Pan American Silver (PAAS, PAAS.TO) said Tuesday that it has completed the sale of its La Arena unit to Zijin Mining Group's Jinteng (Singapore) Mining unit for $245 million in cash.

The unit owns the La Arena gold mine and the La Arena II project in Peru, Pan American said.

Pan American said it will retain a 1.5% life-of-mine gold net smelter return royalty on the La Arena II project. Zijin Mining agreed to pay Pan American an additional $50 million contingent payment once the project began commercial production, Pan American added.

Pan American and La Arena also signed an offtake agreement as part of the approval from Canadian authorities, allowing Pan American to secure up to 60% of the future copper concentrate supply from the La Arena II, Pan American said.