Proactive Investors - Run By Investors For Investors

Yamana Gold agrees to sell Brazilian mine to Lundin Mining in US$1 billion deal

The Chapada mine, located in the state of Goiás, is a copper-gold operation that began production in 2007
brazilian flag
The Chapada mine and Suruca project are in western Brazil

Yamana Gold Inc (TSE:YRI) (NYSE:AUY) announced Monday morning that it agreed to sell its Brazilian mine to Lundin Mining Corporation (TSE:LUN) (OTCMKTS:LUNMF) for US$1 billion.

The Chapada mine, located in the state of Goiás, is a copper-gold operation that began production in 2007.

READ: Newmont's $10B deal to buy rival Goldcorp undercut by major shareholder's opposition

Under the terms of the agreement, Yamana will receive $800 million upon closing of the sale, with an additional consideration of up to $125 million contingent on the gold price, $100 million based on the development of a pyrite circuit to optimize the operation, and a royalty on the adjacent Suruca gold project.

The Suruca project lies seven kilometres northeast of Chapada and has an estimated annual production profile of around 150,000 ounces.

“While Chapada has been a valued asset for Yamana, the sale transaction delivers a significant gain, delivers a high after-tax return and financially repositions the company with a significant and immediate improvement to overall financial flexibility,” said Peter Marrone, Yamana’s CEO, in a statement.

Near-term value

According to Marrone, the sale allows the gold miner to pursue near-term value maximizing portfolio opportunities and increase shareholder returns, initially by way of a 100% increase in the annual dividend.

Yamana’s Canadian shares slipped around 3% to C$3.32 by Monday afternoon, while its US-listed shares were down 2% to US$2.50 on Monday afternoon.

Lundin’s shares gained around 8% to C$7.35 in Canada and 8% in the US, to US$5.52.

--Updates with share price--

Contact Angela at [email protected]

Follow her on Twitter @AHarmantas

View full YAU profile View Profile

Yamana Gold Timeline

Related Articles

1522843655_shutterstock_102742847.jpg
October 25 2018
BAM East will be the focus in 2018, after Landore completed a £3.15mln funding
1526980503_Scotgold---Richard-Gray-at-Tyndrum.jpg
October 23 2018
The decision notice allows Scotgold to proceed with the long-awaited redevelopment of Cononish
1542274067_Telson---Antonio-Berlanga.jpg
November 15 2018
Telson's Mexican mines are set to deliver significant growth
Copyright © Proactiveinvestors.com, 2019. All Rights Reserved - Proactive Investors North America Inc., Proactive Investors LLC

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use