MercoPress. South Atlantic News Agency

Canadian company buys gold-silver mines in Santa Cruz, Argentine Patagonia

CEO Peter Marrone has a strong history of negotiations in Latin America

Canada’s Yamana Gold Inc. plans to buy Extorre Gold Mines Ltd. in a cash-and-stock deal valued at 403.6 million dollars, the companies announced Monday.

Yamana, an Ontario-based gold producer, will acquire Extorre's precious metals mines in Argentina as part of the agreement, including the Cerro Moro project in the province of Santa Cruz.

Yale Simpson, Extorre co-chairman, said that Yamana's offer represents a “good outcome” for Extorre shareholders in an uncertain economy. Investors also have been concerned about the risks involved in developing the Cerro Moro project following a surprise move by Argentina to seize control of its leading oil company from Spanish investors.

“Yamana has both the operational experience in Argentina and financial strength to develop the project on a timely basis,” Simpson said in a statement.

Extorre's board of directors has approved the deal. The company's shareholders are expected to decide whether to approve the offer on Aug. 15. The deal also must be approved by regulators.

Chairman and CEO Peter Marrone called Extorre Gold Mines’s Cerro Moro project “one of the best undeveloped, high-grade opportunities in the Americas.”

“It is a relatively small transaction in that it represents only 3% of Yamana’s market capitalization yet it could ultimately deliver more than 10 % of our total gold equivalent production,” Marrone said in a statement.

The junior company has a number of exploration and development stage precious metals projects, the most advanced of which 95% owned Cerro Moro project in Argentina.

Yamana described it as a high-grade, gold-silver deposit with approximately 1.36 million ounces of gold equivalent indicated mineral resources and 1.05 million ounces of gold equivalent inferred mineral resources.

Yamana already owns the Gualcamayo open-pit mine and holds a stake in the massive Alumbrera copper-and-gold mine in Argentina.

John Ing of Maison Placements Canada called it a “handsome price” for a project in a risky part of the world. “The fact is that it’s in Argentina and that’s a big question mark,” he said, adding that Marrone has a strong history in Latin America.

“This is a project that has yet to pour their first gold or silver dore bar, so there will be a lot of negotiations I’m sure with the government.

Yamana is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties and land positions in Brazil, Argentina, Chile, Mexico and Colombia.