Wednesday, 31st May 2006 (2991 views)

Canadian company Glencairn Gold is to acquire two gold mines from its competitor Yamana, in order to develop business considerably in the area of Central America.

Glencairn is purchasing the two projects from Yamana for a total of 32 million common shares. To acquire La Libertad gold mine in Nicaragua will take 26 million shares, with the remaining 6 million going to purchase Yamana's 60 per cent interest in the Cerro Quema gold deposit in Panama.

The transaction will result in Yamana obtaining an 18.4 per cent stake in Glencairn, with opportunities to participate in company voting and future equity financings, the company said in a statement.

In 2005, La Libertad produced a total of 34,000 ounces of gold, but Glencairn believes that production can be increased by solving maintenance problems and investing more capital.

"We have known La Libertad for many years and recognize that it has been under-funded for some time, said Kerry Knoll, president of Glencairn.

"We believe that La Libertad, based on currently outlined reserves, can sustain production levels in the range of 45,000 to 55,000 ounces of gold per year for at least six or seven years from open pit operations," he commented.

Following the deal, Glencairn will control three producing mines and one development project within a relatively small area, which will open up opportunities for cost and management synergies.

"These acquisitions further solidify our position as one of the largest gold producers in Central America," said Kerry Knoll, who will be succeeded by Peter Tagliamonte as president and chief executive officer of Glencairn.

 

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