TORONTO - Yamana Gold Inc. (TSX:YRI) is creating a new subsidiary with semi-autonomous management led by an industry veteran with a mandate to manage, develop and find strategic alternatives for some of the mining company's non-core assets in Brazil.
Yamana will continue to own the new subsidiary, Brio Gold, and lend it $10 million for startup costs but the new team will be expected to evaluate various strategic alternatives by end of 2015.
The company didn't specify what strategic alternatives it would consider but they typically could include a sale of Brio Gold, joint venture partnerships or a public offering of the new company's shares.
Brio Gold will be led by Gil Clausen, who was most recently president and chief executive of Augusta Resource Corp., which was acquired this year by HudBay Minerals Inc. (TSX:HBM) in an all-equity deal valued at about $555 million when announced in June.
Also joining Yamana from the Augusta team will be Joseph Longpre as chief financial officer of Brio Gold, Lance Newman as vice-president, technical Services, and Mark Stevens, as vice-president for exploration exploration.
"Although this company will initially be a 100 per cent owned subsidiary, Yamana is entrusting Brio Gold's management to both manage these assets and evaluate various strategic alternatives with respect to Brio Gold. All of these efforts will progress through 2015 with an optimization plan and evaluation of strategic options expected by end of 2015," Yamana said.
Brio is expected to initially produce more than 130,000 ounces of gold annually from Fazenda Brasileiro and Pila and could add about 100,000 ounces of annual gold production from C1 Santa Luz, which is being evaluated for development potential.
"We are very excited about this opportunity," Clausen, Brio Gold's chief executive officer, said in a statement.
"We have completed detailed due diligence on these assets and are encouraged by the potential they hold. Moreover, we are impressed with the existing facilities, operational management and site personnel at the mines. We are confident that we will be able to unlock the true value of these assets for Yamana shareholders."