Due to a combination of poor market conditions and surprisingly better results at its Brio Gold Brazilian unit, Yamana Gold (NYSE:AUY) has suspended its plan to divest those assets.
Does it matter?
A year ago, the gold miner had grouped all of its non-core Brazilian assets into a new entity Yamana called Brio Gold, including Fazenda Brasileiro, C1 Santa Luz, and Pilar, as well as its wholly owned Agua Rica project. The purpose was to monetize the assets through some strategic initiative by the end of 2015.
However, the market for such assets has cratered. The price of gold is down 10% over the past 12 months to $1,070 an ounce, but it's some 20% below the 52-week high of $1,300 an ounce it hit back in February. The collapse has led to Barrick Gold (NYSE:GOLD), the world's largest gold producer, selling off non-core gold assets in the U.S. as part of a plan to cut debt by $3 billion. It recently sold four Nevada mines for $720 million. It's also shed almost all of its Australian assets.
Yamana said in a statement that with market conditions not conducive to realizing their real value, particularly since operations have taken a turn for the better, "We will not be rushed into monetizing all or any portion of them."
Brio Gold is expected to produce more 155,000 ounces of the precious metal next year at cash costs of $575 per ounce. Pilar is expected to make up the bulk of the contribution, or 90,000 ounces, with Fazenda Brasileiro putting in the balance.
The gold miner has lost over half of its value this year, among one of the worst performances in the sector. Gold doesn't seem to have found its floor yet, but the improved prospects from these Brazilian assets could signal Yamana Gold has.