VANCOUVER, BRITISH COLUMBIA–(Marketwire – June 9, 2009) – Aura Minerals Inc. (TSX:ORA) (the “Aura Minerals” or the “Company”) is pleased to announce that, subject to certain conditions, it has entered into a binding letter agreement with Yamana Gold Inc. (“Yamana”) to acquire the San Andres Gold Mine located in Honduras and the Sao Francisco and Sao Vicente Gold Mines located in Brazil (the “Acquisition”).
Aura Minerals will host a conference call and audio webcast to discuss the proposed transaction on June 10, 2009 at 8:00 am (EST).
A presentation describing the Aura Minerals/Yamana transaction will be made available at the start of the conference call on the Company’s website at www.auraminerals.com.
Conference Call Information:
Toll Free (North America): 866-223-7781
Participant Audio Webcast: www.auraminerals.com
Conference Call REPLAY:
Replay Call: 416-695-5800 Passcode: 4542303#
Replay Toll Free Call: 800-408-3053 Passcode: 4542303#
The conference call replay will be available from 9:00 am EST on June 10, 2009 until 11:59 pm on June 17, 2009.
Benefits to Aura Minerals Inc.
– Launches the Company solidly into the intermediate gold producer ranks
– Immediate gold production and cash flow with estimated average annual production of 220,000 gold ounces at average cash costs of US$555 per gold ounce in the Americas
– Acquire 1.8 million gold ounces of proven and probable reserves, plus additional 2.44 million gold ounces of measured and indicated resources and additional 0.8 million gold ounces of inferred resources
– Proven assets with an operating history, a record of reserve replacement and exploration upside
– Potential for the Company to internally fund capital projects with the cash flow from the acquired gold mines
– Continued focus on delivering growth in the Americas
– Leverage to Aura Minerals’ existing operating management and relationships in Brazil
– Pro forma, Aura Minerals will have a compelling valuation relative to its peers
– Increased market capitalization and enhanced liquidity will allow for better access to capital markets
The aggregate initial purchase price of US$200 million consists of approximately US$90 million in cash, US$70 million in deferred cash payments and US$40 million in common shares of Aura Minerals, at a deemed price of CDN$0.40 per share. In addition, Yamana will receive a contingent cash flow-based royalty on the San Andres, Sao Francisco and Sao Vicente Gold Mines that will provide payments to Yamana of up to US$40 million, based on operations generating net free cash flow above certain milestones.
The Acquisition will close in two stages in order to accommodate jurisdiction-related regulatory requirements. The first stage, being the acquisition of the San Andres Gold Mine, is expected to close by July 23, 2009. The second stage, being the acquisition of the Sao Francisco and Sao Vicente Gold Mines, will be completed when appropriate consents are received, which is expected in approximately six months. The Acquisition is subject to customary conditions including the completion of a minimum CDN$70 million financing by the Company.
Mr. Patrick Downey, President and CEO of Aura Minerals, stated, “The acquisition of the San Andres, Sao Francisco and Sao Vicente Gold Mines will transform Aura Minerals into an intermediate gold producer, focused in the Americas with a significant development pipeline. The acquisition of these producing gold mines provides immediate cash flow from stable jurisdictions and fits ideally with our strategy of growth in the Americas. We will take immediate possession on closing of the San Andres Gold Mine, with formal transfer of the Brazilian assets being completed after approval of the relevant authorities, which is expected in approximately six months. This will allow Aura Minerals to properly integrate the operations and expand our technical and administrative staff as necessary.
We plan to continue the operational improvements commenced by Yamana at the San Andres Gold Mine and to further ramp up production and reduce cash costs once installation and commissioning of the new primary crusher and conveyor system are complete.
At the Brazilian operations, Aura Minerals and Yamana plan to form a joint management team during the period that the transfer of the assets is being finalized. This will allow both parties to determine potential opportunities to improve throughput and recoveries at both operations which will be of mutual benefit.
We also plan an immediate exploration reconnaissance program on the exploration concessions contiguous with the Sao Francisco Gold Mine and the Sao Vicente Gold Mine. To date, no drilling has been completed but there is evidence of several garimpeiro (artisanal miner) workings in the 50 kilometre stretch between the operations.”
Description of the Gold Mines
San Andres Gold Mine (Honduras)
The San Andres Gold Mine lies in the Trifmio District, a 7,500 square kilometre area that straddles the borders between Honduras, El Salvador and Guatemala, known for its gold, silver, antimony, copper, lead, zinc and iron resources. The mine has been in production since 1983 and has well developed infrastructure.
Gold mineralization at the San Andres Gold Mine is formed within a low sulfidation epithermal environment. Alteration zonation and vein textures reflect a shallow level of exposure within the epithermal environment that formed 50 to 150 metres beneath the water table. The highest-grade gold mineralization is contained within sub-vertical quartz veins containing less than 5 to 15 parts per million gold with quartz lattice textures and crustiform colloform banding which formed mostly within the north-northwest trending extension fractures. These veins are associated with pyrite in the non-oxidized zone and hematite and goethite in the oxidized zone. Grades up to 17 grams per tonne gold have been reported. Low grade disseminated gold ores mined from oxide zones formed in the same environment where rising, neutral pH, solutions dispersed laterally into permeable horizons within bedded, coarse clastic breccias.
The mine is an open-pit heap leach gold mine. Since being acquired in 2006 by Yamana, the mine is reported to have produced 156,000 ounces of gold at an average cash cost of US$444 per gold ounce. Estimated annual production is 80,000 gold ounces at an average LOM cash cost of US$545 per gold ounce. Continuous gold mineralization between current mining operations at the East Ledge deposit and the proposed mining operations at the Twin Hills deposit are expected to increase gold production.
Various improvements and enhancements were made in 2008 including the renegotiation of the hauling and loading contract. A new primary crusher and conveyor system are currently being installed as well as upgrades to the secondary crusher and agglomeration system. This will increase throughput, reduce costs and improve efficiency at the mine.
Reserves and resources at the San Andres Gold Mine are proven and probable reserves of 734,000 gold ounces, additional measured and indicated resources of 1.6 million gold ounces and an additional inferred resource of 120,000 gold ounces at December 31, 2008.
Sao Francisco Gold Mine (Brazil)
The Sao Francisco Gold Mine is located in the extreme western portion of Mato Grosso State in west central Brazil, very close to the Bolivian frontier some 560 kilometres west of the capital city of Cuiaba. The mine consists of four contiguous mining and exploration permits totaling 16,416 hectares.
The Sao Francisco Gold Mine is a shear hosted lode gold deposit. It is epigenetic, structurally controlled, and composed of narrow, 1 to 5 centimetre wide, quartz veins containing free gold. The veins and vein systems/stockworks both parallel and crosscut the bedding planes and appear to represent separate but closely related mineralizing events.
The mine is an open-pit gravity/heap leach gold mine that has been in production since 2006 and had a new mine plan implemented in 2008. Production in 2008 was reported to be 76,000 gold ounces at a cash cost of US$629 per gold ounce. Estimated annual production is between 90,000 and 95,000 gold ounces at an average LOM cash cost of US$569 per gold ounce.
Production planning and recovery at the mine based on better ore grade estimation and control procedures will coincide with significantly improved geological modeling. In addition, the complete mining equipment fleet has been replaced by a new contractor fleet, better suited to mine operations.
Reserves and resources at the Sao Francisco Gold Mine are proven and probable reserves of 727,000 gold ounces, additional measured and indicated resources of 549,000 gold ounces and an additional inferred resource of 582,000 gold ounces at December 31, 2008.
Sao Vicente Gold Mine (Brazil)
The Sao Vicente Gold Mine is located in the extreme western portion of Mato Grosso State in West Central Brazil, very close to the Bolivian frontier and some 560 kilometres west-northwest of the capital city of Cuiaba and approximately 58 kilometres north of the Sao Francisco Gold Mine. The mine consists of three contiguous mining permits totaling 28,980 hectares in area.
Gold mineralization at the Sao Vicente Gold Mine occurs for more than 1,000 metres in two parallel northwest trending zones along the anticline flanks (convex-upward fold). These zones are within a larger regional area of shearing 10 kilometres long by 2 kilometres wide and characteristically proximal to the major regional shear zones. Most of the gold occurs in millimetre to several centimetre-thick quartz veins that cut the host rocks in two prominent directions. One is sub-vertical in association with mylonite shear zones sub-parallel to foliation in the meta-arenite host rocks. The other is flat to shallow dipping and cross-cuts the foliation and bedding of the host rocks.
The mine is an open-pit gravity/heap leach gold mine that commenced with the first gold pour at the end of 2008 and is expected to reach commercial production in mid-2009. Estimated annual production is 50,000 gold ounces at an average LOM cash cost of US$549 per gold ounce and further upside through continued mine exploration.
Reserves and resources at the Sao Vicente Gold Mine are proven and probable reserves of 342,000 gold ounces, additional measured and indicated resources of 298,000 gold ounces and an additional inferred resource of 101,000 gold ounces at December 3, 2008.
Mr. Anthony P. George, B.Sc.(Hons), P.Eng., who is the Company’s Qualified Person as defined by National Instrument 43-101, has also reviewed and approved the contents of this news release as applicable.
Aura Minerals’ financial advisor is Genuity Capital Markets and its legal counsel is DuMoulin Black LLP. Blake, Cassels & Graydon LLP advised the Special Committee of Aura Minerals’ board of directors.
About Aura Minerals Inc.
Aura Minerals is a Canadian resource company focused on the acquisition, exploration and development of mining properties in the Americas. In addition to the three producing gold mines described above, the Company owns the Aranzazu copper mine in Mexico and the advanced stage Arapiraca Project in north-eastern Brazil, which was originally explored in the 1980’s and 1990’s for copper and gold and includes the Serrote Deposit. The project also contains magnetite (up to 50%) and nickel and the Company plans to evaluate the Arapiraca Project for all four metals which can be readily extracted. The nearby infrastructure is excellent with ready access to electricity, water and shipping ports.
For further information, please visit Aura Minerals Inc.’s web site at www.auraminerals.com.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This news release contains forward-looking statements that are not historical facts. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include those risks set out in Aura Minerals’ public documents filed on SEDAR at www.sedar.com. Although Aura Minerals believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Aura Minerals disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
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