AUY Yamana Gold
Filed: 28 Mar 17, 8:00pm
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934|
|ý||Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934|
|For fiscal year ended: December 31, 2016||Commission File number: 1-31880|
YAMANA GOLD INC.
(Exact name of registrant as specified in its charter)
(Province or Other Jurisdiction of Incorporation or Organization)
(Primary Standard Industrial Classification Code Number, if applicable)
(I.R.S. Employer Identification Number, if applicable)
Royal Bank Plaza, North Tower
200 Bay Street, Suite 2200
Toronto, Ontario M5J 2J3
(416) 815 0220
|(Address and Telephone Number of Registrant’s principal executive office)|
Meridian Gold Company
4635 Longley Lane
Reno, Nevada 89502
|(Name, Address and Telephone Number of Agent for Service in the United States)|
Securities registered or to be registered pursuant to Section 12(b) of the Act:
|Title of Each Class||Name of Each Exchange On Which Registered|
|Common Shares, no par value||New York Stock Exchange|
Securities registered or to be registered pursuant to Section 12(g) of the Act: none
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: none
For annual reports, indicate by check mark the information filed with this form:
ýAnnual Information Form ý Audited Annual Financial Statements
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 947,797,596
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements in the past 90 days.
Yes ý No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes o No o
This annual report on Form 40-F and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” under applicable Canadian securities legislation. Except for statements of historical fact relating to Yamana Gold Inc. (the “Company”), information contained herein constitutes forward-looking statements, including, but not limited to, any information as to the Company’s strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as “plan,” “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur.
Forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include:
|•||the Company’s expectations in connection with the production and exploration, development and expansion plans at the Company's projects being met;|
|•||the Company’s plans to continue building on its base of significant gold production, gold development stage properties, exploration properties and land positions in Canada, Brazil, Chile, and Argentina through existing operating mine expansions, throughput increases, development of new mines, advancement of its exploration properties and by targeting other gold consolidation opportunities with a primary focus in the Americas;|
|•||the Company’s expectations regarding the timing of construction, development and production at the Cerro Moro Project;|
|•||the impact of proposed optimizations at the Company's projects;|
|•||the effect of government regulations (or changes thereto) with respect to the restrictions on production, export controls, income taxes, expropriation of property, repatriation of profits, environmental legislation, land use, water use, land claims of local people, mine safety and receipt of necessary permits;|
|•||the impact of the proposed new mining law in Brazil and the Chilean tax reform package;|
|•||Yamana’s expectations relating to the performance of the Canadian Malartic Mine;|
|•||Yamana’s evaluation of various monetization opportunities for its Brio Gold holding from time to time;|
|•||the Company’s investments and development of infrastructure improvements to enhance community relations in the locations where it operates and the further development of the Company’s social responsibility programs;|
|•||the payment of any future dividends;|
|•||the outcome of any current or pending litigation against the Company;|
|•||the outcome of any current or pending tax assessments involving the Company;|
|•||the impact of general business and economic conditions;|
|•||global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions;|
|•||fluctuating metal prices (such as gold, copper, silver and zinc);|
|•||currency exchange rates (such as the Brazilian real, the Chilean peso, the Argentine peso and the Canadian dollar versus the United States dollar);|
|•||possible variations in ore grade or recovery rates;|
|•||changes in the Company’s hedging program;|
|•||changes in accounting policies;|
|•||changes in mineral resources and mineral reserves;|
|•||changes in project parameters as plans continue to be refined;|
|•||risks related to acquisitions and/or dispositions;|
|•||changes in project development, construction, production and commissioning time frames;|
|•||the possibility of project cost overruns or unanticipated costs and expenses;|
|•||potential impairment charges;|
|•||higher prices for fuel, steel, power, labor and other consumables contributing to higher costs and general risks of the mining industry;|
|•||failure of plant, equipment or processes to operate as anticipated;|
|•||unexpected changes in mine life;|
|•||final pricing for concentrate sales;|
|•||unanticipated results of future studies;|
|•||seasonality and unanticipated weather changes;|
|•||costs and timing of the development of new deposits;|
|•||success of exploration activities;|
|•||the risk of government expropriation or nationalization of mining operations;|
|•||risks related to relying on local advisors and consultants in foreign jurisdictions;|
|•||unanticipated reclamation expenses;|
|•||risks relating to joint venture operations;|
|•||title disputes or claims;|
|•||limitations on insurance coverage;|
|•||timing and possible outcome of pending and outstanding labor disputes;|
|•||risks related to enforcing legal rights in foreign jurisdictions;|
|•||vulnerability of information systems;|
|•||as well as those risk factors discussed or referred to in the Company's annual Management's Discussion and Analysis and Annual Information Form for the year ended December 31, 2016 included as exhibits to this annual report on Form 40-F.|
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and operational performance and results as at and for the periods ended on the dates presented in the Company’s plans and objectives and may not be appropriate for other purposes.
Unless otherwise indicated, all dollar amounts in this annual report on Form 40-F are in United States dollars. The exchange rate of Canadian dollars into United States dollars on December 30, 2016, based upon the noon spot rate as reported by the Bank of Canada, was U.S.$1.00 = CDN$1.3427.
RESOURCE AND RESERVE ESTIMATES
The Company's Annual Information Form, which is attached hereto as Exhibit 99.1, has been prepared in accordance with the requirements of the securities laws in effect in Canada as of December 31, 2016, which differ in certain material respects from the disclosure requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the disclosure requirements promulgated by the Securities and Exchange Commission (the “Commission”) and contained in Industry Guide 7 (“Industry Guide 7”). Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101. However, these terms are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the Commission. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty 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 pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations. In contrast, the Commission only permits U.S. companies to report mineralization that does not constitute “reserves” by Commission standards as in place tonnage and grade without reference to unit measures.
Accordingly, information contained in this annual report on Form 40-F, the documents attached hereto and the documents incorporated by reference herein containing descriptions of our mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations of the Commission thereunder.
DISCLOSURE CONTROLS AND PROCEDURES
A. Evaluation of disclosure controls and procedures. Disclosure controls and procedures are designed to ensure that (i) information required to be disclosed by the Company in reports that it files or submits to the Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in the Company's reports filed under the Exchange Act is accumulated and communicated to the Company's management, including its Chairman and Chief Executive Officer (“CEO”) and its Senior Vice President, Finance and Chief Financial Officer (“CFO”), as appropriate, to allow for timely decisions regarding required disclosure.
At the end of the period covered by this report, an evaluation was carried out under the supervision of and with the participation of the Company's management, including the CEO and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate in the circumstances. Based on that evaluation, the Company's CEO and CFO have concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective.
In the Company’s annual report on Form 40-F for the year ended December 31, 2015 (the “2015 Form 40-F”), as well as its management’s discussion and analysis for the year ended December 31, 2015 and for each of the first three quarters of 2016, management of the Company concluded that the Company’s disclosure controls and procedures were effective as of the end of such periods, despite the fact that a material weakness in the Company’s internal control over financial reporting was identified that rendered the Company’s internal control over financial reporting ineffective as of such dates. The Staff of the SEC has expressed its view that the existence of such material weakness also rendered the Company’s disclosure controls and procedures ineffective as of December 31, 2015. Consequently, the Company advises that because of the previously disclosed material weakness, its disclosure controls and procedures were ineffective as of December 31, 2015 and continued to be ineffective until such material weakness was remediated as described below under “Management’s report on internal control over financial reporting”.
B. Management's report on internal control over financial reporting. The Company's management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2016, based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2016. Management excluded from this assessment the internal control over financial reporting at Mineração Riacho dos Machados Ltda, which was acquired on April 29, 2016, and whose assets constitute $53.9 million (or 1.2%) and $78.6 million (or 0.9%), respectively, of the Company’s net and total assets as of December 31, 2016, and whose results since April 29, 2016 represent $39.3 million (or 2.2%) of total revenue and $6.2 million (or 2.0%) of net loss of the Company for the year ended December 31, 2016. See page 21 of Exhibit 99.2, “Management's Discussion and Analysis”, for a discussion of this acquisition.
In the 2015 Form 40-F, management of the Company concluded that the Company had not maintained effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, because controls related to income taxes were not designed with sufficient precision to prevent or detect a potential material error in the Company’s financial information, which resulted in a reasonable possibility that a material misstatement in the Company’s financial statements related to income taxes would not have been prevented or detected on a timely basis. Therefore, management had concluded that a material weakness existed in this review control as of December 31, 2015. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified did not result in a misstatement or error in the Company’s financial statements.
In order to address the material weakness identified as of December 31, 2015, the controls related to income taxes have been re-designed as of December 31, 2016, including control narratives and all related documentation, to increase the precision to prevent or detect error. The aforementioned effort has resulted in the improvement of internal controls over income taxes. Tests have been conducted during 2016 with results indicating that the identified material weakness related to ineffective internal controls over income taxes has been remediated.
The Company's independent registered public accounting firm, Deloitte LLP, have audited the consolidated financial statements included in this annual report and have issued a report dated February 24, 2017 on the Company's internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
C. Attestation report of the registered public accounting firm. Deloitte LLP's attestation report, “Report of Independent Registered Public Accounting Firm”, accompanies the Company's Audited Consolidated Financial Statements for the fiscal year ended December 31, 2016, dated as of February 24, 2017 (except for Note 36, which is as of March 28, 2017), which are attached hereto as Exhibit 99.3.
D. Changes in internal control over financial reporting. As described above under “Management’s report on internal control over financial reporting”, during the three months ended December 31, 2016, improvements have been made in the Company’s internal control over financial reporting to remediate a material weakness identified as of December 31, 2015 with respect to controls related to income taxes. These improvements have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting resulting from such material weakness. The Company has not made other changes in internal controls.
The Company's management, including the CEO and CFO, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
NOTICES PURSUANT TO REGULATION BTR
The Company was not required by Rule 104 of Regulation BTR to send any notices to any of its directors or executive officers during the fiscal year ended December 31, 2016.
AUDIT COMMITTEE FINANCIAL EXPERT
The Company's board of directors (the “Board”) has determined that it has at least one audit committee financial expert serving on its audit committee. The Board has determined that Mr. Richard Graff is an audit committee financial expert and is independent, as that term is defined by the Exchange Act and the New York Stock Exchange's corporate governance standards applicable to the Company.
The Commission has indicated that the designation of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose on such person any duties, obligations or liability that are greater than those imposed on such person as a member of the audit committee and the Board in the absence of such designation and does not affect the duties, obligations or liability of any other member of the audit committee or Board.
CODE OF ETHICS
The Board has adopted a written code of ethics entitled, “Code of Business Conduct and Ethics” (the “Code”), by which it and all officers and employees of the Company, including the Company's principal executive officer, principal financial officer and principal accounting officer or controller, abide. There were no amendments, or waivers granted in respect of, the Code during the fiscal year ended December 31, 2016. The Code is posted on the Company's website at www.yamana.com. A copy of the Code may also be obtained by contacting the Corporate Secretary of the Company at the address or telephone number indicated on the cover page of this annual report on Form 40-F. If there is an amendment to the Code, or if a waiver of the Code is granted to any of Company's principal executive officer, principal financial officer, principal accounting officer or controller, the Company intends to disclose any such amendment or waiver by posting such information on the Company's website. Unless and to the extent specifically referred to herein, the information on the Company's website shall not be deemed to be incorporated by reference in this annual report on Form 40-F.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Deloitte LLP acted as the Company's independent registered public accounting firm for the fiscal year ended December 31, 2016. See page 93 of the Company's Annual Information Form, which is attached hereto as Exhibit 99.1, for the total amount
billed to the Company by Deloitte LLP for services performed in the last two fiscal years by category of service (for audit fees, audit-related fees, tax fees and all other fees) in Canadian dollars.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
See page 94 of the Company's Annual Information Form, which is attached hereto as Exhibit 99.1. No audit-related fees, tax fees or other non-audit fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
OFF-BALANCE SHEET ARRANGEMENTS
Except as noted in Note 33 - “Contractual Commitments” to the Consolidated Financial Statements for the fiscal year ended December 31, 2016, the Company does not have any material off-balance sheet arrangements, and the Company does not have any relationships with unconsolidated special purpose entities.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The disclosure provided under Section 9, “Liquidity, Capital Resources and Contractual Commitments - Contractual Commitments”, on page 65 of Exhibit 99.2, “Management's Discussion and Analysis”, is incorporated by reference herein.
IDENTIFICATION OF THE AUDIT COMMITTEE
The Company's Board of Directors has a separately designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act and satisfies the requirements of Exchange Act Rule 10A-3. The Company's Audit Committee is comprised of John Begeman, Richard Graff, Patrick Mars, Jane Sadowsky and Carl Renzoni, all of whom, in the opinion of the Company's Board of Directors, are independent (as determined under Rule 10A-3 of the Exchange Act and the New York Stock Exchange Listed Company Manual) and are financially literate.
CORPORATE GOVERNANCE PRACTICES
There are certain differences between the corporate governance practices applicable to the Company and those applicable to U.S. companies under NYSE listing standards. A summary of the significant differences can be found on the Company's website at www.yamana.com.
INCORPORATION BY REFERENCE
The Company's annual report on Form 40-F for the Year Ended December 31, 2016 is incorporated by reference into the Registration Statements on Form S-8 (Commission File No. 333-159047, File No. 333-148048 and File No. 333-145300) and on Form F-10 (Commission File No. 333-202140) of the Company.
UNDERTAKING AND CONSENT TO
SERVICE OF PROCESS
Yamana Gold Inc. undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.
B. Consent to Service of Process
The Company has filed an Appointment of Agent for Service of Process and Undertaking on Form F-X with respect to the class of securities in relation to which the obligation to file this Form 40-F arises.
Pursuant to the requirements of the Exchange Act, Yamana Gold Inc. certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.
Date: March 28, 2017
|YAMANA GOLD INC.|
|By:||/s/ Peter Marrone|
|Name: Peter Marrone|
|Title: Chairman and Chief Executive Officer|
|99.1||Annual Information Form for the year ended December 31, 2016|
|99.2||Management’s Discussion and Analysis for the year ended December 31, 2016|
|99.3||Audited annual financial statements for the fiscal year ended December 31, 2016|
|99.4||Certificate of Peter Marrone required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002|
|99.5||Certificate of Jason LeBlanc required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002|
|99.6||Certificate of Peter Marrone pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002|
|99.7||Certificate of Jason LeBlanc pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002|
|99.8||Consent of Deloitte LLP, Independent Registered Public Accounting Firm|
|99.9||Consent of Luiz Pignatari|
|99.10||Consent of Donald Gervais, P. Geo.|
|99.11||Consent of Sylvie Lampron, Eng.|
|99.12||Consent of Sergio Castro|
|99.13||Consent of Mauricio Prado, MAIG|
|99.14||Consent of Felipe Machado de Araújo|
|99.15||Consent of Christian Fuentes|
|99.16||Consent of Marcos Valencia A.|
|99.17||Consent of Wayne W. Valliant, P. Geo.|
|99.18||Consent of Robert L. Michaud, P. Eng.|
|99.19||Consent of William Wulftange, P. Geo.|
|99.20||Consent of Christian Roy, Eng.|
|99.21||Consent of Canadian Malartic General Partnership|
|99.22||Consent of Carl Pednault, Eng.|
|99.23||Consent of Daniel Doucet, Eng.|
|99.24||Consent of Stuart E. Collins, P.E.|
|99.25||Consent of Chester M. Moore, P. Eng.|
|99.26||Consent of Kevin C. Scott, P. Eng.|