In a transaction valued at more than C$200 million, Yamana Gold has entered into three metal purchase agreements with Sandstorm Gold Ltd. The metal purchase agreements include a silver purchase transaction related to production from Cerro Moro, Minera Florida and Chapada, a copper purchase transaction related to production from Chapada, and a gold purchase transaction related to production from Agua Rica.
Yamana said it will use the money to reduce the balance outstanding on its revolving credit facility. The company also continues review alternatives for monetizing its Brio Gold subsidiary.
“The streams that we have put in place do not have significant impacts on the projects to which they relate,” said Yamana Executive Vice President of Finance and CFO Charles Main. “They represent a modest portion of our copper and silver production, which are secondary metals to Yamana and they do not impact our exposure to our primary metal, which is gold. With this deal, and with the successful completion of a deal on Brio Gold, the goal and expectation is to be in a position to have generated cash proceeds well in excess of the amount required to complete the pay down of our credit facility prior to year end, which was one of our strategic objectives for the year. This would leave us with a five year undrawn credit facility of $1 billion along with an increased cash balance. With modest debt repayments of $118 million scheduled for the next couple of years, we believe that Yamana is very well positioned to fully execute on its business plan.”
The options the company is considering for Brio include an initial public offering, reverse takeover, joint venture with private equity firms, a disposition to, or merger with, other companies, and other financing and liquidity options. From an operational perspective, Brio Gold continues to meet or exceed targeted production and cost levels in 2015. Yamana said Brio Gold will exceed 2015 production guidance of 130,000 oz of gold production at cash costs approximating or better than cost guidance for the full year at $730/oz of gold.