The Gold Report - Thu, Apr 5, 2018

Senior Gold Producer's New Mine Is on Time and Budget

Analyst Andrew Kaip with BMO Capital Markets provided an update on what transpired during the period in which his firm was prohibited from writing about this miner.

Mine truck

In an April 3 research note, Andrew Kaip, an analyst with BMO Capital Markets, weighed in on Yamana Gold Inc.'s (YRI:TSX; AUY:NYSE; YAU:LSE) recent asset sale and shared insights from his site visit to its Cerro Moro project in Argentina.

He noted that the company sold its indirect 50% interest in the exploration properties of Canadian Malartic Corp., including the Kirkland Lake and Hammond Reef properties, to Agnico Eagle for $162.5 million in cash. He described the transaction as "positive" because it "improves liquidity during the pivotal ramp-up period at Cerro Moro and the longer-term net debt outlook."

The company anticipates achieving commercial production at Cerro Moro before mid-2018. As such, all of the forecasted 85 Koz of gold production from that mine would contribute to cash flow, Kaip noted.

After the post-sale period of restriction ended, BMO Capital reinitiated coverage on Yamana with a Market Perform rating and a $3 per share target price. Yamana is currently trading at around $2.65 per share.

Yamana released 2018 guidance of 900,000 ounces (900 Koz) of total gold production, excluding Brio Gold and Gualcamayo, at an all-in sustaining cost (AISC) of $725-745 an ounce ($725-745/oz). According to Kaip, these numbers are in line with BMO's estimates of 903 Koz of gold at an AISC of $737/oz.

Guidance for Cerro Mayo production in 2018 is forecasted to be 85 Koz of gold and 3.8 million ounces of silver at a co-product AISC of $650/oz gold and $9.15/oz silver. "Yamana is expecting very little pre-production, contingent on a smooth ramp-up to 1 thousand tons per day," Kaip explained.

The analyst reported that during the March visit, "we saw Cerro Moro tracking well to budgets and timeline" as it advanced through the commissioning stage. With the mill and tailings storage done, the focus was on the mill and flotation circuit. The back end of the plant was nearly ready for testing.

Mining at the underground Escondida zone was "sufficiently advanced" and moving to stope development, wrote Kaip. Open pits were being "pioneered," and staffing was far along.

Yamana had made changes to its mine plan for Cerro Moro, including decreasing silver production and reducing the size of future stockpiles. BMO views these changes as positive as they derisk execution at the mine once it is in production.

In terms of exploration, Yamana is having success with its refocused efforts at Cerro Moro, Kaip indicated. For one, they led to discovery of the Veronica vein, which "looks as if it will add to the resource base and support higher production for longer."

1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click below for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. publishes interesting contributor articles in addition to its own content. We have not verified any of the above details.

Sign-up at (or for our Small Cap Stock Observer newsletter, and to set-up your own My Portfolio, My Watchlist & Alerts and News by Email preferences, or to post at our Bulletin Boards. Free!

Please note that nothing in this report should be taken as a recommendation in any way, and that everything from is subject to the terms of our Privacy Policy and Disclaimer.

comments powered by Disqus

Detailed Quote Portal

symbol lookup | (TSX add :ca)

Membership Privileges

  • Investors Guru Small Cap Stock Observer - newsletter emailed monthly!
  • Featured Stock Profiles - emailed on occasion!
  • News by Email - as it's released, according to your My Preferences!
  • My Portfolio - login to view or update your holdings, or have it emailed daily!
  • My Watchlist & Alerts - login to view or update your stock radar list, and set price triggers for email alerts!
  • Bulletin Boards - no need to request boards, just Quote it! Social Sign-on & Share your ideas, observations & trends!
  • Find it all! Find it Fast! Comprehensive stock research webpages. No more endless clicking!

Email: (see Privacy Policy)
Password: (4-15 characters)
Username: (4-15, BB posts etc)

unsubscribe anytime

Bookmark and Share

 Subscribe in a reader

Our Mobile Site