(All amounts are expressed in United States dollars
unless otherwise indicated.)
YAMANA GOLD INC. (TSX:YRI; NYSE:AUY) (“Yamana” or the “Company”) is
pleased to announce it has entered into a definitive purchase
agreement (the “Purchase Agreement”) to sell 100% of its interest
in the Gualcamayo mine located in San Juan Province, Argentina (the
“Sale Transaction”) to Mineros S.A. (“Mineros”).
Separately, the Company has agreed to grant
Mineros an option to acquire up to a 51% interest in the La Pepa
project, located in the Maricunga gold belt, Chile, over an earn in
period of four years (subject to extension for certain unexpected
contingencies), and then the remaining 49% interest pursuant to a
call option (the Option Agreement).
GUALCAMAYO
Pursuant to the Purchase Agreement for
Gualcamayo, Yamana will receive consideration made of the
following:
- $30 million in cash, payable at
closing.
- An additional $30 million in cash
upon declaration of commercial production of the Deep Carbonates
project, which is an undeveloped mineral resource below the
existing oxide gold mineralization at Gualcamayo.
- A 2% net smelter return royalty
(“NSR”) at Gualcamayo on metal produced after the initial 396,000
ounces, capped at $50 million of total payments (excluding the Deep
Carbonates Project); and
- A 1.5%, uncapped NSR on the Deep
Carbonates project.
The Sale Transaction was structured to provide
both immediate payments and value, and future payments and
value. The Sale Transaction is consistent with the Company's
stated approach to focus on operations and projects where there is
more certainty of production, costs, longer life and capital
requirements. Furthermore, with the two NSRs the Company
preserves considerable upside value from this structure, both to
metal prices and new discoveries and production, in relation to its
carrying value.
The total value of the consideration for
Gualcamayo resulting from the Sale Transaction is in line with
recent market valuations for comparable assets. These
valuations are reflective of the current commodity price
environment, which is approximately $100 per ounce of gold lower
than as of December 31, 2017. This total value is estimated
at approximately $85.0 million and, as such, the carrying value of
Gualcamayo has been reduced to this amount. However, the
consideration offers considerable upside as noted above.
The Sale Transaction is subject to customary
regulatory and third party approvals and other customary closing
conditions and is expected to close in the fourth quarter of
2018.
LA PEPA
The terms of the Option Agreement for the La
Pepa project are as follows:
- Mineros must spend $5 million on the La Pepa project over a
two-year period to earn an initial 20% interest.
- To earn an additional 31% interest, Mineros must pay $5 million
in cash to the Company on completion of an additional $15 million
of spending on the La Pepa project over another two-year period
with expenditures directed toward the completion of a National
Instrument No. 43-101 compliant technical report.
- Once Mineros has earned the 51% interest, by exercising the
call option Mineros may acquire the remaining 49% interest at fair
market value, which will be determined pursuant to an agreed upon
formula and to be calculated by independent valuators.
During the option term, Mineros will act as
operator and nominees of Mineros and Yamana will serve on a
technical committee. The parties expect to sign a
shareholders’ agreement that will set forth the parties’ ownership,
voting and other rights in a Chilean joint venture company that
will be formed to own the La Pepa project.
As part of discussions, the Company evaluated
Mineros’ work plans that cumulatively total $20 million and are
expected to advance the La Pepa project meaningfully, including but
not limited to working towards the completion of a National
Instrument No. 43-101 compliant technical report. The work
plan is expected to provide more certainty to the development
potential of the project in the medium term and, as such, the
Company expects the Option Agreement to surface considerable value
for the Company’s 49% interest, whether or not Mineros exercises
its final call option.
The work plan currently envisages the
following:
- Dealing with the required environmental permits and conducting
an exploration drilling program;
- Geological targeting, including soil samples, geophysics,
mapping and interpretation, all of which can be done without a
permit; and
- Working towards the completion of a preliminary economic
assessment (“PEA”) within two years, including an assessment of
water availability and water supply infrastructure in the
region.
The Company determined that the Option Agreement and, in
particular Mineros undertaking the envisaged work plan, which the
Company supports, provides a low risk approach to surface value
from Le Pepa, and is consistent with Yamana’s focus on pursuing
opportunities with more certainty, while preserving exposure to
upside value.
The Option Agreement will be signed on closing
of the Sale Transaction.
Counsel and Advisors
Yamana has engaged Cassels Brock & Blackwell LLP as its
legal advisors. TD Securities Inc. acted as exclusive financial
advisor to Yamana.
About Mineros
Headquartered in Medellin, Mineros is a
Colombia-based Latin American gold producer with operations in
Colombia and Nicaragua. In Colombia, it has produced gold from the
El Bagre alluvial operations in Antioquia for over forty years, and
more recently, from the La Ye underground mine. In Nicaragua, it
produces gold from the Bonanza mine in the North Caribbean Coast
Autonomous Region that it acquired in 2013, and through innovative
agreements with artisanal miners. Mineros' strategic vision is to
expand its operational and project footprint in the Americas.
Additional information on Mineros is available at
www.mineros.com.co.
About Yamana
Yamana is a Canadian-based gold producer with
significant gold production, gold development stage properties,
exploration properties, and land positions throughout the Americas
including Canada, Brazil, Chile and Argentina. Yamana plans
to continue to build on this base through existing operating mine
expansions, throughput increases, development of new mines, the
advancement of its exploration properties and, at times, by
targeting other gold consolidation opportunities with a primary
focus in the Americas.
FOR FURTHER INFORMATION PLEASE CONTACT: Investor
Relations416-815-02201-888-809-0925Email: investor@yamana.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS: This news release contains or incorporates by reference
“forward-looking statements” and “forward-looking information”
under applicable Canadian securities legislation within the meaning
of the United States Private Securities Litigation Reform Act of
1995. Forward-looking information includes, but is not limited to
information with respect to the Company's strategy, plans or future
financial or operating performance. Forward-looking statements are
characterized by words such as "plan," "expect", "budget",
"target", "project", "intend", "believe", "anticipate", "estimate"
and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements are
based on the opinions, assumptions and estimates of management
considered reasonable at the date the statements are made, and are
inherently subject to a variety of risks and uncertainties and
other known and unknown factors that could cause actual events or
results to differ materially from those projected in the
forward-looking statements. These factors include the Company's
expectations in connection with the satisfaction of all closing
conditions, the completion of the Sale Transaction, the expected
use of proceeds discussed herein and delivering value creation over
the long term, as well as those risk factors discussed or referred
to herein and in the Company's Annual Information Form filed with
the securities regulatory authorities in all provinces
of Canada and available at www.sedar.com, and the
Company's Annual Report on Form 40-F filed with the United
States Securities and Exchange Commission. Although the Company has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. The Company undertakes no
obligation to update forward-looking statements if circumstances or
management's estimates, assumptions or opinions should change,
except as required by applicable law. The reader is cautioned not
to place undue reliance on forward-looking statements. The
forward-looking information contained herein is presented for the
purpose of assisting investors in understanding the Company's
expected plans and objectives in connection with the Sale
Transaction and may not be appropriate for other purposes.
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