Yamana Gold Announces a Further 25% Dividend Increase and Establishes a New Dividend Policy to Ensure the Sustainability of D...
December 16 2019 - 7:30AM
YAMANA GOLD INC. (TSX:YRI; NYSE:AUY) (“Yamana” or “the Company”)
announces several changes in its dividend and the establishment of
a new dividend policy.
Dividend to Increase by Another
25%
The Company announces an additional 25% dividend
increase to $0.05 per share annually, effective for the first
quarter of 2020. This follows the 100% increase in dividends
declared in the third quarter of 2019, thereby representing a 125%
increase in dividends since the third quarter of 2019.
These initial two increases are part of a
gradual and progressive approach to dividend increases as the
Company’s cash balances continue to grow from increasing free cash
flow1 and successful and continuing initiatives to monetize its
portfolio of non-producing assets and financial instruments.
Reporting Dividends Per Production
GEO
Along with other manners of reporting dividends,
the Company will begin to report dividends on a per gold equivalent
ounce (“GEO”)2 of production basis with the latest increase
bringing the dividend level to $50 per GEO2 with room for further
increases.
Sustainability of Dividends and Cash
Reserve Fund
The Company sees dividends as a return on
investment to shareholders that stems from disciplined management
of financial resources and capital allocation. The Company
considers it normal course that as margins increase, it should be
able to manage and reinvest in its business, fund its obligations
and improve its balance sheet, and have residual cash available to
pay and increase dividends.
Further, dividends should be sustainable at any
level, including after increasing to a new level. Recognizing that
the gold price is not within the Company’s control, the Company has
implemented a policy establishing a cash reserve fund that will be
available to be drawn upon, if required, were the gold price to
decline and negatively impact margins over a longer period of time.
While the balance in the cash reserve fund would
change from time to time, the Company intends to maintain a balance
that can support the current or any future increased dividend for a
minimum period, which may vary from time to time but is intended to
be no less than three years, independent of prevailing gold
prices.
While the Company is and expects to continue to
generate cash flow that will create and augment the cash reserve
fund, the Company is also advancing multiple monetization
initiatives that will generate additional cash, some or all of
which would further support the cash reserve fund.
$900 Million of Dividends Paid to
Date
The Company has paid dividends consistently
through twelve of its sixteen-year history since declaring its
first dividend in 2007. The Company was in its initial capital
spending and development phase from 2003 to 2006.
In the twelve-year period since 2007, the
Company has paid more than $900 million in dividends, which is
industry leading for the same period. The Company views the payment
of dividends as an important mechanism to manage its capital base
and maximize returns for shareholders.
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
416-815-02201-888-809-0925Email: investor@yamana.com
End Notes
- The Company uses the financial measure "Net Free Cash Flow" and
"Free Cash Flow", which are non-GAAP financial measures, to
supplement information in its Consolidated Financial Statements.
Net Free Cash Flow and Free Cash Flow do not have any standardized
meaning prescribed under IFRS, and therefore may not be comparable
to similar measures employed by other companies. The Company
believes that in addition to conventional measures prepared in
accordance with IFRS, the Company and certain investors and
analysts use this information to evaluate the Company’s performance
with respect to its operating cash flow capacity to meet
non-discretionary outflows of cash or to meet dividends and debt
repayments. The presentation of Net Free Cash Flow and Free Cash
Flow are not meant to be a substitute for the cash flow information
presented in accordance with IFRS, but rather should be evaluated
in conjunction with such IFRS measures. Net Free Cash Flow is
calculated as cash flows from operating activities of continuing
operations adjusted for advance payments received pursuant to metal
purchase agreements, non-discretionary expenditures from sustaining
capital expenditures and interest and financing expenses paid
related to the current period. Free Cash Flow further deducts
remaining capital expenditures and payments for lease
obligations.
- GEO includes gold plus silver with silver converted to a gold
equivalent at a ratio of 86.79:1 for the third quarter. The GEO
ratio is calculated based on average market prices.
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 proposed changes to its
dividend policy and dividend reporting, the implementation of a
cash reserve fund in order to sustain dividend level independent of
gold prices, the Company’s expectation that it will continue to
generate cash flow and execute on monetization initiatives, some of
which will support the cash reserve fund. 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 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, and other
risk factors discussed 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 proposed changes to its
dividend policy and payment of dividends and may not be appropriate
for other purposes.
(All amounts are expressed in United States
dollars unless otherwise indicated)
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