Yamaha Gold is the third largest producer of gold in Canada by market value. The company has agreed in principle to purchase Extorre Gold Mines to expand into Argentina for $404 million in cash and stock.
Extorre stockholders will get cash and a small percent in stock from Yamaha. The price is a 54% over the 20-day average price for the Extorre stock. Yamaha is like many other producers of gold that are looking to increase production following 11 consecutive years of price increases for the precious metal. Extorre is based in Vancouver, Canada and owns 95% of the gold project Cerro Moro in the province of Santa Cruz in Argentina, Yamaha announced in a prepared statement.
The transaction to purchase Extorre is relatively small since it only represents about 3% of the market capitalization that Yamaha has said Peter Marrone, the CEO of Yamaha. Marrone also said that the project could eventually deliver over 10% of the total gold production for the company.
The financial advisers Yamaha used to close the deal were CIBC World Markets, Inc. and Barclays Capital. For legal advisors Yamaha used Blackwell LLP and Cassels Brock. Extorre used Gowling Lafluer Henderson and Canaccord Genuity Corp in the transaction.
On the commodities market, gold is presently selling for $1,620 per ounce, but over the past 52 weeks, the precious metal has ranged in price per ounce from between $1482 to $1907. The metal has become popular of late due to the volatility of the stock market.