YAMANA GOLD INC. (TSX: YRI; NYSE: AUY) (“Yamana” or “the Company”)
announces strong preliminary first quarter 2020 results, with gold
production of 192,238 ounces and silver production of 2.73 million
ounces. Total gold equivalent ounce (“GEO”) production during the
quarter was 221,746 GEO. Jacobina, El Peñón, and Minera Florida all
delivered exceptional quarters, exceeding production targets. The
Company also had strong financial performance in the first quarter,
the result of which was an improved balance sheet, including
further net debt reductions. The Company completed the quarter well
capitalized and with a strong cash position along with greater
certainty with its operations, including in relation to the
remobilization of Cerro Moro.
Yamana commends the remarkable dedication,
commitment, professionalism, and compassion of its employees who
have come together in these challenging times to drive the
outperformance in the first quarter while also supporting the
Company’s efforts to provide vital supplies to local communities.
This is the Yamana way and we could not be more proud.
First Quarter 2020 Production
Results
Yamana Mines |
First Quarter 2020 Preliminary Production |
GEO Production (oz.) |
221,746 |
Gold Production (oz.) |
192,238 |
Silver Production (oz.) |
2,730,851 |
The above totals are based on a GEO ratio of
94.23:1 for the quarter, which was higher than what the Company
assumed in its guidance. GEO includes gold plus silver with silver
converted to a gold equivalent ratio that is calculated based on
quarterly average market prices.
First Quarter 2020 Production By
Mine
Mine-by-Mine |
First Quarter 2020 Preliminary Production |
Gold (oz.) |
|
El Peñón |
42,230 |
Canadian Malartic (50%) |
64,763 |
Jacobina |
43,938 |
Cerro Moro |
18,743 |
Minera Florida |
22,563 |
Yamana Mines |
192,238 |
Silver (oz.) |
|
El Peñón |
1,355,910 |
Cerro Moro |
1,374,941 |
Yamana Mines |
2,730,851 |
Operational Highlights
- Jacobina posted another consecutive
quarter of record production with 43,938 ounces of gold. Average
throughput exceeded 6,500 tonnes per day a full quarter ahead of
schedule for the Phase 1 optimization and without benefits from the
installation of further plant modifications still to be
completed.
- El Peñón produced 42,230 ounces of
gold and 1.355 million ounces of silver during the quarter, which
came in ahead of production targets.
- Canadian Malartic produced 64,763
ounces of gold (50% basis) during the quarter. The mine continued
its strong operational performance prior to the operation being put
into care and maintenance on March 24, 2020, due to the Quebec
Government’s order to temporarily suspend all non-essential
business. The mine remains well prepared to transition back to
production once the order expires.
- Minera Florida maintained the
momentum from its finish to 2019, producing 22,563 ounces of gold,
well ahead of production targets for the quarter.
- Cerro Moro produced 18,743 ounces
of gold and 1.374 million ounces of silver during the quarter. The
operation transitioned to a reduced production schedule on March
19, 2020, in compliance with the Argentine Government’s declaration
of a temporary mandatory social isolation period. As reported
below, the government declared mining an essential service on April
3, 2020, allowing the mine to resume normal operations. Cerro Moro
is now in the process of remobilizing.
- Costs for the quarter were in line
with costs targets. Costs were positively impacted by foreign
exchange movements. Costs were also impacted by wages and other
benefits continuing to be paid at Canadian Malartic and Cerro Moro,
notwithstanding the demobilization and full or partial suspension
of these operations late in the quarter.
- Sales of gold and silver during the
quarter approximated the amount of gold and silver produced.
Cerro Moro Resuming Full Operations; Canadian Malartic
to Resume Operations Once Temporary Restriction Order Expires
On April 3, 2020, the Argentine Government
declared mining an essential service, which will allow Cerro Moro
to resume full operations. The Company is encouraged by the
declaration of the Argentine government that mining is an essential
service, and plans to resume operations in an orderly and gradual
manner with attention to health and safety requirements.
Recommended standards and measures have been established at
national, provincial and municipal levels. The Company’s
protocols relating to these standards and measures have been
discussed with and reviewed by applicable authorities, and are
considered to be in compliance. The Company will continue to
consult with national and international medical experts along with
municipal, provincial and national governments, its workforce and
other stakeholders.
The temporary restriction order for
non-essential services by the Quebec Government, which was
initially expected to expire on April 13, 2020, has been extended
to May 4, 2020. As the original temporary restriction order
designated mining as an essential service, subject to certain
limitations on activities, in conjunction with other member mining
companies in Quebec, the Company is seeking clarification if the
extension applies to mining companies. Once the temporary
restriction order expires, the Company expects full operations to
resume at Canadian Malartic as soon as possible in an orderly and
gradual manner with attention to health and safety
requirements.
All of Yamana’s other mines continue to operate
normally with enhanced health and safety precautions and protocols.
See below for additional information on these precautionary
measures.
Update on Guidance and Future
Production
The Company previously guided that 46% of
production would occur in the first half of the year,
which it expected to be approximately evenly
split between the first and second quarters based on the GEO
ratio forecast in its original production
guidance. Production in the first quarter achieved this
target. Due to the impact of COVID-19, the Company expects
the second quarter to be weaker than previously anticipated, after
which the Company expects a resumption of normal
operations in the second half of the year. The
Company expects to formally update its guidance for
the balance of this year and for 2021 and 2022 when it
releases its first quarter results on April 30, 2020.
Continuing Improvements to Strong
Balance Sheet
The Company is well capitalized, as it started
the year with $158.8 million of cash and cash equivalents, had
positive cash flows during the first quarter, and as previously
announced, drew down $200 million from its $750 million revolving
credit facility. The Company also made a scheduled private
placement debt repayment of $56 million during the quarter. The
Company has no pending scheduled debt repayments or significant
capital commitments, with its next scheduled debt repayment due in
March, 2022. The $200 million drawdown was a precautionary measure
and the Company currently has no plans to use these funds.
The Company remains committed to maintaining
amongst the strongest balance sheets in the industry and is ahead
of expectations on its leverage target. With free cash flow
generated during the quarter, and despite the impact on production
at Canadian Malartic and Cerro Moro, net debt decreased during the
quarter by approximately $15 million, the result of which is that
net debt at quarter end was approximately $874 million.
During the quarter, the Company paid dividends
of approximately $10 million. The Company’s previously announced
25% increase to its annual dividend went into effect in the first
quarter, bringing the annual dividend to $0.05 per share, and
consequently, shareholders of record at the close of business on
March 31, 2020, will be entitled to receive payment of this
dividend on April 14, 2020.
Foreign Exchange Update
During the quarter, the Company entered into
Canadian dollar zero-cost contracts totaling C$91.2 million, split
evenly between May and December of 2020, that allow the Company to
participate in exchange rate movements between the two strikes of
1.38 and 1.45. This allowed the Company to lock in a significant
benefit to the rate of 1.32 used in guidance.
Furthermore, average foreign exchange rates of
the Company’s operating currencies were weaker in the quarter, and
at quarter end, than those assumed for guidance purposes, having a
favourable impact on operating costs.
COVID-19 Precautionary
Measures
Yamana continues to take every precaution
to ensure the health and safety of its employees,
families, and communities, and it is working closely
with its host communities to support their
needs through this difficult period.
The Company has implemented heightened
levels of health screening, precautionary measures, and support
services at all of its operations. These actions
include: temporarily restricting all employee travel;
temporarily shifting to remote work arrangements at our corporate
and regional offices; enhanced medical screening of all individuals
entering mine sites; enhanced sanitization and
disinfecting at our mines and offices; mandatory social
distancing at our operations; staggered work schedules and meal
times to support social distancing; and increased levels of busing
to minimize the number of people on each vehicle in support of
social distancing.
The Company is in regular contact with medical
experts and government authorities in every country
where it operates. If at any point the Company
determines that continuing operations poses an increased risk to
our workforce or local communities, the Company will reduce
operational activities up to and including care and maintenance and
management of critical environmental systems.
There are currently no suspected or confirmed
cases of COVID-19 at any of Yamana’s
operations.
About Yamana
Yamana Gold Inc. is a Canadian-based precious
metals producer with significant gold and silver production,
development stage properties, exploration properties, and land
positions throughout the Americas, including Canada, Brazil, Chile
and Argentina. Yamana plans to continue to build on this base
through 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.
FOR FURTHER INFORMATION PLEASE
CONTACT:Investor Relations416-815-0220
1-888-809-0925 Email: investor@yamana.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS: This news release contains or incorporates by reference
“forward-looking statements” and “forward-looking information”
under applicable Canadian securities legislation and within the
meaning of the United States Private Securities Litigation Reform
Act of 1995. Forward-looking information includes, but is not
limited to information with respect to the Company’s strategy,
plans or future financial or operating performance including
guidance and liquidity and the impact of the coronavirus.
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 unforeseen impacts on guidance, liquidity, cash flow,
monetization initiatives, and available residual cash, an inability
to maintain a cash reserve fund balance that can support current or
future dividend increases, the outcome of various planned technical
studies, production and exploration, development, optimizations and
expansion plans at the Company's projects, changes in national and
local government legislation, taxation, controls or regulations
and/or change in the administration of laws, policies and
practices, and 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, silver and zinc), currency exchange rates (such as the
Brazilian Real, the Chilean Peso and the Argentine Peso versus the
United States Dollar), the impact of inflation, 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, risks related to asset
dispositions, risks related to metal purchase agreements, risks
related to acquisitions, changes in project parameters as plans
continue to be refined, changes in project development,
unanticipated costs and expenses, higher prices for fuel, steel,
power, labour 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, permitting
timelines, government regulation and the risk of government
expropriation or nationalization of mining operations, risks
related to relying on local advisors and consultants in foreign
jurisdictions, environmental risks, unanticipated reclamation
expenses, risks relating to joint venture or jointly owned
operations, title disputes or claims, limitations on insurance
coverage, timing and possible outcome of pending and outstanding
litigation and labour disputes, risks related to enforcing legal
rights in foreign jurisdictions, as well as those risk factors
discussed or referred to herein and in the Company's Annual
Information Form filed with the securities regulatory authorities
in all provinces of Canada and available at www.sedar.com, and
the Company’s Annual Report on Form 40-F filed with the United
States Securities and Exchange Commission. 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.
All amounts are expressed in United States Dollars unless
otherwise indicated.
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