YAMANA GOLD INC. (TSX:YRI; NYSE:AUY; LSE:AUY) (“Yamana” or the
“Company”) herein provides 2022, 2023 and 2024 production guidance,
2022 cost guidance and an update to its ten-year outlook.
HIGHLIGHTS
- The Company is maintaining its 2022
production guidance and expects production not to be less than
1,000,000 gold equivalent ounces ("GEO")(2). For 2023, the Company
is increasing its production guidance from 1,000,000 GEO(2) to
1,030,000 GEO(2). The Company sees further near-term growth
continuing in 2024 with production increasing to 1,060,000
GEO(2).
- For 2022, the Company expects total
cost of sales, cash costs(1) and AISC(1) not to exceed $1,215, $725
and $1,080 per GEO(2) respectively. Over the three-year guidance
period, the Company is expecting the increase in GEO(2) production
to have a positive impact on costs. In particular, the Company's
lowest-cost operation, Jacobina, is a significant contributor to
the increase in production over the guidance period, and
consequently the Company anticipates this will drive down the
average cost of production, improving overall margins and cash
flow.
- The Company introduced a inaugural
longer-term, ten-year outlook last year to demonstrate the
confidence it has in the sustainability of its production platform
and in the long mine lives of its assets. Exploration successes
have provided significant support for the ten-year outlook and
those successes underpin that outlook this year with a greater
certainty than when it was first introduced. The Company expects to
provide a formal update on its longer-term ten-year outlook every
other year to allow more time for exploration, mineral resource
conversion and evaluation of the foregoing to longer-term
production plans. The Company anticipates delivering the next
update to its ten-year outlook in 2023, and expects it will
increase its sustainable baseline annual production at current
operations from 1,000,000 GEO(2) to at least 1,050,000 GEO(2) from
2025. Further, the growth potential of 1,200,000 GEO(2) outlined in
the previously announced ten-year outlook remains a conservative
target with preliminary evaluations identifying a number of
opportunities which together could increase production to as high
as 1,500,000 GEO(2) within the ten-year outlook horizon, and could
meaningfully extend the production platform beyond the ten-year
timeframe. The opportunities identified for growth to reach as high
as 1,500,000 GEO(2) remain within the Company's existing portfolio
of assets and are exclusive of further potential growth beyond this
level from MARA, Suyai and opportunities within the generative
exploration portfolio.
- While the Company provides a
ten-year outlook, its existing asset base has the potential to
sustain production well beyond this timeframe. Canadian Malartic
and Jacobina both have multi-decade mine lives, Wasamac has a
strategic mine life of at least 15 years, and El Peñón and Minera
Florida have a strong track record of mineral reserve replacement,
and have actually grown mineral reserves in recent years. Cerro
Moro also notably achieved mineral reserve replacement for the
first time this year, establishing what we expect to be an ongoing
trend, similar to the mineral reserves replacement cycle
established at the Company’s more mature operations.
- The Company remains well-positioned
to fund all exploration, expansions, projects and opportunities
identified in its guidance and decade-long outlook using available
cash and cash flow from operations.
Three-Year Production Guidance
The following table presents the Company's total
gold, silver and GEO(2) production expectation in 2022, 2023 and
2024, which demonstrates year-over-year production growth, starting
at 1,000,000 GEO(2) and increasing to 1,060,000 GEO(2) by 2024.
This 3% and 6% production growth exceeds the guidance provided last
year and the budgets on which that guidance was based.
Due to mine development and sequencing for 2022,
the Company expects a evenly weighted production weighting between
the first half and the second half of the year, instead of a
stronger second half weighting as was customary in prior years.
However, the first quarter is expected to be the lowest production
quarter of the year, as Jacobina ramps up to 8,500 tonnes per day
("tpd") and due to the temporary disruption to operations during
the first three weeks of January at Minera Florida.
The following tables present actual production
for 2021 and production guidance for 2022, 2023 and 2024. While the
Company provides production guidance within a range of +/- 3% by
mine and overall, the following presents the production levels by
year in that range which management expects to meet or exceed for
the particular year.
(000's ounces) |
2021 Actual |
2022 Guidance |
2023 Guidance |
2024 Guidance |
Total gold production |
885 |
870 |
910 |
930 |
Total silver production |
9,169 |
9,500 |
8,650 |
9,400 |
Total
GEO production(2) |
1,011 |
1,000 |
1,030 |
1,060 |
(000's ounces) |
Gold |
2021 Actual |
2022 Guidance |
2023 Guidance |
2024 Guidance |
Canadian Malartic (50%) |
357 |
320 |
330 |
340 |
Jacobina |
186 |
195 |
230 |
230 |
Cerro Moro |
80 |
95 |
95 |
95 |
El Peñón |
176 |
170 |
165 |
165 |
Minera Florida |
85 |
90 |
90 |
100 |
Total |
885 |
870 |
910 |
930 |
(000's
ounces) |
Silver |
2021 Actual |
2022 Guidance |
2023 Guidance |
2024 Guidance |
Cerro Moro |
5,582 |
5,300 |
4,400 |
4,450 |
El Peñón |
3,587 |
4,200 |
4,250 |
4,950 |
Total |
9,169 |
9,500 |
8,650 |
9,400 |
(000's ounces) |
GEO(2) |
2021 Actual |
2022 Guidance |
2023 Guidance |
2024 Guidance |
Canadian Malartic (50%) |
357 |
320 |
330 |
340 |
Jacobina |
186 |
195 |
230 |
230 |
Cerro Moro |
156 |
169 |
156 |
157 |
El Peñón |
226 |
228 |
224 |
234 |
Minera Florida |
85 |
90 |
90 |
100 |
Total |
1,011 |
1,000 |
1,030 |
1,060 |
2022 Cost Guidance
The Company has assumed an expected average
year-over-year consolidated cost impact in the range of 3% at its
wholly owned operations, including the impact of inflation. At
Canadian Malartic, costs are expected to increase over 2021 as
reflected in the previously disclosed longer term mine plan, mostly
due to lower production and increased strip ratio.
Cost pressures from inflation are expected to be
moderate as the transitory impacts of commodity-linked consumables
and COVID-related supply chain disruptions ease. At the Company’s
operations, the impact of inflation on costs is expected to be
partially offset by the related devaluation of local currencies, in
which the majority of expenses are incurred. Furthermore, the
Company has experienced a more modest exposure to inflation given
the lower relative exposure to consumables at its portfolio of
primarily lower tonnage underground operations and access to lower
cost renewable energy versus carbon-based sources of power. At this
time, the Company is not experiencing any significant inflationary
pressure on capital costs, and the Company believes that its
assumptions relating to forecast capital costs remain valid.
Over the three-year guidance period, the Company
is expecting a 6% increase in GEO production that is anticipated to
have a positive impact on consolidated costs. In particular, the
Company's lowest-cost operation, Jacobina, is a significant
contributor to the increase in production over the guidance period,
and consequently the Company anticipates this will drive down the
average cost of production, improving overall margins and cash
flow.
The Company anticipates that it will continue to
incur some costs in relation to COVID-19 in the near future. Total
costs are expected to be approximately $10.0 million for 2022, or
approximately $10 per GEO(2) sold on a consolidated basis. The bulk
of the COVID-19 costs are expected at Cerro Moro and El Peñón, in
relation to additional transportation, testing and sanitation
requirements, at approximately $4.0 million and $3.0 million,
respectively. COVID-19 costs are not included in the below
disclosure as they are currently excluded from total cost of sales
per GEO sold(2), cash costs(1) per GEO sold(2) and AISC(1) per GEO
sold(2).
The following table presents actual costs for
2021 and cost guidance for 2022. While the Company provides cost
guidance within a range of +/- 1.5% overall, with some mines having
slightly wider and narrower ranges, the following presents the cost
levels in those ranges which management expects to meet or be below
for 2022.
|
Total cost of sales per GEO
sold(2) |
Cash costs(1)per GEO
sold(2) |
AISC(1)per GEO
sold(2) |
|
2021 Actual |
|
2022Guidance |
2021 Actual |
|
2022Guidance |
2021 Actual |
|
2022Guidance |
Canadian Malartic (50%) |
$ |
1,135 |
|
$ |
1,320 |
$ |
647 |
|
$ |
760 |
$ |
901 |
|
$ |
1,030 |
Jacobina |
$ |
863 |
|
$ |
845 |
$ |
566 |
|
$ |
555 |
$ |
738 |
|
$ |
760 |
Cerro Moro |
$ |
1,332 |
|
$ |
1,420 |
$ |
848 |
|
$ |
940 |
$ |
1,228 |
|
$ |
1,285 |
El Peñón |
$ |
1,054 |
|
$ |
1,170 |
$ |
673 |
|
$ |
660 |
$ |
932 |
|
$ |
885 |
Minera Florida |
$ |
1,434 |
|
$ |
1,280 |
$ |
881 |
|
$ |
740 |
$ |
1,224 |
|
$ |
1,135 |
Total(i) |
$ |
1,132 |
|
$ |
1,215 |
$ |
689 |
|
$ |
725 |
$ |
1,030 |
|
$ |
1,080 |
(i) Total AISC includes
additional non-mine site specific costs primarily comprised of
corporate G&A and exploration expenditures.
The following table presents expansionary
capital, sustaining capital, and total exploration spending for
2021 and guidance for 2022 by mine:
|
Expansionary capital |
Sustaining capital |
Total exploration |
(In
millions of US Dollars) |
2021 Actual |
2022Guidance |
2021 Actual |
2022Guidance |
2021 Actual |
2022Guidance |
Canadian Malartic (50%) |
$ |
50.1 |
$ |
114.0 |
$ |
69.2 |
$ |
70.0 |
$ |
15.9 |
$ |
14.0 |
Jacobina |
|
28.1 |
|
37.0 |
|
14.0 |
|
24.0 |
|
9.5 |
|
15.0 |
Cerro Moro |
|
1.2 |
|
1.0 |
|
39.8 |
|
41.0 |
|
17.3 |
|
18.0 |
El Peñón |
|
7.8 |
|
3.0 |
|
34.6 |
|
28.0 |
|
18.8 |
|
20.0 |
Minera Florida |
|
22.6 |
|
11.0 |
|
15.2 |
|
20.0 |
|
10.0 |
|
12.0 |
MARA(i) |
|
14.3 |
|
13.0 |
|
— |
|
— |
|
— |
|
— |
Wasamac |
|
6.7 |
|
15.0 |
|
— |
|
— |
|
6.9 |
|
10.0 |
Other capital |
|
0.8 |
|
3.0 |
|
0.9 |
|
2.0 |
|
— |
|
— |
Other exploration expense |
|
— |
|
— |
|
— |
|
— |
|
10.7 |
|
6.0 |
Other capitalized
exploration |
|
— |
|
— |
|
— |
|
— |
|
10.6 |
|
15.0 |
Total |
$ |
131.6 |
$ |
197.0 |
$ |
173.7 |
$ |
185.0 |
$ |
99.7 |
$ |
110.0 |
(i) MARA actuals for 2021 and
guidance for 2022 in this table are disclosed at the Company's
56.25% interest, and not at 100%, as consolidated and disclosed in
other CAPEX tables. MARA expansionary capital is due to work
associated with the advancement of the project including the
feasibility study, EIA and other related work.Approximately 60% of
the Company’s expected exploration investment is capital in
nature.
The following table presents other expenditure
results in 2021 and expectations for 2022:
(In millions of US Dollars) |
2021 Actual |
2022 Guidance |
Total DDA |
$ |
447.9 |
$ |
500 - 520 |
Cash based G&A (i) |
$ |
70.8 |
$ |
75.0 |
Cash
income taxes paid (ii) |
$ |
151.0 |
$ |
145 - 165 |
(i) Cash based G&A excludes
$4.0 million of non-cash stock based compensation expense, included
in G&A as reported in the Consolidated Statements of Operations
for 2021 actuals.(ii) 2022 guidance is based on
$1,800 gold price and $25.00 silver price as per guidance
assumption table below.
TEN-YEAR PRODUCTION OUTLOOK
On January 25, 2021, the Company introduced its
longer-term, ten-year production outlook to demonstrate the
confidence it has in the sustainability of its production platform
and in the long mine lives of its assets. In its inaugural outlook
the Company announced a baseline annual production of 1,000,000
GEO(2) from current operations and with growth to 1,200,000 GEO(2)
by approximately 2028 from its Wasamac development project.
Opportunities for Further Growth from
Operating Assets and Wasamac
Since the announcement of its inaugural ten-year
outlook, exploration successes have provided significant support
for the outlook and those successes underpin that outlook this year
with a greater certainty than when it was first introduced. The
Company expects to provide a more formal update on its longer-term
ten-year outlook every other year to allow more time for
exploration, mineral resource conversion and evaluation of the
foregoing to longer-term production plans and anticipates
delivering this again in 2023 subsequent to further analysis on
several longer-term growth opportunities. In its next updated
outlook, the Company expects it will increase its sustainable
baseline annual production at current operations from 1,000,000
GEO(2) to at least 1,050,000 GEO(2) from 2025. Further, the growth
potential of 1,200,000 GEO(2) outlined in the previously announced
ten-year outlook remains a conservative target as the Company has
significant production upside at its operating mines and at its
Wasamac project. Preliminary evaluations have identified a number
of opportunities for further growth, including the potential for a
Phase 4 expansion at Jacobina, the potential plant expansion and
heap leach project at Cerro Moro, the addition of the new South
Deeps discovery into the mine plan at El Peñón and the possible
addition of a second shaft and further production from upper
ore-bodies accessed by the ramp at Odyssey. At Wasamac there
remains the potential for higher production levels from Wildcat,
Wildcat South and the highly prospective Francoeur, Arntfield and
Lac Fortune properties. Assuming all of these identified
opportunities are advanced, the Company's production potential
could reach up to 1,500,000 GEO within the ten-year outlook
horizon, and meaningfully extend that production profile beyond the
ten-year timeframe.
Additional Opportunities Not Included in
the Ten-Year Outlook
The Company has additional compelling
development projects in its pipeline with the potential to drive
significant long-term production upside towards the end of the
current decade and beyond. These include the MARA Project, one of
the largest copper-gold projects in the world which Yamana owns
56.25% and which has an average annual production of 556 million
pounds of copper equivalent (100% basis) during its first ten
years. In addition, the Suyai Project is a large gold project in
Chubut Province, Argentina, that is projected to reach production
of up to 250,000 ounces annually in its first eight years. In
Brazil, the Company is expanding the known oxide mineral resource
base at Lavra Velha, and the deposit is being evaluated as a
potential open pit prospect relying on heap leaching for recovery.
Further, Jacobina Norte is a highly-prospective property that lies
contiguous to and north of the Company’s prolific Jacobina mine,
with preliminary results showing excellent potential for the
discovery of standalone Jacobina-type mineralization and the
addition of a new mine along the greenstone basin. These
opportunities remain outside of the growth outlined in the ten-year
outlook.
Additional details on each operation and project
are provided below.
Summary of Ten-Year Outlook by Mine
Canadian Malartic and OdysseyAt Canadian
Malartic, production will transition from the open pit to the
underground between 2023 to 2029.As outlined in the National
Instrument 43-101 technical report, completed in March 2021, the
Odyssey underground project supports a mine life to at least 2039
with annual gold production of 500,000 to 600,000 ounces when fully
ramped up on a 100% basis. As of December 31, 2021, the Odyssey
Project contains 2.35 million ounces of gold in Indicated Mineral
Resources and 13.15 million ounces of gold in Inferred Mineral
Resources on a 100% basis, of which 7.3 million ounces, or
approximately 47%, is included in the technical report mine plan.
Opportunities exist for supplemental production sources to increase
throughput beyond the 20,000 tpd as outlined in its 2021 technical
report and utilize the excess process capacity of the 60,000 tpd
Canadian Malartic plant. Exploration drilling of the East Gouldie
Extension and parallel structures, while widely spaced, indicate
that a corridor of mineralization extends at least 1.3 kilometres
to the east of East Gouldie. Although at the very early stages,
these results suggest the potential for a second production shaft
that could increase throughput over the longer term. Open pit and
underground exploration targets within the Canadian Malartic land
package present additional potential ore sources.
WasamacAt Wasamac, the underground gold project
remains on track for first gold production in the fourth quarter of
2026 and commercial production in the fourth quarter of 2027.
Wasamac is designed as a modern underground operation with a small
footprint and almost all surface infrastructure located on the
north of Route 117 highway, away from the neighbouring community.
Use of an underground conveyor, electric mining equipment and
high-efficiency ventilation fans to minimize energy use and carbon
emissions, with further electrification planned as new technology
becomes commercially available between now and project execution.
Ore will be processed through a new processing plant at a planned
average throughput of 7,000 tpd and tailings will be deposited
underground as paste fill and in a filtered dry-stack tailings
storage facility. Following a rapid production ramp-up in its first
year, Wasamac will sustain gold production of approximately 200,000
ounces per year for at least the following four years. Including
the ramp-up phase, average annual production for the first five
years of operation is expected to be 184,000 ounces. There is also
excellent exploration potential and opportunities for higher
throughput and higher recovery than currently envisaged. Ongoing
exploration, including exciting targets at Wildcat, Wildcat South,
Francoeur, Arntfield, and Lac Fortune, have the potential to
further grow the mineral inventory which is expected to support a
production platform of 200,000 ounces per year with AISC(1) below
$850 per ounce over a mine life of at least 15 years.
El PeñónAt El Peñón, the Company has a high
degree of confidence that it will continue to replace mineral
reserves through new discoveries and infill drilling on several
major veins, thereby maintaining mine life visibility for at least
another ten years. The ten-year outlook assumes a processing rate
between 3,500 tpd to 3,700 tpd with annual production of between
220,000 GEO(2) and 230,000 GEO(2). The plant however has a
processing capacity of up to 4,200 tpd and reaching that capacity
would not require any additional capital spending. This higher
plant capacity processing rate could support an annual production
platform of between 250,000 GEO(2) to 270,000 GEO(2) which is not
currently considered in the Company's ten-year outlook. The outlook
remains fully supported by mineral reserves and mineral resources.
District-scale exploration work completed during the year yielded
positive results, and opens up a new, large area of high
exploration potential, suggesting a significant expansion of the
highly productive El Peñón vein system south of the existing mine.
Such expansion of the vein system could in turn meet the objective
of increasing production at a site that has significant excess
plant capacity. Notably, the new South Deeps discovery appears to
have similar geology to the wide veins El Peñón was mining when
GEO(2) production was materially higher.
Minera FloridaAt Minera Florida, robust
exploration results are expected to drive incremental production
growth given the mine's low-cost opportunity to increase capacity
at its existing processing plant. The current throughput of 74,500
has the potential to increase to 100,000 tonnes per month by 2025,
which would increase annual gold production to approximately
120,000 ounces as early as 2027. Preliminary studies indicate that
the capacity of the processing plant can be increased to
approximately 90,000 tonnes per month with just incremental
adjustments.
Cerro MoroThe Company expects production at
Cerro Moro will maintain a sustainable level of 160,000 GEO(2) for
the next ten-years. If the Company successfully developed both the
plant expansion and heap leach projects, which represent
significant upside opportunities, along with conversion of the
exploration targets to mineral resources, Cerro Moro could produce
at least 200,000 GEO(2) per year. This upside would be beyond the
current ten-year outlook, which is expected to be sustainable from
mineral reserves mine life, ongoing exploration successes and
mineral reserve replacement.
JacobinaAt Jacobina, with its phased expansion
strategy, the Company anticipates the mine will be a multi-decade,
low-cost operation. The Phase 2 expansion will increase throughput
to 8,500 tpd and raise annual production to 230,000 ounces. Beyond
Phase 2, the Company plans to implement a Phase 3 expansion which,
for a modest cost, would increase throughput to 10,000 tpd and
raise annual production to 270,000 ounces. While Phase 3 was
originally planned for 2027, the Company is considering bringing
this forward given the success of Phase 2 to date and the receipt
of the necessary permit. Beyond this growth incorporated in the
ten-year outlook, the Company sees significant opportunities to
grow its regional presence and continue to build the world-class
Jacobina Complex. To this end, the Company is now considering a
Phase 4 expansion on the back of another year of significant
mineral reserves and mineral resource growth. Phase 4 would involve
an expansion of the existing processing plant to a throughput of up
to 15,000 tpd, which would add an extra 100,000 ounces beyond what
is currently included in the ten-year outlook. The Company believes
that the current mine, with the addition of two independent mining
sectors (such as Joao Belo Sul) can support the higher throughput
rate and has initiated a study to explore the plant expansion, mine
sequencing, haulage optimization, tailings, and permitting amongst
other salient items.
For further information on the efforts and
successes undertaken and achieved in 2021 which support the
Company's ten-year outlook, please refer to the announcement issued
February 17, 2022 titled: 'Yamana Gold reports strong fourth
quarter and full year 2021 results with record cash flows driven by
standout production.'
GUIDANCE ASSUMPTIONS
Key assumptions, in relation to guidance, are
presented in the table below.
Guidance Assumptions and 2022 Sensitivity Impact
|
|
|
|
Impact of Change to 2022 Guidance Assumptions |
|
2021 Actual(i) |
2022 Guidance |
Change to 2022GuidanceAssumptions |
AISC(1)/GEO |
Earnings beforeTaxes($M) |
Change in Cash($M) |
GEO Ratio |
72.55 |
72.00 |
|
|
|
|
Gold |
$1,800 |
$1,800 |
$50 |
|
$5 |
$43.0 |
$32.0 |
Silver |
$25 |
$25 |
$1.00 |
|
($6) |
$8.0 |
$6.0 |
USD-CAD(ii) |
1.25 |
1.26 |
5 |
% |
($16) |
$12.0 |
$19.0 |
USD-BRL(ii) |
5.40 |
5.50 |
5 |
% |
($4) |
$3.0 |
$4.0 |
USD-CLP(ii) |
759.07 |
825.00 |
5 |
% |
($6) |
$4.0 |
$6.0 |
USD-ARS(ii) |
95.10 |
130.00 |
5 |
% |
($3) |
$2.0 |
$2.0 |
(i) Actual metal
prices and exchange rates shown in the table above are the average
metal prices and exchange rates for the year ended December 31,
2021.(ii) Change represents a US Dollar appreciation
in relation to the foreign currency.
The Company notes that it guides on GEO
production and costs based on a particular assumption of gold and
silver prices. Although underlying gold and silver production does
not change with the fluctuation in gold and silver prices, the
change in the GEO ratio from such fluctuations may result in a
different GEO production than that guided. For comparability, the
Company kept the GEO ratio for the guidance period at 72.0,
consistent with what was used in last year's guidance, in line with
2021 actuals, and because the Company expects that silver will
perform at least as well as gold in 2022. At the spot GEO ratio of
approximately 80.0, the calculation of expected 2022 production
would be modestly lower, although the underlying production of gold
and silver would not change. Further, at the spot GEO ratio, costs
on a per GEO basis would be modestly higher. Please refer to the
sensitivity impact table for further details.
The Company may enter into forward contracts or
other risk management strategies, from time to time, to hedge
against the risk of an increase in the value of foreign currencies
in the jurisdictions in which the Company operates. Please refer to
the Foreign Exchange Hedging Section of this release below.
FOREIGN EXCHANGE HEDGING
As at December 31, 2021, the Company had
zero-cost collar contracts, which allow the Company to participate
in exchange rate movements between two strikes, as follows:
|
Average call price (i) |
Average put strike price (i) |
Total (millions) (ii) |
Brazilian Real to USD |
|
|
|
January
- December 2022 |
R$5.25 |
R$5.71 |
R$192.0 |
Chilean Peso to USD |
|
|
|
January
- December 2022 |
CLP$750.00 |
CLP$850.75 |
CLP$62,400.0 |
(i) R$ = Brazilian Reais, CLP$
= Chilean Pesos.(ii) Evenly split by month.
In addition, as at December 31, 2021, the
Company had forward contracts as follows:
|
Average forward price (i) |
Total (millions) (ii) |
Brazilian Real to USD |
|
|
January
- December 2022 |
R$5.4925 |
R$192.0 |
Chilean Peso to USD |
|
|
January
- December 2022 |
CLP$798.69 |
CLP$62,400.0 |
(i) R$ = Brazilian Reais, CLP$ =
Chilean Pesos.(ii) Evenly split by month.
Qualified Persons
Scientific and technical information contained
in this news release has been reviewed and approved by Sébastien
Bernier (P. Geo and Senior Director, Geology and Mineral
Resources). Sébastien Bernier is an employee of Yamana Gold Inc.
and a "Qualified Person" as defined by Canadian Securities
Administrators' National Instrument 43-101 - Standards of
Disclosure for Mineral Projects.
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 RelationsCall: 416-815-0220Call:
1-888-809-0925Email: investor@yamana.com
FTI Consulting (UK Public Relations)Sara Powell
/ Ben Brewerton +44 203 727 1000Email:
Yamana.gold@fticonsulting.com
Credit Suisse (Joint UK Corporate Broker)Ben
Lawrence / David NangleTelephone: +44 (0) 20 7888 8888
Joh. Berenberg Gossler & Co. KG (Joint UK
Corporate Broker)Matthew Armitt / Jennifer Wyllie / Detlir
EleziTelephone: +44 (0) 20 3207 7800
Peel Hunt LLP (Joint UK Corporate Broker)Ross
Allister / David McKeown / Alexander AllenTelephone: +44 (0) 20
7418 8900
END NOTES
(1 |
) |
This is a non-GAAP financial performance measure. Refer to the
Non-GAAP Financial Performance Measures section included at the end
of this news release. |
|
|
(2 |
) |
GEO is calculated as the sum of gold ounces and the gold equivalent
of silver ounces using a ratio of 72.55 for the year ended December
31, 2021. GEO calculations for actuals are based on an average
market gold to silver price ratio for the relevant period. Guidance
GEO assumes gold ounces plus the equivalent of silver ounces using
a ratio of 72.00. |
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,
without limitation, its 2022, 2023 and 2024 production guidance,
2022 cost guidance and an update to its ten-year outlook; the
Company's expectation that it will provide a detailed update on its
longer-term ten-year outlook every other year and anticipates
delivering this again in 2023; and opportunities for growth.
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, the outcome of 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.
NON-GAAP FINANCIAL PERFORMANCE MEASURES
The Company has included certain non-GAAP
financial performance measures to supplement its Consolidated
Financial Statements, which are presented in accordance with IFRS,
including the following:
- Cash Costs per GEO sold;
- All-in Sustaining Costs per GEO
sold;
The Company believes that these measures,
together with measures determined in accordance with IFRS, provide
investors with an improved ability to evaluate the underlying
performance of the Company. Non-GAAP financial performance measures
do not have any standardized meaning prescribed under IFRS, and
therefore they may not be comparable to similar measures employed
by other companies. The data is intended to provide additional
information and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. Management's determination of the components of non-GAAP and
additional measures are evaluated on a periodic basis influenced by
new items and transactions, a review of investor uses and new
regulations as applicable. Any changes to the measures are duly
noted and retrospectively applied as applicable.
GEO PRODUCTION AND SALES
Production and sales of silver are treated as a
gold equivalent in determining a combined precious metal production
or sales unit, commonly referred to as gold equivalent ounces
("GEO"). Specifically, guidance GEO produced are calculated by
converting silver production to its gold equivalent using relative
gold/silver metal prices at an assumed ratio and adding the
converted silver production expressed in gold ounces to the ounces
of gold production. Actual GEO production and sales calculations
are based on an average realized gold to silver price ratio for the
relevant period.
CASH COSTS AND ALL-IN SUSTAINING
COSTS
The Company discloses “Cash Costs” because it
understands that certain investors use this information to
determine the Company’s ability to generate earnings and cash flows
for use in investing and other activities. The Company believes
that conventional measures of performance prepared in accordance
with IFRS do not fully illustrate the ability of its operating
mines to generate cash flows. The measures, as determined under
IFRS, are not necessarily indicative of operating profit or cash
flows from operating activities.
The measure of Cash Costs and All-in Sustaining
Costs (AISC), along with revenue from sales, is considered to be a
key indicator of a company’s ability to generate operating earnings
and cash flows from its mining operations. This data is furnished
to provide additional information and is a non-GAAP financial
performance measure. The terms Cash Costs per GEO sold and AISC per
GEO sold do not have any standardized meaning prescribed under
IFRS, and therefore they may not be comparable to similar measures
employed by other companies. Non-GAAP financial performance
measures should not be considered in isolation as a substitute for
measures of performance prepared in accordance with IFRS and are
not necessarily indicative of operating costs, operating profit or
cash flows presented under IFRS.
Cash Costs include mine site operating costs
such as mining, processing, administration, production taxes and
royalties which are not based on sales or taxable income
calculations, but are exclusive of amortization, reclamation,
capital, development and exploration costs. The Company believes
that such measure provides useful information about its underlying
Cash Costs of operations. Cash Costs are computed on a weighted
average basis as follows:
- Cash Costs per GEO sold - The total
costs used as the numerator of the unitary calculation represent
Cost of Sales excluding DDA, net of treatment and refining charges.
These costs are then divided by GEO sold. Non-attributable costs
will be allocated based on the relative value of revenues for each
metal, which will be determined annually at the beginning of each
year.
AISC figures are calculated in accordance with a
standard developed by the World Gold Council (“WGC”) (a
non-regulatory, market development organization for the gold
industry). Adoption of the standard is voluntary and the cost
measures presented herein may not be comparable to other similarly
titled measures of other companies.
AISC per sold seeks to represent total
sustaining expenditures of producing and selling GEO from current
operations. The total costs used as the numerator of the unitary
calculation represent Cash Costs (defined above) and includes cost
components of mine sustaining capital expenditures including
stripping and underground mine development, corporate and mine-site
general and administrative expense, sustaining mine-site
exploration and evaluation expensed and capitalized and accretion
and amortization of reclamation and remediation. AISC do not
include capital expenditures attributable to projects or mine
expansions, exploration and evaluation costs attributable to growth
projects, income tax payments, borrowing costs and dividend
payments. Consequently, this measure is not representative of all
of the Company's cash expenditures. In addition, the calculation of
AISC does not include depletion, depreciation and amortization
expense as it does not reflect the impact of expenditures incurred
in prior periods.
- AISC per GEO sold - reflect
allocations of the aforementioned cost components on the basis that
is consistent with the nature of each of the cost components to the
GEO production and sales activities.
Reconciliation of Total Cost of Sales to Cash
Costs and AISC
Cash Cost & AISC Reconciliation - Total |
For the year ended December 31, 2021 |
(In millions of US Dollars except GEO and per GEO amounts) |
Total |
|
TotalGEO |
|
Non-sustaining |
Cost of sales excluding DDA |
$ |
695.0 |
|
$ |
695.0 |
|
$ |
— |
DDA |
|
447.9 |
|
|
447.9 |
|
|
— |
Total cost of sales |
$ |
1,142.9 |
|
$ |
1,142.9 |
|
$ |
— |
DDA |
|
(447.9 |
) |
|
(447.9 |
) |
|
— |
Total cash costs |
$ |
695.0 |
|
$ |
695.0 |
|
$ |
— |
AISC adjustments: |
|
|
|
General and administrative expenses |
|
74.8 |
|
|
74.8 |
|
|
— |
Community costs in other operating expenses |
|
6.5 |
|
|
6.5 |
|
|
— |
Reclamation & remediation - accretion & amortization |
|
34.6 |
|
|
27.2 |
|
|
7.4 |
Exploration capital expenditures |
|
68.1 |
|
|
34.9 |
|
|
33.2 |
Exploration and evaluation expenses |
|
31.6 |
|
|
2.7 |
|
|
28.9 |
Sustaining capital expenditures |
|
173.7 |
|
|
173.7 |
|
|
— |
Leases (IFRS 16 Adjustment) |
|
24.3 |
|
|
24.3 |
|
|
— |
Total AISC |
|
$ |
1,039.1 |
|
|
GEO sold(2) |
|
|
1,009,262 |
|
|
Cost of sales excluding DDA
per GEO sold |
|
$ |
689 |
|
|
DDA per GEO sold |
|
$ |
444 |
|
|
Total cost of sales per GEO
sold |
|
$ |
1,132 |
|
|
Cash costs per GEO sold |
|
$ |
689 |
|
|
AISC
per GEO sold |
|
$ |
1,030 |
|
|
Cash
Cost & AISC Reconciliation - Operating Segments |
For the year ended December 31, 2021 |
(In millions of US Dollars except GEO and per GEO amounts) |
Total |
|
MalarticGEO |
|
JacobinaGEO |
|
Cerro MoroGEO |
|
El PeñónGEO |
|
Minera FloridaGEO |
|
Corporate &Non-Sustaining |
|
Cost of sales excluding DDA |
$ |
695.0 |
|
$ |
231.3 |
|
$ |
105.5 |
|
$ |
130.5 |
|
$ |
150.3 |
|
$ |
77.4 |
|
$ |
— |
|
DDA |
|
447.9 |
|
|
174.7 |
|
|
55.4 |
|
|
74.6 |
|
|
85.0 |
|
|
48.5 |
|
|
9.7 |
|
Total cost of sales |
$ |
1,142.9 |
|
$ |
406.0 |
|
$ |
160.9 |
|
$ |
205.1 |
|
$ |
235.3 |
|
$ |
125.9 |
|
$ |
9.7 |
|
DDA |
|
(447.9 |
) |
|
(174.7 |
) |
|
(55.4 |
) |
|
(74.6 |
) |
|
(85.0 |
) |
|
(48.5 |
) |
|
(9.7 |
) |
Total cash costs |
$ |
695.0 |
|
$ |
231.3 |
|
$ |
105.5 |
|
$ |
130.5 |
|
$ |
150.3 |
|
$ |
77.4 |
|
$ |
— |
|
AISC adjustments: |
|
|
|
|
|
|
|
General and administrative expenses |
|
74.8 |
|
|
4.0 |
|
|
0.7 |
|
|
0.4 |
|
|
0.5 |
|
|
0.7 |
|
|
68.5 |
|
Community costs in other operating expenses |
|
6.5 |
|
|
1.2 |
|
|
0.9 |
|
|
4.0 |
|
|
— |
|
|
— |
|
|
0.4 |
|
Reclamation & remediation - accretion & amortization |
|
34.6 |
|
|
15.7 |
|
|
1.5 |
|
|
3.2 |
|
|
2.0 |
|
|
4.4 |
|
|
7.8 |
|
Exploration capital expenditures |
|
68.1 |
|
|
— |
|
|
7.2 |
|
|
5.6 |
|
|
15.6 |
|
|
6.5 |
|
|
33.2 |
|
Exploration and evaluation expenses |
|
31.6 |
|
|
0.2 |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
31.2 |
|
Sustaining capital expenditures |
|
173.7 |
|
|
69.2 |
|
|
14.0 |
|
|
39.8 |
|
|
34.6 |
|
|
15.2 |
|
|
0.9 |
|
Leases (IFRS 16 Adjustment) |
|
24.3 |
|
|
0.7 |
|
|
7.6 |
|
|
5.4 |
|
|
5.1 |
|
|
3.3 |
|
|
2.2 |
|
Total AISC |
|
$ |
322.3 |
|
$ |
137.6 |
|
$ |
188.9 |
|
$ |
208.1 |
|
$ |
107.5 |
|
|
GEO sold(2) |
|
|
357,667 |
|
|
186,534 |
|
|
153,882 |
|
|
223,375 |
|
|
87,804 |
|
|
Cost of sales excluding DDA
per GEO sold |
|
$ |
647 |
|
$ |
566 |
|
$ |
848 |
|
$ |
673 |
|
$ |
881 |
|
|
DDA per GEO sold |
|
$ |
488 |
|
$ |
297 |
|
$ |
485 |
|
$ |
381 |
|
$ |
553 |
|
|
Total cost of sales per GEO
sold |
|
$ |
1,135 |
|
$ |
863 |
|
$ |
1,332 |
|
$ |
1,054 |
|
$ |
1,434 |
|
|
Cash costs per GEO sold |
|
$ |
647 |
|
$ |
566 |
|
$ |
848 |
|
$ |
673 |
|
$ |
881 |
|
|
AISC
per GEO sold |
|
$ |
901 |
|
$ |
738 |
|
$ |
1,228 |
|
$ |
932 |
|
$ |
1,224 |
|
|
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