Yamana raises $178m for debt repayment through Mercedes, warrant sales

VANCOUVER (miningweekly.com) – Canadian gold producer Yamana Gold has raised about $178-million to cut its debt load, the company said Monday.

The Toronto-headquartered company received $122.5-million in cash from the sale of its Mercedes mine, in Mexico, to Premier Gold, as well as shares, equity securities and net smelter return royalties with an additional value of about $22-million.

Yamana reported that the marketable securities received included six-million common shares in Premier and three-million common share purchase warrants that are exercisable at C$4.75 per common share for 24 months. The company also received a 1% net smelter return royalty on the Mercedes mine, which becomes payable six years from the completion of the sale or when cumulative production of 450 000 oz of gold equivalent from Mercedes is reached, whichever comes earlier. Yamana also received a 2% net smelter return royalty on the Mexico-based La Silla and La Espera properties.

Meanwhile, the company has also sold 15-million Sandstorm Gold warrants with a strike price of $3.50 each for net proceeds of about $33.55-million, or $2.24 apiece. The warrants expire on October 27, 2020, meaning that the warrants were about $1.55 a share in the money when priced on September 23. The warrants were originally issued as part of the consideration for certain metal purchase arrangements relating to copper and silver entered into with Sandstorm in 2015.

In total, these transactions have provided about $156-million in cash to reduce net debt. One of the company's objectives in early 2016 was to reduce net debt by $300-million in a two-year period through 2017.

Yamana also announced that it intended to achieve a leverage ratio below 1.5 over time. It reported that it was well ahead of schedule on both objectives and expected that cash balances would continue to increase, while net debt would continue to decrease organically as a result of increased margins at current gold and silver prices.