Yamana Gold offers $574 million in stock for Desert Sun Mining

[Scorpio]

2006-02-22 07:06:00

TORONTO (CP) - Aiming to create a major intermediate gold miner, Yamana Gold Inc. (TSX:YRI) has struck a deal to acquire Desert Sun Mining Corp. for about $575 million worth of Yamana shares.

Desert Sun stockholders (TSX:DSM) would receive 0.6 of a Yamana common share for each Desert Sun share held. The price is valued at $5.47 a share, representing a premium of 21.1 per cent over the five-day weighted average price, Yamana said Wednesday.

Desert Sun owns the long-life Jacobina gold mine in Bahia, Brazil, near Yamana's Fazenda Brasileiro mine and its C1 Santa Luz pre-feasibility project.

If approved by Desert Sun stockholders the transaction will give Yamana estimated annualized gold production of 450,000 ounces in 2006, increasing to 700,000 ounces in 2007 and to more than 800,000 ounces in 2008 from operating mines and mines under construction.

The deal, which has the unanimous approval of the boards of directors of both companies, would add to Yamana's net asset value and longer-term earnings and cash flow per share.

"In our strategic vision which we articulated in late 2005, our goal was to produce 750,000 ounces of gold by 2008," Yamana CEO Peter Marrone said in a release.

Well at least DEZ will be up today.