer, cash provided to Lavras Gold Corp and Amarillo’s net cash as at 30 September 2021, is estimated to be C$135m (US$106m),” the company said.

Steps to completion

Hochschild said the transaction is still subject to Hochschild shareholder approval as well as that of Amarillo shareholders and the Canadian court regulatory authorities, and the satisfaction of certain other customary conditions.

However, it said the deal has been unanimously recommended by the board of directors of Amarillo and has the full support of Amarillo’s major shareholders, Baccarat Trade Investments and Eric Sprott.

“The board of directors of Hochschild believes the transaction is in the best interests of Hochschild’s shareholders. Accordingly, the board unanimously intends to recommend that shareholders vote in favour of the transaction. Completion is expected to occur in the first quarter of 2022,” it said in a statement.

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Hochschild said the deal aligns with its core strengths and long-term strategy of acquiring and optimising development-stage projects in the Americas. It also highlighted that it will provide exposure to a high-quality project with attractive costs where certain infrastructure construction is underway.

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A word from the chief exec

Ignacio Bustamante, Hochschild’s chief executive, commented on the acquisition.

“The acquisition of Amarillo enhances the company’s project pipeline and is the result of a long-term company review process of a wide range of growth opportunities.

“Posse is an attractive low-cost project with relatively near-term production and strong exploration upside potential. With our significant experience in developing precious metal deposits in the Americas, Hochschild is ideally placed to take Posse to its next stage and generate strong sustainable value for the company and the project’s local stakeholders,” he said.

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