Yamana Completes Extorre Buy - Analyst Blog

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Gold miner Yamana Gold, Inc. ( AUY ) has completed its previously announced acquisition of Extorre Gold Mines Limited. The acquisition was sealed after Extorre's shareholders voted for the deal at a special meeting held on August 15. The final court approval for the transaction was received by Extorre on August 21.

Yamana had agreed to pay the shareholders of Extorre $4.26 for every share, with $3.50 in cash. The remaining part of the consideration will be satisfied by issuing 0.0467 of a Yamana common share for each common share of Extorre. The deal is worth $395 million.

The acquisition of Extorre brings a number of development projects under Yamana's jurisdiction, of which Cerro Moro is the most crucial. Cerro Moro has high grade gold and silver deposits in Santa Cruz, Argentina. It has 1.36 million ounces of gold equivalent indicated mineral resources and 1.05 million ounces of gold equivalent inferred mineral resources.

Yamana stated that it has already started working on integrating, exploring and developing the Cerro Morro project. It plans to spend $5 million on Cerro Morro over the next four months for upgrading and increasing the mine's mineral resources.

In addition, Yamana is planning to start production at the mine in 2015 with a production target of around 200,000 gold equivalent ounces per year. The additional production will boost Yamana's output by more than 10% annually and also result in an improvement in cash flow and earnings.

Yamana holds a Zacks #5 Rank, reflecting a short-term (1 to 3 months) Strong Sell rating.

YAMANA GOLD INC (AUY): Free Stock Analysis Report
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