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The mining newspaper for Alaska and Canada's North
Japanese conglomerate views Alaska gold mine as major investment in its strategy to become a major force in nonferrous metals
Teck Resources Ltd. and affiliates of Sumitomo Metal Mining Co. Ltd. and Sumitomo Corp. said they completed the sale of Teck's 40 percent interest in the Pogo Gold Mine in Interior Alaska July 7 after several months of negotiations.
The transaction, first announced April 30, required the Japanese conglomerate to pay Teck US$245 million, plus an undisclosed amount of working capital. As a result, Sumitomo Metal and Sumitomo now own 100 percent of Pogo, with the former increasing its share to 85 percent from 51 percent, and the latter to 15 percent from 9 percent.
Sumitomo Metal will establish Sumitomo Metal Mining Pogo LLC with US$41.5 million in paid-in capital as a local interest holder and operating company to take over from Teck and carry out mine management and operation, the buyers said in a joint statement.
Sumitomo Metal said it considers becoming a major force in the nonferrous metals industry a strategic target, and the acquisition at the remaining interest in Pogo is a significant step in that direction.
The Pogo Gold Mine will become the first overseas mine managed and operated by Sumitomo Metal, and the Japanese company said it believes that results at Pogo gold mine will provide further valuable opportunities for overseas mine development and operations.
Meanwhile, Sumitomo Corp. said it positions investment in, and management of, prime nonferrous mines as one of its core businesses, and firmly believes the acquisition of a larger stake in the Alaska mine "will be highly beneficial towards investment and mine management participation."
The mine commenced production more than three years ago in February 2006. Pogo is regarded as the first overseas investment into gold mine development by a Japanese company.
Sumitomo discovered the Pogo orebody in 1994, and along with Teck, advanced it to the production stage in a little more than 11 years.
Pogo produced 343,296 troy ounces of gold in 2008 from 818,237 tons of ore processed at a rate of 2,236 tons per day.
As the mine's operator, Teck had hoped to boost mill processing at Pogo this year to its full production rate of 2,500 tpd by focusing on circuit optimization and recovery improvement as well as underground development to open up additional ore headings.
Teck will continue to assist Sumitomo Metal with operating the mine during the transition to the new operator, according to a Teck spokesman.
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