Yamana Gold set to spin off Brazilian unit as separate public company

Canadian Yamana Gold (TSX:YRI) (NYSE:AUY) is set to spin off its Brio Gold subsidiary, which operates non-core assets in Brazil, as a standalone public company.

This is not the first time the Toronto-based mid-sized gold producer tries to divest the three Brazilian mines owned by its local unit. Late last year, the company attempted to sell some of its 100% stake in Brio through a private share placement but later cancelled the plan, citing tough market conditions.

Shareholders will receive purchase rights in Brio as a dividend in-kind, which they can use to buy shares in the unit.

If the current move succeeds Yamana shareholders will receive purchase rights in Brio as a dividend in-kind, which they can use to buy shares in the unit. The exercise price will depend on market demand, the miner said in a statement.

Yamana will maintain exposure to Brio Gold through a retained equity interest following completion of the spin-off, it said.

Brio Gold is expected to produce more 155,000 ounces of the precious metal this year from Fazenda Brasileiro and Pilar mines, adding eventually another 100,000 ounces a year from C1 Santa Luz, the third operation owned by Yamana’s subsidiary.

The Canadian firm, which also has mines in Chile, Mexico and Canada, also owns two other mines in Brazil — Chapada and Jacobina, which together produced about 215,775 ounces of gold last year.