Blog Coverage: Yamana Gold Announced Sale of Brio Gold Assets; Raised C$80 Million

Upcoming AWS Coverage on Richmont Mines Post-Earnings Results

LONDON, UK / ACCESSWIRE / May 12, 2017 / Active Wall St. blog coverage looks at the headline from Yamana Gold Inc. (NYSE: AUY) as the Company announced on May 11, 2017, that along with Brio Gold Inc., it has entered into an agreement with a syndicate of Underwriters, co-led by Canaccord Genuity Corp., CIBC Capital Markets, and National Bank Financial Ltd., pursuant to which the Underwriters have agreed to purchase 26.667 million common shares of Brio Gold, currently held by Yamana. The Company has a diversified portfolio of assets providing sustainable gold production supported by a large mineral reserve and mineral resource base. In FY16, Yamana produced 1.27 million ounces of gold, 7.0 million ounces of silver and 116 million pounds of copper. Register with us now for your free membership and blog access at:

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One of Yamana Gold’s competitors within the Gold space, Richmont Mines Inc. (NYSE: RIC), reported on May 04, 2017, its operating and financial results for the three months ended March 31, 2017. AWS will be initiating a research report on Richmont Mines in the coming days.

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The Announcement

Under terms of the agreement, the Underwriters will have the option exercisable in whole or in part at any time until 30 days following the close of the offering, to increase the size of the offering by an additional 2.667 million of Brio Gold’s common shares to cover over-allotments. If the over-allotment option is exercised in full capacity, the total gross proceeds set to be received by Yamana will be C$ 88,002,000.

Prior to the announcement, Yamana held 89,202,922 common shares of Brio Gold which represented approximately 79.3% of the issued and outstanding common shares of Brio Gold on a basic basis and 75.3% on a fully diluted basis. After giving effect to this offering, and assumption of the full exercise of Over-allotment Offering, Yamana will own 59,868,922 common shares of Brio Gold, representing in the aggregate about 53.2% of the issued and outstanding common shares of Brio Gold on a basic basis and 50.5% on a fully diluted basis. Brio Gold is not entitled to receive any proceeds from the Offering and all of the expenses of the offering will be paid by its parent Company, Yamana.

The Debt-Ridden Portfolio

Yamana views this transaction as a liquidation process to loose hold of low-return assets. The Company had net debt of $1.5 billion as of December 31, 2016. This offloading of Brio Gold assets is possibly the step towards reducing the debt owed by Yamana. The sale of about 26 million shares is set to reduce the Company’s investment in Brio significantly and will help the Company expect a meaningful increase in liquidity for the shares. The Company stated that reducing the interest in Brio Gold will create liquidity and lead to additional opportunities for the remaining stake in Brio Gold.

The Brio Gold Story

On December 23, 2016, Yamana Gold announced the closing of its previously announced offering of purchase rights and related transactions pursuant to which Yamana transferred common shares of Brio Gold. A total of 17,324,507 Brio shares owned by Yamana were transferred pursuant to the transaction at a price of C$3.25 per Brio share. As a result of the transaction, Brio Gold became a standalone public Company with Yamana as the major stakeholder with about 85% interest in the Company. Later, on March 06, 2017, Yamana sold 6 million common shares of Brio Gold Inc., for C$3.35 per Brio’s share for total proceeds of C$ 20.10 million to an arm’s length institutional shareholder. This announcement, on May 11, 2017, is the second sell-off posted by Yamana in 2017.

Yamana Q1 FY17 Results

On May 03, 2017, Yamana Gold reported its financial and operational results for Q1 FY17. The Company reported net gold production of 257,333 ounces including 215,647 ounces of gold from Yamana’s six production mines and attributable gold production from Brio of 41,886 ounces for Q1 FY17. The total silver production for the quarter stood at 1.08 million ounces while the Company reported 26.5 million pounds of copper production for Q1 FY17. Yamana reported net revenue of $403.5 million and observed a net loss of $5.9 million or $0.01 per share for Q1 FY17.

Stock Performance

At the close of trading session on Thursday, May 11, 2017, Yamana Gold’s stock price rose 5.04% to end the day at $2.71. A total volume of 14.43 million shares were exchanged during the session, which was above the 3-month average volume of 12.75 million shares. The stock currently has a market cap of $2.78 billion and has a dividend yield of 0.74%.

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