TORONTO, Feb. 23, 2020 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX: YRI; NYSE: AUY) (“Yamana” or the “Company”) is pleased to announce it has entered into a definitive purchase agreement (the “Purchase Agreement”) to sell a portfolio of royalty interests and the contingent payment to be received upon declaration of commercial production at the Deep Carbonates Project (“DCP”) at the Gualcamayo gold mine (together, the “Sale Transaction”) for total consideration of $65 million to Guerrero Ventures Inc. (TSX-V:GV) (“Guerrero”).

The consideration has been structured to realize both immediate value for these non-core assets through a cash component of $20 million and further value from a significant $45 million share position in a newly created, growth-oriented company with a driven and experienced management team. As a founding shareholder, Yamana stands to benefit from participation in the new company, a pure-play precious metals royalty company that has significant potential upside through mineral resource expansions and mine life extensions.

The Sale Transaction marks another step in the Company’s efforts to optimize its portfolio and improve its financial flexibility. The sales consideration is expected to advance the Company’s generative exploration program and for other purposes, including contributing to the Company’s dividend reserve fund. The Sale Transaction also provides Yamana with a meaningful stake in a new royalty company that has a strong asset base, like-minded corporate objectives, and a growth mandate. This model is similar to the approach that Yamana took with the creation of its Brio Gold subsidiary, which subsequently became a successful standalone public company and continues to provide valuation upside to Yamana today following Brio’s acquisition by Leagold Mining Corporation and Leagold’s pending merger with Equinox Gold Corp.

Details of the Sale Transaction

•Guerrero will acquire two portfolios of precious metals royalty, stream and gold loan assets from funds related to Orion Resource Partners (USA) LP (collectively, “Orion”) and Yamana for total consideration of $268 million and $65 million, respectively (the “Acquisitions”).


•Yamana’s portfolio of assets being sold under the Sale Transaction consists of:

o 1% net smelter return royalty (“NSR”) on gold production from the Riacho dos Machados (“RDM”) gold mine operating in Minas Gerais, Brazil
o 2% NSR on oxide gold production from the Gualcamayo gold mine operating in San Juan, Argentina, once the operation produces approximately 275,000 ounces from January 1, 2020
o 1.5% NSR on production from the DCP at the Gualcamayo gold mine
o $30 million cash payment receivable upon declaration of commercial production at the DCP at the Gualcamayo gold mine
o 2% NSR on production from the Suruca project in Goiás, Brazil
•Guerrero will satisfy the purchase price under the Sale Transaction to Yamana by issuing $45 million in common shares of Guerrero at a price of C$0.90 per share and by paying $20 million in cash (the “Cash Consideration”) on closing. Guerrero may elect, prior to closing, to pay up to $10 million of the Cash Consideration through a deferred cash payment (the “Deferred Cash Payment”), in which event Yamana will receive interest payable at 3% and the Deferred Cash Payment may be converted at any time, in whole or in part, by the holder into shares of Guerrero at C$0.90 per share. While the Deferred Cash Payment will be due for payment in full at the end of two years, Guerrero may pay the Deferred Cash Payment at the end of one year, subject to additional payment by Guerrero equal to 5% of the Deferred Cash Payment, and the right of Yamana to convert the Deferred Cash Payment into shares of Guerrero at a price of C$0.90 per share. The instrument creating the Deferred Cash Payment can be transferred at any time.

•Guerrero intends to fund the up-front cash component of Yamana’s consideration through a combination of cash on hand and the proceeds from a proposed private placement (the “Private Placement”) of subscription receipts at a price of C$0.90 per subscription receipt. Guerrero has obtained a lead order of $3 million for the Private Placement.

•Guerrero will satisfy the purchase price payable to Orion under the Acquisitions by issuing $268 million in common shares of Guerrero at a price of C$0.90 per share.

Ownership Position in New Precious Metals Royalty Company

Upon closing of the Acquisitions, Guerrero intends to change its corporate name to Nomad Royalty Company Ltd. (“Nomad”). Orion and Yamana are expected to hold approximately 77% and 13% of the outstanding shares of Nomad, respectively, on a pro forma basis, after taking into consideration the conversion into shares of the subscription receipts to be issued in the Private Placement, and excluding any shares that may be issued under the Deferred Cash Payment, if issued.

Pro forma the Acquisitions, Nomad’s combined portfolio is expected to consist of ten royalty, stream and gold loan assets, seven of which are currently producing or expected to begin producing in 2020.
•Orion’s portfolio of assets being acquired under the Acquisitions consists of:

o Gold stream on the Blyvoor gold mine currently under final construction in the Witwatersrand Gold Belt, South Africa
o Gold stream on the operating Bonikro gold mine in Côte d’Ivoire
o Silver stream on the commissioning Woodlawn zinc-copper mine in New South Wales, Australia
o Silver stream on the operating Mercedes gold-silver mine in Sonora, Mexico
o Silver stream on the operating South Arturo gold mine in Nevada, USA
o Gold deliveries under a gold loan made to Premier Gold Mines Limited

Completion of the Acquisitions is expected to establish Nomad as a new global, diversified precious metals royalty company run by a highly-qualified leadership team consisting of Vincent Metcalfe as Chief Executive Officer and Joseph de la Plante as Chief Investment Officer. Both executives have extensive experience and a strong network of relationships within the mining sector. With the support of Orion and Yamana as strategic shareholders, Nomad expects to pursue an acquisition-driven growth platform to scale up, diversify, and achieve a valuation multiple consistent with the royalty space.

Completion of the Sale Transaction

Completion of the Sale Transaction is expected to occur during the second quarter of 2020 and is subject to standard closing conditions, including approval of the TSX Venture Exchange. Nomad expects to seek approval from the Toronto Stock Exchange to graduate from the TSX Venture Exchange and list its common shares on the TSX.

Upon closing of the Sale Transaction, Yamana will be entitled to maintain its percentage ownership of the issued and outstanding common shares of Nomad and have representation on Nomad’s Board of Directors. These entitlements will remain in place so long as Yamana’s share ownership of Nomad remains at or above 10% of the issued and outstanding common shares.

Counsel and Advisors

Yamana has engaged Cassels Brock & Blackwell LLP as its legal advisors. RBC Capital Markets acted as financial advisor to Yamana.

About Guerrero Ventures
Guerrero is a publicly listed company with a focus on acquiring mineral assets that will provide the opportunity to enhance shareholder value.

About Yamana
Yamana Gold Inc. is a Canadian-based precious metals producer with significant gold and silver production, development stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile and Argentina. Yamana plans to continue to build on this base through expansion and optimization initiatives at existing operating mines, development of new mines, the advancement of its exploration properties and, at times, by targeting other consolidation opportunities with a primary focus in the Americas.