Yamana Gold Inc. AUY has inked a deal with Cormark Securities and Stifel GMP to sell 12,000,000 units to qualified purchasers for C$10 per unit or gross proceeds of C$120 million. The dealers have also committed to buy any unsold units from Yamana at C$10 per unit on closing, which is subject to customary conditions.
Per Yamana, each unit consists of one common share of Equinox Gold that is owned by Yamana and one-half of a common share purchase warrant of Yamana. Each Warrant entitles the holder thereof to acquire one additional common share of Equinox owned by Yamana at an exercise price of C$13.50 for a period of 9 months from the date of issue. Yamana will receive total gross proceeds of C$201 million in case all the warrants are exercised.
Further, the sale of both the unit shares and the warrants will be made through a private placement in the United States. In Canada, the sale of the warrants will be made on a private placement basis, while unit shares will be made through block trades.
Yamana plans to employ the net proceeds from the transaction for general corporate purposes. The transaction is slated to close on or about Apr 15 or any other date agreed between the dealers and Yamana.
Shares of Yamana have surged 67.1% in the past year compared with 40.7% growth of the industry.
The company recently announced preliminary production results for first-quarter 2020.
In the first quarter, the company produced 192,238 ounces of gold and 2.73 million ounces of silver. Total gold equivalent ounces (GEO) produced in the quarter were 221,746.
Costs of operations in the first quarter were in line with the company’s targets. Moreover, costs were favorably impacted in the quarter by foreign exchange swings. Overall, sales of gold and silver in the first quarter were roughly equal to production figures.
Moreover, the company witnessed strong financial performance in the to-be-reported quarter partly owing to net debt reduction.
Zacks Rank & Key Picks
Yamana currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the basic materials space are Novagold Resources Inc. NG, Franco-Nevada Corporation FNV and Barrick Gold Corporation GOLD, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Novagold has an expected earnings growth rate of 11.1% for fiscal 2020. The company’s shares have surged 147.8% in the past year.
Franco-Nevada has an expected earnings growth rate of 15.9% for 2020. Its shares have returned 63.7% in the past year.
Barrick has an expected earnings growth rate of 41.2% for 2020. The company’s shares have rallied 78.8% in the past year.
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