YAMANA GOLD INC. (TSX:YRI; NYSE:AUY, LSE:AUY) (“Yamana” or the
“Company”) today announces strong preliminary third quarter
results, with gold production of 201,772 ounces and silver
production of 3.04 million ounces. Total gold equivalent production
(“GEO”) was 240,466 ounces. Jacobina, El Peñón, Minera Florida, and
Canadian Malartic all enjoyed standout quarters.
With overall production, and production at most of the
Company’s mines, currently tracking ahead of plan, and in some
cases well ahead of plan, the Company increases its 2020 production
guidance from the previous guidance of 890,000 GEO to 915,000 GEO,
representing an increase of 3%. Gold production and silver
production guidance have increased from previous guidance by
approximately 1% and 6%, respectively. More specific mine-by-mine
and metal-by-metal information will be provided with the Company’s
financial results at the end of the month. The Company
continued to generate strong cash flows in the quarter which
strengthened its cash balances and balance sheet. Cash
balances at quarter end increased by a further $145 million
from $325 million at the end of the second quarter
to approximately $470 million.
The strong results position the Company well for
an even stronger fourth quarter and continued production growth
over the next several years. Furthermore, the Company has low
capital commitments over the near-to-medium term, which together
with Yamana’s rising production profile, cash flows, and cash
balances, provide significant financial flexibility to pursue all
of its capital allocation objectives, including further dividend
increases.
As a result, the Company is pleased to announce
that it is raising its annual dividend by a further 50% to $0.105
per share, effective for the fourth quarter of 2020. At the new
rate, the dividend will be 425% higher than the dividend level just
18 months ago. Furthermore, as the Company has established a policy
of representing the dividend on a per GEO basis, with the objective
of maintaining the dividend at between $50 to $100 per GEO, this
increase positions the dividend at the high end of the range at
$100 per ounce.
DIVIDEND INCREASE
HIGHLIGHTS
- The Company is increasing its
annual dividend by a further 50% to $0.105 per share, effective for
the fourth quarter of 2020.
- On a per GEO basis, the dividend is
at the top of the Company’s target range of $50-$100 per GEO, with
$100 per GEO now the new dividend floor.
- At the new rate, the dividend will
be 425% higher than the dividend level just 18 months ago.
- Based on Yamana’s share price at
yesterday’s close, the Company’s dividend yield at the new rate
would be 1.9%, which on an absolute and risk-adjusted basis is
amongst the highest of its North American peers. The Company
endeavours to balance cash returns with overall returns and notes
that while its dividend yield to share price has improved
significantly relative to peers, its significant increase in share
price since last year has the effect of reducing cash return yields
although at the expense of significant overall returns which
include share price. Since the start of 2019, overall returns
for the Company’s shares are 143% as of yesterday’s close.
- Consistent with its dividend policy
and sustainability objectives, the Company has sufficient cash
reserves on hand to support payment of the dividend at
the increased level for three years. The cash reserve
fund provides the Company with the flexibility to pay the
dividend at the new floor for an extended period
even in a bottom of cycle gold price
environment.
- The Company will no longer provide
a range for its dividends on a per GEO basis although, as a policy,
it has now set a floor for its dividend and any increases above the
new floor will be based entirely on cash flows and cash generation
capacity of the Company. The Company notes that as its cash
flows and cash balances increase, its dividend
will rise correspondingly as a percentage of
cash flows and commensurate with increasing cash balances from
cash flows and sources that supplement cash flows. The Company will
continue to reflect its dividend both on a per share basis and on a
per ounce basis.
- Yamana endeavours to create an
optimal balance between the amount of the dividend that it
pays and the sustainability of that dividend.
- The Company recognizes that it
could pay a substantially higher dividend by immediately
utilizing its cash reserves, but believes that
at the new dividend floor and with its
cash reserve fund it has the proper balance
between the amount payable
and dividend sustainability for now. Moreover, the
Company is confident that its cash flows and other cash generation
efforts will support further dividend increases in due course.
- The Company will continue to engage
regularly with investors to ensure it is maintaining an optimal
balance between the amount payable and dividend
sustainability.
THIRD QUARTER 2020 PRODUCTION
RESULTS
|
Third Quarter 2020 Preliminary
Production |
GEO Production (oz.) |
240,466 |
Gold Production (oz.) |
201,772 |
Silver Production (oz.) |
3,040,341 |
The above totals are based on a GEO ratio of
79.26:1 for the quarter. GEO includes gold plus silver with silver
converted to a gold equivalent ratio that is calculated based on
quarterly average market prices.
THIRD QUARTER
2020 PRODUCTION BY MINE
Mine-by-Mine |
Third Quarter 2020 Preliminary
Production |
Gold (oz.) |
|
|
El Peñón |
39,322 |
Canadian Malartic (50%) |
76,398(1) |
Jacobina |
44,080 |
Cerro Moro |
18,818 |
Minera Florida |
23,153 |
Yamana Mines |
201,772 |
Silver (oz.) |
|
El Peñón |
1,360,999 |
Cerro Moro |
1,679,342 |
Yamana Mines |
3,040,341 |
- Includes pre-commercial ounces from
Barnat of approximately 13,000 ounces.
OPERATIONAL HIGHLIGHTS
- Jacobina continued
its strong operational performance, with gold
production of 44,080 ounces, well above plan. The results
reflect higher feed grade and strong throughput rates,
which averaged 6,800 tonnes per day (“tpd”) during the quarter.
Phase 1 optimization work has begun with the objective of improving
processing rates and efficiencies.
- El Peñón delivered
another strong quarter, with gold production of 39,322 ounces
and silver production of 1.36 million ounces. Production for both
metals was above plan primarily due to the processing of higher
grade ore, with silver production significantly overperforming due
to mine sequencing in a high-grade area.
- At Canadian Malartic, gold
production of 76,398 ounces was above plan due to increased
throughput. The daily throughput rate underscores the consistency
created by the newly installed advanced process control system as
well as improvements in rock fragmentation that are decreasing the
load on the grinding unit. In addition, softer rock is being
processed thereby requiring less grinding power and consequently
contributing to an increase in grinding capacity. During the
quarter, throughput was significantly higher than the comparative
prior year quarter despite the operation incurring two planned mill
shutdowns for maintenance purposes. Excluding these shutdowns,
throughput exceeded 60,000 tpd. Work on the exploration ramp into
the Odyssey and East Malartic zones is progressing on
schedule.
- At Minera Florida, gold
production of 23,153 ounces was in line with plan, while quarterly
development rates were the highest in two years, improving
flexibility with a positive impact on throughput.
- Cerro Moro produced 18,818 ounces
of gold and 1.68 million ounces of silver during the quarter
compared to 8,175 ounces and 730,571 ounces, respectively, in the
previous quarter. The operation is back to the standard throughput
expectation of 1,000 tpd, with productivity trending higher.
Increasing production from the Zoe underground higher-grade mine in
the fourth quarter is expected to position Cerro Moro for its
highest gold production quarter of the year.
- As previously guided, the fourth
quarter is expected to be the strongest quarter in line with
historical trends.
NEW DIVIDEND FLOOR SET; CASH
BALANCES CONTINUE TO
RISE; COMPANY
WILL EVALUATE FURTHER DIVIDEND INCREASES BASED ON CASH
FLOWS
At the new rate, the dividend is now at the high
end of the Company’s stated target range of $50-$100 per GEO as set
under its dividend policy. The $100 per GEO rate will be the new
dividend floor. The Company will no longer provide a range for its
dividends on a per GEO basis although, as a policy, it has now set
a floor for its dividend and any increases above the new floor will
be based entirely on cash flows and cash generation capacity of the
Company. The Company notes that as its cash flows and cash
balances increase its dividend will rise correspondingly as a
percentage of cash flows and commensurate with increasing cash
balances from cash flows and sources that supplement cash flows.
The Company will continue to reflect its dividend both on a per
share basis and on a per ounce basis.
Consistent with its dividend policy and
sustainability objectives, the Company has sufficient cash reserves
on hand to support payment of the dividend at the increased level
for three years upon first payment. The cash reserve fund on the
balance sheet is part of that sustainability
effort, as it provides the Company with the flexibility to pay
the dividend at the new floor for an extended period even in a
bottom of cycle gold price environment. The Company ended the third
quarter with approximately $470 million in cash and equivalents, an
increase of $145 million from the end of the second quarter. The
increase in cash balances reflects strong operational performance
as well as the sale of certain marketable securities previously
held by the Company, representing a value in excess of $18 million,
including approximately 1.2 million shares of Equinox Gold.
Yamana endeavours to create an optimal balance
between the amount of the dividend that it pays and the
sustainability of that dividend. The Company recognizes that it
could pay a substantially higher dividend by immediately utilizing
its cash reserves, but believes that at the new dividend floor and
with its cash reserve fund it has the proper balance between the
amount payable and sustainability for now. Moreover, the Company is
confident that its cash flows and other cash generation efforts
will support further dividend increases in due course, and the
Company will continue to engage regularly with investors to ensure
the balance between the amount payable and sustainability remains
optimal.
ADDING FURTHER STRENGTH AND RESILIENCE
TO FINANCIAL POSITION
As it begins the fourth quarter, historically
Yamana’s strongest, the Company is well-positioned financially,
with rising free cash flows and cash balances, lower capital
intensity over the near-to-medium term, and additional near-term
opportunities to monetize strategic assets—all of which allow for
continued balance sheet improvement and for cash generated to meet
the Company’s obligations.
The Company does not have any significant
expansionary capital or other near-term obligations, which means
Yamana is in the position of increasing its cash balances from cash
flows and management of its market securities. The Company expects
to be in a position by year-end 2020 to achieve its balance sheet
management objective of maintaining a leverage ratio of of net debt
to EBITDA of below 1.0x, even when assuming a bottom-of-cycle gold
price of $1,350 per ounce underscoring the Company’s
significant financial flexibility and best-in-class balance
sheets.
FULL THIRD QUARTER
OPERATIONAL AND FINANCIAL RESULTS TO BE ISSUED OCTOBER
29th FOLLOWED BY CONFERENCE CALL
ON OCTOBER 30th
The Company will release its third quarter 2020
operational and financial results after the market close October
29, 2020, followed by a conference call and webcast on October 30,
2020, at 9:00 am ET.
Third Quarter 2020 Conference
Call
Toll Free (North America): |
1-800-273-9672 |
Toronto Local and
International: |
416-340-2216 |
Webcast: |
www.yamana.com |
|
|
Conference Call
Replay |
|
Toll Free (North
America): |
1-800-408-3053 |
Toronto Local and
International: |
905-694-9451 |
Passcode: |
8127218# |
The conference call replay will be available
from 12:00 p.m. ET on October 30, 2020, until 11:59 p.m. ET on
November 20, 2020.
About YamanaYamana 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 Relations and Corporate
Communications416-815-02201-888-809-0925Email:
investor@yamana.com
Tavistock (UK Public
Relations)Charles Vivian / Emily MossTelephone: +44 7977
297 903 / +44 778 855 4035Email: yamana@tavistock.co.uk
Peel Hunt LLP (Joint UK Corporate
Broker)Ross Allister / David McKeown / Alexander
AllenTelephone: +44 (0) 20 7418 8900
Berenberg (Joint UK
Corporate Broker)Matthew Armitt / Jennifer Wyllie / Detlir
Elezi Telephone: +44 (0) 20 3207 7800
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 dividend
policy, 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 all 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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