Yamana Gold offshoot Brio eyes listing, acquisitions

March 1
7:31 PM 2015

Yamana Gold Inc offshoot Brio Gold has big plans for 2015 that could include a public listing and acquisitions of modest assets, possibly from big miners who are selling non-core operations, Brio Chief Executive Gil Clausen said on Sunday.

Clausen said he and his team wanted to turn Brio, which was created in December when Yamana parceled off some of its non-core Brazilian assets into a subsidiary, into a new, mid-sized gold producer.

"I think that Brio is an ideal M&A story from the perspective that we intend to grow and continue to grow. So we'll be looking at assets," Clausen said in an interview at the Prospectors and Developers Association of Canada convention in Toronto.

"Our focus clearly is to try and build this into a solid mid-tier producer. Our five-year plan would be to get comfortably to within the 300,000 to 500,000 ounce production range."

Brio would consider buying assets producing between 70,000 to 100,000 ounces in the Americas, with a bias towards Brazil.

"One likely scenario is that we're a public company within the year," Clausen said. Brio has set up headquarters in Toronto, he said.

Yamana said in December that it would explore a potential sale of Brio, along with other options, in 2015. The unit includes the Fazenda Brasileiro, C1 Santa Luz and Pilar mines, and a Agua Rica project.

Pilar and C1 Santa Luz had "failed to deliver as planned", Morningstar analyst Kristoffer Inton said in a note to clients on Feb. 12. The three mines together produced 82,945 ounces of gold at cash costs of $798 per ounce in 2014.

Yamana last year reported large impairment charges at the two mines and C1 Santa Luz was put on care and maintenance as the company looked for ways to improve its performance.

Clausen said Brio expects to spend less than $30 million on C1 Santa Luz, which is forecast to be up and running again next year and producing 100,000 ounces of gold annually.

Clausen is the former chief executive of U.S.-based copper company Augusta Resource Corp, which was bought last year by HudBay Minerals for about C$555 million ($443.86 million).

Yamana's stock is down some 53 percent in the past 12 months, underperforming the S&P/TSX Global Gold Index, which is down 9 percent.

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