Gold bars are displayed at a bullion house in Mumbai.ARKO DATTA/Reuters
Yamana Gold Inc. is raising $260-million to help pay down its debt and strengthen the balance sheet, the company said on Monday.
The Toronto-based gold miner is selling 49.1 million shares at $5.30 apiece to a group of bankers led by Canaccord Genuity and National Bank Financial.
The share offering comes after a difficult year for Yamana and the rest of the gold industry. Yamana's stock lost 50 per cent of its value as bullion dropped as low as $1,140 (U.S.) an ounce in 2014, underpinning the industry's need to keep costs down.
The precious metal has since rebounded slightly and is trading around $1,233, although that is still a third lower than the $1,900 reached during the gold boom.
The lower gold price has pushed companies to reduce debt, as well as shed non-core assets and focus on their most profitable operations. Yamana created a wholly owned subsidiary for its non-core assets after failing to find buyers for some of its Brazilian mines.
Yamana's $260-million (Canadian) share offering is a bought deal, in which the banks have bought the shares and will now sell them to investors. It is unclear whether bankers will have an easy time selling the stock. Other bought deals have been challenging in the gold sector over the past two years.
The offering is expected to close around Feb. 3. The banks have the option to buy an additional 7.37 million shares after the closing, which would raise a total of $299-million for Yamana.
Yamana said: "This prudent action will put the company in a stronger position in any commodity price environment."
Rachelle Younglai