Nexa sells Peruvian copper subsidiary

Brazil's Nexa Resources announced the sale of its Peruvian subsidiary Minera Cerro Colorado to Canadian company Olympic Precious Metals for US$4.3 million, plus US$25mn if certain development milestones are hit.

The transaction is expected to be completed by the end of 2024, according to a filing with Peru's securities regulator SMV.

In July, Nexa announced that it was in talks with interested parties.

In a statement, Nexa, which is part of the Votorantim group, said the purchase agreement involves US$300,000 in upfront cash, US$1mn in a first and US$3mn in a second phase.

Minera Cerro Colorado holds the concession for the US$655mn Pukaqaqa greenfield copper exploration project, according to the energy and mines ministry. 

Pukaqaqa is in Huancavelica region and has 309Mt of resources, with copper grade of 0.4% and estimated useful life of 17 years. Nexa said the project also hosts molybdenum and gold deposits.

The environmental study has been approved and Nexa invested US$365,000 in infrastructure maintenance in 2022, although it never submitted extraction plans or reported the start of activities. Surrounding communities have also opposed the project.

“Nexa has been actively assessing risk-return alternatives, and the sale of this project is expected to result in Nexa’s continued portfolio optimization process to improve free cash flow in line with the company's disciplined capital allocation framework,” the statement said. 

In Q2, Nexa recorded a net loss of US$69mn and US$81mn in the first half.

Vancouver-based Olympic Precious Metals is focused on copper and gold, but because it is relatively new, information and other projects is scarce.

CEO Matthew Wood is a former founder of Steppe Gold, which has significant operations in Mongolia.