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Yamana raises $152m through three Sandstorm streaming deals

27th October 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Canadian gold miner Yamana Gold has clinched three metal purchase agreements with streaming firm Sandstorm Gold to raise $152-million that would be used towards extinguishing the company’s revolving credit facility, as Yamana seeks to increase its available cash flows.

Under the terms of the streaming deals, Sandstorm had agreed to advance $148-million and issue the company 15-million common share purchase warrants with a strike price of $3.50, valid for five years. Sandstorm would also make a further advanced payment of $4-million in six months.

The metal purchase agreements included a silver purchase transaction related to future production from Cerro Moro, in Argentina, Minera Florida, in Chile, and Chapada, in Brazil; a copper purchase transaction on output from Chapada and a gold purchase transaction related to future output from Agua Rica, also in Argentina.

Mining companies had increasingly been turning to alternative financing options in their efforts to repair their balance sheets, as they grappled with sustained lower commodity prices for several years.

Yamana stated that the transaction was one of various alternatives the company had been evaluating and advancing to help achieve its goal of reducing the balance owing on its revolving credit facility to nil.

“[The streams] 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 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,” Yamana executive VP for finance and CFO Charles Main explained.

This was expected to leave Yamana with a five-year undrawn credit facility of $1-billion, along with an increased cash balance.

Yamana also stated that it was still working on ways to monetise its Brio Gold subsidiary, which held some of its noncore assets in Brazil. These alternatives included an initial public offering, a reverse takeover, a joint venture with private equity firms, a merger or an outright sale.

Yamana’s TSX-listed stock closed up 4.10% on Tuesday at C$3.30 apiece, after having lost about 33% of its value so far this year.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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