Yamana acquiring Extorre Gold for $414M; plans 18% dividend increase - InfoNews

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Yamana acquiring Extorre Gold for $414M; plans 18% dividend increase

June 18, 2012 - 8:36 AM

TORONTO - Yamana Gold Inc. (TSX:YRI) announced a $400-million acquisition Monday involving a miner with a promising gold-silver project in Argentina while also saying it plans to increase its dividend by 18 per cent.

The purchase of Extorre Gold Mines Ltd. (TSX:XG) will see Yamana pay $3.50 in cash and 0.467 of a Yamana share for each Extorre share. Holders of Extorre options are eligible for 0.2648 of a Yamana share for each Extorre share that would have been issuable.

Based on Friday's closing price of Yamana shares of $16.36 on the Toronto Stock Exchange, the implied $4.26 per share values the deal at about $414 and represents a premium of about 54 per cent over the 20-day volume weighted average of Extorre shares on the TSX, Extorre said in a separate announcement.

Yamana said the transaction value, net of cash and on a basic shares outstanding basis, is approximately $395 million, representing approximately three per cent its pro forma market capitalization.

Extorre has a number of exploration and development stage precious metals projects, the most advanced of which is its 95 per cent owned Cerro Moro project in Argentina.

Yamana described it as a high-grade, gold-silver deposit with approximately 1.36 million ounces of gold equivalent indicated mineral resources and 1.05 million ounces of gold equivalent inferred mineral resources.

Yamana, although focused on organic growth, had indicated recently it would consider tuck-in acquisitions that offer an opportunity for an "accelerated path to development and production and high return."

"Extorre represents one of these opportunities," chairman and CEO Peter Marrone said in a release. "It is a relatively small transaction in that it represents only three per cent of Yamana's market capitalization yet it could ultimately deliver more than 10 per cent of our total gold equivalent production."

"In our view, it is one of the best undeveloped, high-grade opportunities in the Americas," Marrone said, adding that Yamana has the operational, jurisdictional and financial strength to advance the project on a timely basis to benefit all stakeholders.

Completion of the transaction, which is subject regulatory approval as well as approval by Extorre shareholders, is expected to close in August.

Meanwhile, Yamana said it would be increasing is annual dividend by four cents to 26 cents per year effective in the third quarter. The move increases the quarterly dividend to 6.5 cents per share.

"This most recent dividend increase is the fourth dividend increase approved by the company in the past 12 months signalling, yet again, that Yamana is committed to delivering growth and value to shareholders across all measures, which includes dividends," Marrone said.

Yamana is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties and land positions in Brazil, Argentina, Chile, Mexico and Colombia.

News from © The Canadian Press, 2012
The Canadian Press

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