The company plans to apply the entire proceeds from the Chapada mine sale to reduce its $1.6 billion debt pile
When the management teams at Yamana Gold Inc. and Lundin Mining Corp. look at copper and gold, both see a rising price environment ahead.
Despite the shared positive outlook, it was copper-focused Lundin Mining Corp. that announced on Monday it would plunk down $1 billion in cash to purchase the Chapada copper-gold mine in Brazil from gold-focused Yamana, which needs cash to reduce its debt load.
In some ways the deal mirrors analysts’ optimistic predictions about copper compared to a more hazy outlook on gold equities, even in the face of a potential U.S. recession, and the possibility of a global economic slowdown amid persistent trade disputes.
That’s in part because analysts see an emerging copper supply gap, while regardless of metal prices, many investors are staying away from Canadian gold mining companies as they repair their balance sheets.
“This now is a complete cleanup (of the balance sheet),” Peter Marrone, executive chairman and founder of Yamana, told the Financial Post. “And now we’re ready to move forward, and all the discussions about getting ahead of the leverage and debt at Yamana should be done.”