Yamana Gold Signs Copper, Silver Purchase Agreements with Sandstorm

Yamana Gold Inc. (TSX:YRI,NYSE:AUY) announced that it’s entered into three metal purchase agreements with Sandstorm Gold Ltd. (TSX:SSL,NYSE:SAND). As part of the agreements, Sandstorm has paid Yamana $148 million and has issued it 15 million common share purchase warrants; the warrants have a strike price of $3.50 and a term of five years.
As quoted in the press release:

Sandstorm will also pay the Company an additional advanced payment of $4 million in six months. The metal purchase agreements include a silver purchase transaction related to production from Cerro Moro, Minera Florida and Chapada, a copper purchase transaction related to production from Chapada, and a gold purchase transaction related to production from Agua Rica. 100% of the advanced payment will be used by Yamana to reduce the balance outstanding on its revolving credit facility.
The Transaction is one of various alternatives the Company has been evaluating and advancing to help achieve its stated goal of reducing the balance owning on its revolving credit facility to nil. The Company continues to advance other alternatives on a number of fronts including the planned monetization of its subsidiary Brio Gold Inc. (“Brio Gold”), an update for which is provided below.

Charles Main, executive vice president, finance, and CFO at Yamana, commented:

We are very pleased to have completed this transaction. The streams that we have put in place do not have significant impacts on the projects to which they relate. They represent a modest portion of our copper and silver production which are secondary metals to Yamana and they do not impact our exposure to our primary metal which is gold. With this deal, and with the successful completion of a deal on Brio Gold, the goal and expectation is to be in a position to have generated cash proceeds well in excess of the amount required to complete the pay down of our credit facility prior to year end, which was one of our strategic objectives for the year. This would leave us with a five year undrawn credit facility of $1 billion along with an increased cash balance. With modest debt repayments of $118 million scheduled for the next couple of years, we believe that Yamana is very well positioned to fully execute on its business plan and on generating and increasing cash flow and free cash flow.

Click here to read the full Yamana Gold Inc. (TSX:YRI,NYSE:AUY) press release.