Pan American Silver (TSX:PAAS,NASDAQ:PAAS) said on Tuesday (November 5) that it has received final regulatory approval from the Canadian government for the sale of its La Arena assets in Peru.

The company is selling the La Arena gold mine and development-stage La Arena II copper-gold project to Jinteng (Singapore) Mining, a subsidiary of Zijin Mining Group (OTC Pink:ZIJMF,HKEX:2899).

Under the terms of the deal, Zijin will pay US$245 million in cash for the properties. Pan American will also receive a 1.5 percent life-of-mine net smelter return royalty on gold production from La Arena II.

The agreement further provides a US$50 million contingent payment to Pan American once La Arena II starts commercial production. Pan American will also enter an offtake agreement with Zijin through which it will gain access to 60 percent of future copper concentrate supply from La Arena II on commercial terms for sale in North America.

The finalization of the La Arena sale is expected by the end of 2024.

Also on Tuesday, Pan American released its latest quarterly report, outlining record free cashflow of US$151.5 million.

President and CEO Michael Steinmann said higher silver and gold prices improved the company’s operating margins during the period, noting that it is positioned to meet its 2024 production guidance. Pan American estimates it will produce between 21 million and 23 million ounces of silver and 880,000 to 1 million ounces of gold this year.

Steinmann also noted continued strength in production and cost management across various projects.

He noted that at the La Colorada mine in Mexico, new ventilation infrastructure led to a 59 percent increase in silver production and a 26 percent reduction in cash costs from the previous quarter.

Total throughput is expected to reach 2,000 metric tons per day by year end.

During Q3, the company directed an additional US$3.6 million in capital to the La Colorada skarn project, focusing on further exploration and completion of a ventilation system to support production scalability.

Regarding the Escobal mine in Guatemala, Pan American indicated it is still unclear when operations may resume.

The mine, which is one of the world’s largest silver deposits, has been inactive since 2017 due to a pending consultation process with the Xinka indigenous community. This process, governed by Guatemala’s constitutional court under International Labor Organization Convention 169, has experienced delays, and a new timeline has not been set.

Recently, the country’s energy and mines ministry appointed a deputy minister of sustainable development to oversee the consultation, but no significant progress has been reported.

The suspension at Escobal has limited Pan American’s production capabilities. The site previously produced approximately 20 million ounces of silver annually before the stoppage.

As it awaits an outcome, Pan American is keeping the property on care and maintenance.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.