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Yamana Gold Will Sell the Gualcamayo Mine for $85 Million

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Sale of Gualcamayo

Yamana Gold (AUY) announced that at the end of the third quarter, it entered into an agreement to sell its Gualcamayo mine in Argentina to Mineros SA.

The consideration from the transaction includes:

  • $30.0 million in cash to be payable at closing
  • $30.0 million to be paid on the declaration of commercial production at the Deep Carbonates project
  • 2% NSR (net smelter royalty) at Gualcamayo on metal produced after initial 396,000 ounces—NSR will be capped at $50 million
  • 1.5% uncapped NSR from the production of the Deep Carbonates project
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Transaction consideration

Yamana Gold has estimated the transaction’s total value at ~$85 million. While selling the mine, the company retained the opportunity to participate in medium to long-term value creation through NSR agreements.

Option agreement

Yamana Gold offered to let Mineros acquire up to 100% of its La Pepa project in Chile. According to the option agreement, Mineros has to spend $5 million over a period of two years for a 20% interest. Mineros has to pay Yamana Gold $5 million in cash on completion of an additional $15 million of spending over another two-year period.

Many other miners (GDXJ) (NUGT), including Barrick Gold (ABX), Newmont Mining (NEM), Goldcorp (GG), and Kinross Gold (KGC), have gone for portfolio optimization in the past to maximize profitable production.

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