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Yamana Gold Inc. (USA) (NYSE:AUY) Acquires Mega Precious Metals As Part of Growth Plans

Yamana Gold Inc. (USA) (NYSE:AUY) has recently reached a deal with Mega Precious Metals, where the former would acquire all the outstanding shares of the latter at C$0.10 per share. Based on the company’s current, issued and outstanding shares, the total cost of the deal would come to 17.5 million Canadian dollars. The deal is part of reforms made by the company, after its Argentinean scare.

The details of the deal also highlighted that Yamana would also be purchasing outstanding debentures of Mega Precious Metals, currently being held by Pacific Rail Road Capital Resource Funds. However, if the deal is not completed, Mega would be liable to a termination fee of C$ 700,000, while Yamana is liable to just C$ 500,000.

The deal will give Yamana control over one of the important mines in Canada. The Twin Lakes open pit project in Manitoba Bay. This mine alone will add 2.05 million ounces @ 1.52 g/t gold to the assets of Yamana. It would also account for a 9% increase in grade. This would be the second acquisition by the company in Canada, following the acquisition of Malartic from Agnico Eagle on April 16 last year.

Yamana has been recovering from the effects of depressed gold prices and is now trying to make amends to make it more profitable. Following the announcement of the acquisition, the company held its annual shareholder meeting for the election of directors to its board. Additionally, the company also reported a 33% increase in gold production in 1Q2015, compared to the same period last year. The growth was mostly attributed to the Canadian Malartic mine and El Penon. The result was a 26% increase in operating cash flows, reaching to $2.0 million. Yamana was also able to significantly reduce its capital expenditures by 45%.

Yamana Gold Inc. (USA) (NYSE:AUY) closed at $4, after losing 0.99% on April 29. The company has 941.25 million shares being traded in the market with a 52-week range of $3.33-$9.04.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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