Combination of Yamana and Desert Sun Creates Leading Intermediate Gold Producer.TORONTO -- Yamana Gold Yamana Gold Inc. (TSX: YRI) is a Toronto, Canada based producer of gold at various sites in South and Central America. The company began in 1980 as Yamana Resources Inc., changing to its present name in 2003. Inc. (Yamana) (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :YRI YRI Yum Restaurants International (Dallas, TX) YRI Yaw Rate Indicator (aviation) YRI You Recall Incorrectly (chat) )(AMEX AMEX See: American Stock Exchange :AUY)(LSE LSE - Language Sensitive Editor (AIM):YAU) and Desert Sun Mining Corp. (DSM 1. DSM - Data Structure Manager. An object-oriented language by J.E. Rumbaugh and M.E. Loomis of GE, similar to C++. It is used in implementation of CAD/CAE software. DSM is written in DSM and C and produces C as output. ) (TSX:DSM)(AMEX:DEZ DEZ Dezember (German: December) DEZ Disease Eradication Zone DEZ Death Egg Zone (Sonic 2/3 & Knuckes level) DEZ Di-Ethylzinc ) today announced a transaction which provides that Yamana will acquire all of the outstanding common shares of DSM in exchange for Yamana common shares. DSM shareholders will receive 0.6 of a Yamana common share for each DSM common share held. Based on the 5-Day weighted average of Yamana's share price, the transaction price is C$5.47 per DSM common share, representing a premium of 21.1% over the 5-Day weighted average price of DSM's common shares. DSM owns the long-life Jacobina gold mine in Bahia, Brazil near Yamana's Fazenda Fazenda is a Portuguese word for 'farm', but is used in the English language for the coffee estates that spread within the interior of Brazil between 1840 and 1896, which created major export commodities for Brazilian trade, but also led to intensification of slavery in Brazil. Brasileiro mine and its C1 Santa Luz pre-feasibility project. The transaction results in Yamana becoming a leading intermediate gold producer with the following profile: - Estimated annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. 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 (includes expansion plan for Jacobina Mine proposed by Desert Sun and excludes near development stage projects held by Yamana) - Total resource base of approximately 11.6 million ounces of measured and indicated resources plus inferred resources of approximately 6.1 million ounces - Proven and probable reserves of approximately 7.6 million gold ounces (included in above measured and indicated resource total above) - Proven and probable copper reserves of approximately 2.3 billion pounds - Cash costs projected at US$270 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. of gold in 2006, with US$125 and US$115 per ounce of gold projected for 2007 and 2008, respectively - One of the largest Brazilian exploration land holdings with a significant presence in three major gold belts The transaction provides the following anticipated benefits to Yamana and DSM shareholders: - Creates an intermediate gold producer with one of the largest production growth profiles - Increases operational strength and management depth - Facilitates operational and administrative synergies - Results in a company with further growth potential from existing development-stage assets and better positioned to take advantage of additional acquisitions - Broadens shareholder base and increases share liquidity The transaction is accretive to Yamana in terms of net asset value and longer-term earnings and cash flow per share. DSM shareholders will benefit from an attractive premium and the opportunity to participate in the future growth of the combined company. Increased Profile Peter Marrone, President and Chief Executive Officer of Yamana said, "In our strategic vision which we articulated ar·tic·u·la·ted adj. Characterized by or having articulations; jointed. in late 2005, our goal was to produce 750,000 ounces of gold by 2008. With this acquisition, we will exceed that goal. As a result of this increased production profile and with the advancement of our development-stage or near development-stage assets, we are now targeting production of 1.0 million ounces by 2008. The purchase of Desert Sun adds a large-scale, long-life operation to Yamana's existing operations. The Jacobina Mine is near our existing operations in the State of Bahia in Brazil. The resulting synergies created by combining the Jacobina Mine with our existing operations in Bahia are tremendous. Further, the addition of the 150-km long Bahia Gold Belt's exploration potential will contribute to further growth. With the new production profile, Yamana will be one of the largest intermediate producers with projected future cash costs among the lowest in the industry. Our combined market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. is well below that of our peers and so we see significant upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside value in the shares of the combined company." Bruce Bruce, Scottish royal family descended from an 11th-century Norman duke, Robert de Brus. He aided William I in his conquest of England (1066) and was given lands in England. Humphrey, President and Chief Executive Officer of Desert Sun said, "From the perspective of a Desert Sun shareholder, the transaction provides an attractive premium while still maintaining significant upside exposure. Further, it provides diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. from being a one-mine company and it combines the strength of two respected operating teams operating team Surgery The participants–surgeons, nurses, etc–in a sterile surgical procedure performed under general–less commonly, local anesthesia . We are confident that Yamana's shares represent good value and that we will participate in the upside through share ownership in the combined company." Summary of the Transaction The acquisition of DSM will be completed by way of a court approved Plan of Arrangement whereby each DSM common share will be exchanged for 0.6 of a Yamana common share. All DSM options and warrants will become exercisable for common shares of Yamana based on the exchange ratio. As a result of the proposed transaction, the combined company will be held approximately 76% by existing Yamana shareholders and 24% by existing DSM shareholders. The total number of Yamana common shares outstanding would be approximately 262.1 million, on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis after giving effect to Yamana's previously announced acquisition of RNC RNC Republican National Committee (US) RNC Republican National Convention RNC Radio Network Controller RNC Royal Newfoundland Constabulary (provincial police force) Gold Inc. The transaction values DSM at approximately US$500 million on a non-diluted basis. The acquisition has the unanimous approval of the Boards of Directors of Yamana and DSM. The Board of Directors of DSM, having received the unanimous recommendation of a special committee of directors, is recommending that holders of DSM common shares vote in favour of the transaction. GMP GMP (guanosine monophosphate): see guanine. Securities L.P. provided an opinion to the special committee of the board of directors of DSM that the business combination is fair, from a financial point of view, to the holders of common shares of DSM. Yamana has agreed with DSM that Bruce Humphrey (DSM President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. ) and Stan STAN Stanchion STAN Stärke- und Ausrüstungsnachweis (German) Stan Standard Man (human patient simulator) STAN SEMCIP Technical Assistance Network STAN System Trace Audit Number STAN Star Trek Area Network Bharti (DSM Chairman) will join its board of directors. It is expected that Yamana's management team will be supplemented with the addition of certain officers from DSM to whom Yamana intends to extend offers of employment. Commenting on management, Peter Marrone said, "We have a very capable management team and we welcome new additions to that team. The operational depth of the company will increase and better position us for further growth." The transaction is subject to all requisite regulatory and court approvals, third party consents and other conditions customary in transactions of this nature. The combination must be approved by at least two-thirds of the votes cast by shareholders of DSM at a meeting of holders of common shares of DSM. The shareholder meeting is expected to be held on March 31, 2006, with the transaction anticipated to close shortly thereafter. If the combination does not occur under certain circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , DSM has agreed to pay Yamana a break-fee of C$21.5 million. Yamana's financial advisor is National Bank Financial Inc. DSM's financial advisor is Sprott Securities Inc. and its special committee of directors is being advised by GMP Securities L.P. About Yamana Yamana is a Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. gold producer with significant gold production, gold and copper-gold development stage properties, exploration properties and land positions in all major mineral areas in Brazil. With the acquisition of RNC Gold, Yamana also owns two producing mines in Central America Land mines in Central America are of the unfortunate by-product of the conflict in the 1980's. Contrary to the requirements of generally-accepted international law, the minefields of Central America were usually unmarked and unrecorded on maps. . Yamana expects to produce gold at intermediate company production levels in 2006 in addition to significant copper production by 2007. Company management plans to continue to build on this base through the advancement of its exploration properties and by targeting other gold consolidation opportunities in Brazil and elsewhere in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. . About Desert Sun Mining Desert Sun Mining is a Canadian gold mining company listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. and the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. with 100% ownership of the Jacobina Mine and the 155 km long Bahia Gold Belt in the state of Bahia, in northeastern Brazil.
Conference Call
A conference call is scheduled for Wednesday, February 22, 2006 at
10:00 a.m. Eastern time.
Call-in numbers: Local and international: 416-644-3433
North American toll-free: 800-814-4859
A replay of this conference call will be available from Wednesday,
February 22, 2006 (1:00 p.m.) until Wednesday, March 1, 2006.
(11:59 p.m.)
Replay numbers: Local and international: 416-640-1917
Passcode: 21168019#
North American toll-free: 877-289-8525
Passcode: 21168019#
A presentation providing further information on these transactions and on the business combination will also be available on Yamana's and DSM's web sites at www.yamana.com and www.desertsunmining.com, respectively. Cautionary Statements This news release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ", within the meaning of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and similar Canadian legislation, concerning the business, operations and financial performance and condition of each of Yamana and DSM. Forward-looking statements include, but are not limited to, statements with respect to estimated production, synergies and financial impact of the proposed transaction; the benefits of the proposed transaction and the development potential of Yamana's and DSM's properties; the future price of gold and copper; the estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; capital expenditures; success of exploration activities; permitting time lines and permitting, mining or processing issues; currency exchange rate fluctuations; government regulation of mining operations; environmental risks; unanticipated reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. expenses; title disputes or claims; and limitations on insurance coverage. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases Words and Phrases® A multivolume set of law books published by West Group containing thousands of judicial definitions of words and phrases, arranged alphabetically, from 1658 to the present. or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Yamana and DSM to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to: unexpected events during construction, expansion and start-up; variations in ore grade Ore grade is a measure that describes the concentration of a valuable natural material (such as metals or minerals) in its surrounding ore. Ore grade is used to assess the economic feasibility of a mining operation: the cost of extracting a natural material from its ore is directly , tones mined, crushed or milled; variations in relative amounts of refractory refractory Material that is not deformed or damaged by high temperatures, used to make crucibles, incinerators, insulation, and furnaces, particularly metallurgical furnaces. , non-refractory and transition ores; delay or failure to receive board or government approvals; timing and availability of external financing In the theory of capital structure, External financing is the phrase used to describe funds that firms obtain from outside of the firm. It is contrasted to internal financing which consists mainly of profits retained by the firm for investment. on acceptable terms; the businesses of Yamana and DSM not being integrated successfully or such integration proving more difficult, time consuming or costly than expected; not realizing on the anticipated benefits from the Yamana/DSM transaction or not realizing on such anticipated benefits within the expected time frame; risks related to international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold and copper; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in the completion of development or construction activities, as well as those factors discussed in or referred to in the current annual Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial and current Annual Information Form of each of Yamana and DSM filed with the securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities in Canada and available at www.sedar.com, and Yamana's Annual Report on Form 40-F and DSM's Annual Report on Form 20-F, each filed with the United States Securities and Exchange Commission. Although management of each of Yamana and DSM has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Neither Yamana nor DSM undertakes to update any forward-looking statements that are incorporated by reference herein, except in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with applicable securities laws. Mineral resources Noun 1. mineral resources - natural resources in the form of minerals natural resource, natural resources - resources (actual and potential) supplied by nature which are not mineral reserves do not have demonstrated economic viability. Readers should refer to the respective Annual Information Forms of Yamana, DSM and RNC Gold Inc, each for the year ended December 31, 2004, and other continuous disclosure documents filed by each of Yamana, DSM and RNC Gold Inc. since January 1, 2005 available at www.sedar.com, for further information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the mineral resources and mineral reserves of Yamana, DSM and RNC Gold Inc. Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources: This news release uses the terms "Measured", "Indicated" and "Inferred" Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.
A table summarizing the reserves and resources for each of DSM and
Yamana' projects is provided as follows:
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Resources Summary Measured Indicated
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tonnes grade tonnes grade
(000s) (g/t) (000s) (g/t)
------ ----- ------ -----
Fazenda Brasileiro - UG (1) 974 2.880 3,394 3.137
Fazenda Brasileiro - OP (1) 394 2.360 898 1.620
Fazenda Nova (2) 6,053 0.866
Sao Francisco (2) 21,081 0.637 47,239 0.629
Chapada (2) 25,200 0.300 396,200 0.220
Jacobina Project (3) 3,400 2.680 24,500 2.560
San Andres (2) 38,975 0.780
La Libertad (2) 14,816 1.190 22,480 1.050
Sao Vicente (4) 6,431 1.030 6,028 0.950
C1 Santa Luz (1) 18,400 1.660
Ernesto (5) 234 6.340 611 8.730
Cerro Quema (2) 8,611 1.010 6,529 0.820
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Resources Summary Measured & Indicated Inferred
---------------------------------------------------------------------
tonnes grade ounces tonnes grade ounces
(000s) (g/t) (000s) (000s) (g/t) (000s)
------ ----- ------ ------ ----- ------
Fazenda
Brasileiro - UG (1) 4,368 3.082 432.9 695 4.630 103.6
Fazenda
Brasileiro - OP (1) 1,292 1.844 76.6
Fazenda Nova (2) 95 0.500 1.5
Sao Francisco (2) 68,320 0.631 1,386.8 64,923 0.387 807.8
Chapada (2) 421,400 0.225 3,045.5 250,870 0.152 1,226.0
Jacobina Project (3) 27,900 2.570 2,311.0 33,600 2.800 3,029.0
San Andres (2) 38,975 0.780 978.9 29,700 0.650 625.0
La Libertad (2) 37,295 1.110 1,327.4 5,133 0.930 152.7
Sao Vicente (4) 12,459 0.990 396.0 210 0.530 3.6
C1 Santa Luz (1) 18,400 1.660 982.4
Ernesto (5) 846 8.070 219.2 511 5.980 98.3
Cerro Quema (2) 15,141 0.930 451.4 2,769 0.500 44.1
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11,608.1 6,091.7
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Reserves Summary Proven Probable Proven & Probable
---------------------------------------------------------------------
tonnes grade tonnes grade tonnes grade ounces
(000s) (g/t) (000s) (g/t) (000s) (g/t) (000s)
------ ----- ------ ----- ------ ----- ------
Fazenda
Brasileiro - UG (1) 974 2.880 1,386 2.870 2,360 2.880 218.2
Fazenda
Brasileiro - OP (1) 394 2.360 394 2.360 29.9
Fazenda Nova (2) 4,986 0.914 4,986 0.914 146.6
Sao Francisco (2) 15,690 0.668 32,142 0.679 47,832 0.675 1,038.4
Chapada (2) 17,341 0.324 279,807 0.257 297,148 0.261 2,493.5
Jacobina
Project (3) 3,065 2.208 18,517 2.173 21,580 2.180 1,510.0
San Andres (2) 17,339 0.860 17,339 0.860 477.1
La Libertad (2) 3,471 2.220 3,865 1.990 7,335 2.100 495.1
Sao Vicente (4) 3,533 1.054 2,471 1.044 6,004 1.050 202.7
C1 Santa Luz (1) 9,200 1.880 9,200 1.880 566.0
Cerro Quema (2) 5,903 1.160 4,596 1.030 10,499 1.100 372.5
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7,550.0
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(1) As of August 31, 2005
(2) As of December 31, 2004
(3) As of December 15, 2005
(4) Updated from press release May 2, 2005
(5) Updated from press release June 1, 2005
Desert Sun Mining Corp. (TSX:DSM) (AMEX:DEZ) Yamana Gold Inc. (TSX:YRI) (AMEX:AUY) (AIM:YAU) |
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