Yamana's Pivotal Moment
This will eventually be seen as the crucial pivoting point between Yamana's extended stay in limbo and its resurgence to catch the pack of golden outperformers.
Yamana, Partners To Integrate Agua Rica Into Alumbrera Mine 9:20a ET March 8, 2011 (Dow Jones) Yamana, Partners To Integrate Agua Rica Into Alumbrera Mine
DOW JONES NEWSWIRES
Yamana Gold Inc. (AUY) and its joint-venture partners in the producing Alumbrera mine in Argentina have struck an agreement which will see Yamana's nearby development-stage Agua Rica project ultimately integrated into Alumbrera.
The Toronto-based miner's Alumbrera partners are Xstrata PLC (XTA.LN) and Goldcorp Inc. (GG). Subject to Xstrata and Goldcorp exercising their option to have Alumbrera acquire Agua Rica, and following the integration, Xstrata, Goldcorp and Yamana would respectively own 50%, 37.5% and 12.5% of the combined project. Those are the stakes the companies now own in Alumbrera, a large and low-cost gold and copper mine in western Argentina.
Given that Yamana would own 12.5% of the combined project, it's effectively selling 87.5% of Agua Rica. It will receive initial payments totaling $110 million from the two partners. Upon approval to proceed with construction at Agua Rica, it will get another $150 million, and a final $50 million once commercial production is achieved.
The deal includes a deferred consideration revenue stream from the project, which Yamana said will allow it to retain positive exposure to the majority of the significant gold resources at Agua Rica.
According to Yamana's website, Agua Rica is a large-scale copper, gold, silver and molybdenum deposit expected to produce 370 million pounds of copper and 148,000 ounces of gold annually during the first 10 years of production.
The companies expect significant synergies from the move, which comes at a time of strong global demand and prices for both copper and gold.