Summary

  • Yamana Gold is a Canadian-based precious metals producer with a high quality, diversified portfolio, including significant gold and silver production.
  • Company's portfolio of producing mines consists of five long long-life, high-quality operations in the Americas.
  • Yamana holds a 50% interest in the Canadian Malartic mine.

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Company Overview

Yamana Gold (TSX:YRI, NYSE:AUY, LSE:AUY ) is a Canadian-based precious metals producer with a high quality, diversified portfolio, including significant gold and silver production; long-life production assets – including development stage properties and exploration properties – located throughout mining-friendly jurisdictions across the Americas, in Canada, Brazil, Chile and Argentina. Yamana plans to build on this base through sustainable expansion and optimization initiatives at existing operating mines, development of new mines, the advancement of its exploration properties and, at times, by targeting other consolidation opportunities with a primary focus in the Americas. The company is committed to operating responsibly and transparently to strengthen sustainable returns to shareholders and align business and societal outcomes by creating transformational impacts for all stakeholders. Yamana’s shares are traded on the Toronto Stock Exchange, New York Stock Exchange and London Stock Exchange.1

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Producing Mines

The company's portfolio of producing mines consists of five long long-life, high-quality operations in mining-friendly jurisdictions in the Americas.2

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Canadian Malartic

Canada’s biggest gold mine and low cost producer is advancing a large underground project with the potential to extend mine life for decades.

The Canadian Malartic mine, in which Yamana holds a 50% interest, is located in the Abitibi region of Quebec near the town of Val-d’Or. It is Canada’s largest gold mine and Yamana’s biggest producer. The Company acquired the operation in 2014 with Agnico Eagle Mines when they jointly purchased Osisko Mining. The operation is overseen by the Canadian Malartic General Partnership, a joint management committee consisting of senior leaders from Yamana and Agnico Eagle.

Cerro Moro

High-grade underground and open-pit mine with exploration upside to provide sustainable production and drive future growth.

Cerro Moro is a gold-silver operation located in the Santa Cruz province of Argentina approximately 70 kilometres south of the port city of Puerto Deseado. The Company acquired the operation in 2012 when it completed the acquisition of Extorre Gold Mines. Cerro Moro entered production in 2018, making it Yamana’s newest mine.

The life of mine, based only on mineral reserves, consists of an integrated operation from open pits and underground stopes, and indicates mining for a total period of five years, with a throughput of 1,000 tonnes per day. Exploration and engineering studies are ongoing with an objective to extend the life of the operation, with a strategic mine life objective of 10 years.

El Peñón

Cornerstone underground mine with strong cash flow generation and consistent track record of replacing mineral reserves for more than 20 years

Located in northern Chile in the Atacama Desert, El Peñón is an underground gold-silver mine acquired in 2007 when Yamana completed the purchase of Meridian Gold. The operation has maintained a mineral reserve life of six to eight years, continually replacing ounces mined since entering production in 1999. It is a prime example of how Yamana is able to deliver value and organic growth by consistently replacing mineral reserves beyond depletion and increasing mine life.

Jacobina

Top tier, long life underground mine that has more than doubled production since 2014, with opportunities for further significant growth.

The Jacobina mining complex is located in Bahia state in northeastern Brazil. It consists of five underground gold mines: Canavieiras, João Belo, Morro do Cuscuz, Morro do Vento, and Serra do Córrego. Yamana acquired its 100% interest in Jacobina when it completed the purchase of Desert Sun Mining in 2006. The Jacobina mine is a paleo placer deposit with grains of gold hosted in conglomerate beds (reefs) in the Serra de Corrego Formation on the São Francisco Craton. Before the opening of the Atlantic Ocean millions of years ago, the São Francisco Craton was adjacent to similar geological environments in West and South Africa that host the Witwatersrand and Tarkwa gold deposits. Together, these three paleo placer deposits host 40% of the world’s gold resource and reserve inventory. Gold at Jacobina is hosted within a Proterozoic continental rift basin preserved in a 155-kilometre long north-south belt. Yamana controls the entire belt with 71,000 hectares of exploration concessions and 5,000 hectares of exploration permits.

Minera Florida

Established underground mine transitioning to newer high-grade zones that will provide the foundation for future production increases and extended mine life.

Minera Florida is an underground gold mine located in central Chile, approximately 75 kilometres southwest of Santiago. Yamana acquired the operation as part of the Meridian Gold acquisition in 2007. In 2017, Yamana purchased all outstanding concessions in the neighbouring Las Cenizas property to hold a 100% interest in the project area. The mine has been in operation for over 30 years, and the longer-term objective is to increase production to +120,000 ounces of gold per year through the exploration and development of new targets located in the mineral claims adjacent to the Alhue Block where most of the mining activity has taken place in the past. Exploratory drilling in these new areas has successfully identified the continuity of the mineralized structures demonstrating a much wider mineralization footprint on the large land package open to exploration.

Advancing Projects

The MARA project is a unique, high-quality, low-risk brownfield project located in the Catamarca province of Argentina, approximately 25 kilometres north of Andalgalá. The MARA project is a result of the integration completed in December 2020 of the Agua Rica project with the Minera Alumbrera plant and infrastructure. Leveraging Minera Alumbrera’s existing infrastructure enhances project economics, simplifies permitting and reduces the project’s economic footprint, significantly enhancing the value of the project. Yamana owns 56.25% of the project, with Glencore International AG and Newmont Corp. owning 25.00% and 18.75% interests, respectively. Yamana is the operator of the joint venture and it will continue to oversee engagement with local, provincial and national stakeholders, completion of the feasibility study and environmental impact assessment for the MARA project, and generally lead the project to development and operation.  The feasibility study is expected to be completed in 2022.

The MARA project, on a 100% basis, has proven and probable mineral reserves of 11.7 billion pounds of copper and 7.4 million ounces of gold contained in 1.105 billion tonnes of ore with an initial mine life of 28 years. Mineral resources include 260 million tonnes of measured and indicated mineral resources, containing more than 1.6 billion pounds of copper and 0.95 million ounces of gold. The project will be mined via a conventional high-tonnage truck and shovel open pit operation. Based on the results of the pre-feasibility study released in July 2019, average life of mine material moved is expected to be approximately 108 million tonnes per year, with ore feed of 40 million tonnes per year and an average life of mine strip ratio of 1.66. Further tests and studies are scheduled for the feasibility study stage to identify upside opportunities for the project with respect to processing capacity, inclusion of mineral resources, and stockpiling and blending strategies.

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Financial Highlights

Net earnings for the year ended December 31, 2021 were $147.5 million or $0.15 per share basic and diluted, compared to net earnings of $203.6 million or $0.21 per share basic and diluted for the year ended December 31, 2020. Net earnings for the year ended December 31, 2021 were negatively impacted by $161.6 million of items that management believes may not be reflective of current and ongoing operations attributable to Yamana Gold Inc. equity holders and which may be used to adjust or reconcile input models in consensus estimates.3

For the year ended December 31, 2021, revenue was $1,815.4 million compared to $1,561.0 million for the same period in 2020. The 16% increase was primarily attributable to higher gold sales volumes in the current period as well as higher realized prices for both gold and silver compared to 2020. Higher sales volumes were seen across all of the Company's mines and were most notable at Canadian Malartic and Cerro Moro, given prior period volumes were impacted by the government-mandated suspension of operations in March and April 2020 and subsequent ramp up throughout the remainder of the period.

Cost of sales excluding DDA increased $80.9 million or 13% for the year ended December 31, 2021 compared to 2020, primarily due to the increase in sales volumes as discussed above, and in line with plan.

Total DDA expense increased $52.9 million or 13% for the year ended December 31, 2021 compared to 2020, primarily due to the overall higher sales volumes in the current period, as discussed above.

G&A expenses include costs related to the overall management of the business that are not part of direct mine operating costs. In the year ended December 31, 2021, G&A expenses decreased $11.1 million or 13% compared to 2020. This was predominantly due to the significant increase in the Company's share price in the second and third quarters of 2020, impacting non-cash sharedbased compensation valuation in the prior year.

Exploration and evaluation expenses of $31.6 million for the year ended December 31, 2021 were significantly higher than the $15.1 million of expenses in 2020 due to increased expenditures resulting from the generative exploration program. The program is focused on advancing projects in Yamana’s portfolio, while continuing drilling activity at a number of the Company’s highly prospective earlier stage projects.

The Company's share of net earnings related to its associates totalled $0.9 million for the year ended December 31, 2021, In the year ended December 31, 2021, the Company recorded other operating expenses of $37.4 million (2020: $14.6 million). These expenses were partially offset by a $21.3 million gain recognized upon the discontinuation of the equity method on the Company's investment in Leagold in the first quarter of 2020.

The income tax provision for the year ended December 31, 2021 reflects a current income tax expense of $159.8 million and a deferred income tax expense of $135.9 million. This compares to a current income tax expense of $116.2 million and a deferred income tax expense of $170.3 million for the year ended December 31, 2020.

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First Quarter 2022 Results

APR 27, 2022; Yamana Gold reported its financial and operational results for the first quarter of 2022. Production totalled 238,617 gold equivalent ounces ("GEO") at total cost of sales, cash costs and all-in sustaining costs ("AISC") of $1,212, $734 and $1,084 per GEO respectively. The standout production results, combined with the low cost performance, underpinned the strong cash flow generation including $151.7 million in cash flows from operating activities and $197.3 million in cash flows from operating activities before net change in working capital. The Company expects free cash flow to increase quarter-over-quarter with the strongest free cash flow generation anticipated in the second half of the year, and in particular during the fourth quarter, which is expected to result in cash balances steadily increasing throughout the year.4

  • First quarter net earnings of $57.8 million or $0.06 per share basic and diluted. Adjusted net earnings of $83.6 million or $0.09 per share basic and diluted.
  • Cash flows from operating activities of $151.7 million and cash flows from operating activities before net change in working capital increased 7.6% year-over-year to $197.3 million.
  • Net free cash flow and free cash flow before dividends and debt repayments of $111.8 million and $34.7 million, respectively.
  • Cash and cash equivalents totalled $516.4 million. The Company has $750.0 million in available credit.
  • Production of 238,617 GEO was in line with plan despite a lower gold to silver ratio. With the budget gold equivalent ratio, GEO production would have exceeded plan. Quarterly GEO production increased year-over-year from strong gold production and the exceptional performance from Cerro Moro which produced 44,801 GEO, an increase of 27% year-over-year.
  • Gold production of 210,533 ounces exceeded plan, following standout performances from Jacobina with 47,124 ounces, El Peñón with 41,330 ounces and Cerro Moro with 25,254 ounces. March was a standout month for Jacobina, with the mine achieving record monthly production and throughput.
  • Silver production of 2,198,669 ounces exceeded plan, following the exceptional performance from Cerro Moro.

References

  1. ^ https://www.yamana.com/English/about/company-overview/default.aspx
  2. ^ https://www.yamana.com/English/portfolio/producing-mines/default.aspx
  3. ^ https://s28.q4cdn.com/334653565/files/doc_financials/2022/ar/Yamana-AR21_FULL_RGB_for-AODA_may09-FINAL.pdf
  4. ^ https://www.yamana.com/English/investors/news/news-details/2022/Yamana-Gold-Reports-First-Quarter-2022-Results-With-Low-Cost-Performance-Driving-Strong-Cash-Flow-Generation-Standout-Quarters-From-Jacobina-and-Cerro-Moro/default.aspx
Created by Asif Farooqui on 2022/05/23 07:16
     

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