Yamana Gold to group Brazil mines under new unit

Yamana Gold to group Brazil mines under new unit

The company’s Chapada open pit gold-copper mine, located northwest of Brasília in Goiás state. (Image courtesy of Yamana Gold)

Canadian Yamana Gold (TSX:YRI) (NYSE:AUY) said Wednesday it is creating a new subsidiary that will group its less favoured mines in Brazil and will explore options for the unit next year.

The new company, Brio Gold Inc., will initially be a fully owned subsidiary, the firm said in a statement. Gil Clausen, the former chief executive officer of Augusta Resource Corp., which was recently acquired by HudBay Minerals (TSX:HBM), will lead Brio Gold.

Clausen, said the company, will start by evaluating “various strategic alternatives” for the unit, which didn't specify. However options would likely include a sale of Brio Gold, joint venture partnerships or a public offering of the new company's shares.

Brio is expected to initially produce more than 130,000 ounces of gold annually from Fazenda Brasileiro and Pilar and could add about 100,000 ounces of annual gold production from C1 Santa Luz, which is being evaluated for development potential.

The Toronto-based miner is also planning to sell part, or all, of its Agua Rica project in Argentina and has hired Credit Suisse Group AG to advise on the process.

Yamana, which also operates in Chile, Mexico and Canada, will continue to manage its other Brazilian mines through a scaled-back management team in the country.