YAMANA GOLD INC. (TSX:YRI) (NYSE:AUY) (“Yamana” or the “Company”)
herein provides 2018, 2019 and 2020 production, and 2018 cost
guidance.
PRODUCTION OUTLOOK
The following table presents the Company’s total production for
its mines in gold equivalent ounces (“GEO”) for 2018, 2019 and
2020.
|
2017 Actual |
2018 Guidance |
2019 Guidance |
2020 Guidance |
Total Gold Equivalent Production (oz.)(1,2) |
892,006 |
1,013,000 |
1,084,000 |
1,149,000 |
- Gold equivalent ounces includes gold plus silver at a ratio of
72:1.
- Excluding any attribution from Yamana’s interest in Brio Gold
Inc. (“Brio Gold”) or Gualcamayo. For 2017, total gold
production including Gualcamayo was 977,316 ounces.
Gualcamayo is expected to produce 110,000 ounces in 2018,
additional details are provided on page 7 of this press
release.
The following table presents per unit cost
expectations on a GEO basis for 2018.
|
2017 Actual(2) |
2018 Guidance(2) |
Cost of sales per unit sold |
$1025 |
$1,010 -$1,030 |
By-product cash costs per unit produced(1) |
$565 |
$460 - $480 |
By-product AISC per unit produced(1) |
$827 |
$725 - $745 |
- Refers to a non-GAAP financial measure or an additional line
item or subtotal in financial statements. Reconciliations for
all non-GAAP financial measures are available at
www.yamana.com/Q42017 and in Section 14 of the Company’s fourth
quarter 2017 Management’s Discussion & Analysis, which has been
filed on SEDAR simultaneously with this press release.
- 2017 actuals include Gualcamayo, while 2018 guidance excludes
Gualcamayo as it is an asset held for sale.
The following table presents the Company’s total
production expectations by metal for its mines for 2018, 2019 and
2020.
|
2017 Actual |
2018 Guidance |
2019 Guidance |
2020 Guidance |
Total Gold Production (oz.)(1) |
823,264 |
900,000 |
940,000 |
970,000 |
Total Silver Production (oz.) |
5,004,761 |
8,150,000 |
10,400,000 |
12,950,000 |
Total Copper Production (lbs.) (Chapada) |
127.3 |
120.0 |
120.0 |
120.0 |
(All amounts are expressed in United States dollars unless
otherwise indicated.)
- Excluding any attribution from Yamana’s interest in Brio Gold
Inc. (“Brio Gold”) or Gualcamayo. For 2017, total gold
production including Gualcamayo was 977,316 ounces.
Gualcamayo is expected to produce 110,000 ounces in 2018,
additional details are provided on page 7 of this press
release.
Gold production is expected to increase in the
guidance period in each of 2019 and 2020 mostly as a result of
increases in production at Canadian Malartic, Jacobina, Minera
Florida, and with new production from Cerro Moro. Silver
production is expected to increase more significantly, in
percentage terms, than gold production almost entirely as a result
of the ramp up of Cerro Moro. Copper production, all of which
is from Chapada, is expected to remain constant throughout the
guidance period.
The Company is now concentrating its efforts on
five producing mines, which, beginning in early 2018, will increase
to six with the planned start of production from Cerro Moro in the
second quarter. The Company’s Gualcamayo mine has been
classified as an asset held for sale and, as such, is not included
in total production and cost expectations for the guidance
period. See “Gualcamayo” section below for additional
details.
The following table presents mine-by-mine
production expectations for 2018.
|
Gold oz. |
Silver oz. |
|
2017Guidance |
2017Actual |
2018Guidance |
2017Guidance |
2017Actual |
2018Guidance |
Chapada |
110,000 |
119,852 |
110,000 |
- |
— |
- |
El Peñón |
140,000 |
160,509 |
145,000 |
4,150,000 |
4,282,339 |
4,400,000 |
Canadian Malartic (50%) |
300,000 |
316,731 |
325,000 |
- |
— |
— |
Jacobina |
120,000 |
135,806 |
135,000 |
- |
— |
— |
Minera Florida |
105,000 |
90,366 |
90,000 |
- |
— |
— |
Cerro Moro |
- |
- |
85,000 |
- |
— |
3,750,000 |
|
|
|
|
|
|
|
The Company’s 2018 total gold production
guidance of 900,000 ounces implies a bias to the upside over the
sum of mine production expectations presented above. This
takes into consideration that certain mines, based on historical
performance and potential benefits of planned optimizations, are
expected to achieve higher levels of gold production in 2018 while
not attributing those production ounces to specific mines at this
time.
At Cerro Moro, the Company has undertaken
studies to optimize mine sequencing and the mix of gold and silver
production, balancing efforts to front-end load gold and silver
production in the early years while taking into account the
underground and open-pit sequencing to execute on the plan.
With the planned changes and new sequencing, the consequence is a
higher proportion of gold dominant stopes over the guidance
period. While this provides more flexibility in the mine plan
to maximize gold production above current guidance levels, a
consequence is that silver grades are lower and silver production
is slower to ramp up as compared to prior guidance. With the
new sequencing, the Company forecasts silver production over 8
million ounces in 2020.
For its existing mines, Yamana expects to
continue its established trend of delivering stronger production in
the second half of the year compared to the first half of the
year. In 2018, the Company expects approximately 47 per cent
of total gold production and 46 per cent of total copper production
to be delivered in the first half, excluding Cerro Moro. For
Cerro Moro, the Company expects approximately 25 to 30 per cent of
the mine’s gold and silver production to be produced in the first
half.
COST OUTLOOK
With the contribution from Cerro Moro, the
Company’s all-in sustaining costs (“AISC”) are expected to decrease
from 2017 levels into 2018 and 2019.
The following table presents per unit cost
expectations for 2018.
|
Gold (/oz.) (2) |
Silver (/oz.) |
Copper(/lbs.)(Chapada) |
2017 Actual, excluding Brio Gold |
|
|
|
Cost of sales per unit sold |
$1,023 |
$13.63 |
$1.73 |
Co-product cash costs per unit produced(1) |
$672 |
$10.01 |
$1.54 |
Co-product AISC per unit produced(1) |
$888 |
$13.48 |
$1.74 |
By-product cash costs per unit produced(1) |
$561 |
$8.58 |
- |
By-product AISC per unit produced(1) |
$820 |
$12.65 |
- |
2018 Guidance, excluding Brio Gold |
|
|
|
Cost of sales per unit sold |
$1,010 -$1,030 |
$15.00 - $15.25 |
$1.80 - $1.85 |
Co-product cash costs per unit produced(1) |
$630 - $650 |
$9.00 - $9.25 |
$1.60 - $1.65 |
Co-product AISC per unit produced(1) |
$850 - $870 |
$12.25 - $12.50 |
$1.80 - $1.85 |
By-product cash costs per unit produced(1) |
$460 - $480 |
$6.75 - $7.00 |
- |
By-product AISC per unit produced(1) |
$725 - $745 |
$10.50 - $10.80 |
- |
- Refers to a non-GAAP financial measure or an additional line
item or subtotal in financial statements. Reconciliations for
all non-GAAP financial measures are available at
www.yamana.com/Q42017 and in Section 14 of the Company’s
fourth quarter 2017 Management’s Discussion & Analysis, which
has been filed on SEDAR simultaneously with this press
release.
- 2017 actuals include Gualcamayo, while 2018 guidance excludes
Gualcamayo as it is an asset held for sale.
The following table presents cost of sales,
co-product cash costs and co-product AISC guidance by mine for gold
and silver for 2018.
|
Total cost of salesper ounce sold |
Co-product cashcosts(1) per unitproduced |
Co-product AISC(1,2)per unit produced |
|
|
2017 |
2018E |
|
2017 |
2018E |
|
2017 |
2018E |
Gold (oz.) |
Chapada |
$384 |
$450 |
$334 |
$385 |
$385 |
$430 |
El Peñón |
$1,089 |
$1,065 |
$751 |
$790 |
$928 |
$965 |
Canadian Malartic (50%) |
$1,000 |
$1,000 |
$576 |
$590 |
$742 |
$760 |
Jacobina |
$1,057 |
$1,100 |
$701 |
$730 |
$867 |
$910 |
Minera Florida |
$1,248 |
$1,275 |
$812 |
$750 |
$1,090 |
$930 |
Cerro Moro |
|
- |
$1,100 |
|
- |
$510 |
|
- |
$650 |
|
|
|
|
|
|
|
Silver (oz.) |
El Peñón |
$14.57 |
$14.75 |
$10.30 |
$10.75 |
$12.77 |
$13.25 |
Cerro Moro |
|
- |
$15.25 |
|
- |
$7.10 |
|
- |
$9.15 |
- Refers to a non-GAAP financial measure or an additional line
item or subtotal in financial statements. Reconciliations for
all non-GAAP financial measures are available at
www.yamana.com/Q42017 and in Section 14 of the Company’s fourth
quarter 2017 Management’s Discussion & Analysis, which has been
filed on SEDAR simultaneously with this press release.
- Mine site AISC includes cash costs, mine site general and
administrative expense, sustaining capital and exploration
expense. Consolidated AISC incorporates additional non-mine
site costs including corporate general and administrative
expense.
With respect to Cerro Moro, for 2018 and 2019
the Company is expecting to average co-product cash costs of $500
per ounce gold and $6.70 per ounce silver, and co-product AISC of
$650 per ounce gold and $8.85 per ounce silver.
The following table presents sustaining capital
and exploration spend expectations by mine for 2018.
(in millions) |
2017SustainingCapital Actual |
2018SustainingCapitalGuidance |
2017 TotalExplorationActual |
2018 TotalExplorationGuidance |
Chapada |
$27.9 |
$25.0 |
$8.2 |
$8.0 |
El Peñón |
$38.5 |
$35.0 |
$17.8 |
$12.0 |
Canadian Malartic (50%) |
$48.2 |
$50.0 |
$10.2 |
$5.0 |
Minera Florida |
$24.6 |
$16.0 |
$12.4 |
$10.0 |
Jacobina |
$21.7 |
$20.0 |
$5.9 |
$6.0 |
Cerro Moro |
- |
$21.0 |
$7.7 |
$9.0 |
Monument Bay |
- |
- |
$3.3 |
$6.0 |
Discretionary |
- |
- |
- |
$16.0 |
Other sustaining |
$2.1 |
$3.0 |
- |
- |
Generative exploration and overhead |
- |
- |
$18.3 |
$17.0 |
Total |
$163.0 |
$170.0 |
$83.8 |
$89.0 |
The Company expects approximately 75% of
exploration spending will be capitalized in 2017.
In 2017, the Company provided guidance that
approximately $21 million dollars of exploration spending was
considered discretionary and would be allocated on a success
basis. Yamana expects to use a similar approach in 2018 to
allocate $16 million dollars of discretionary exploration spending
based on results at the Company’s various mines and assets.
The potential for a portion of the 2018 discretionary spending
offsets some of the change in expected exploration spending
compared to 2017 actuals seen at certain mines, such as El Peñón,
in the table above.
At Minera Florida, the Company is
projecting lower sustaining capital and exploration expenditures in
2018 as previously planned expenditures are expected to be spread
across a number of years. This approach is consistent with
the transformational strategy implemented in 2017, which is
expected to result in lower production in the immediate term while
the Company expects production to increase to 120,000 ounces of
gold per year by 2021. The Company continues to target a
longer-term strategic production objective of 130,000 ounces of
gold per year at Minera Florida.
The following table presents other expenditure
expectations for 2018, excluding Gualcamayo and any attribution
from Yamana’s interest in Brio Gold.
|
2017Actual (excludingBrio Gold) (1) |
2018Guidance(1) |
Total expansionary capital (millions) |
$279.9 |
$192 |
Total Depreciation, depletion and amortization (“DDA”)
(millions) |
$384.3 |
$450 |
Total general and administrative (“G&A”) expense
(millions) |
$90.6 |
$94 |
Cash based G&A |
$82.9 |
$85 |
Stock-based G&A |
$7.7 |
$9 |
- 2017 actuals include Gualcamayo, while 2018 guidance excludes
Gualcamayo as it is an asset held for sale.
A significant portion of the expansionary
capital budget for 2018 relates to Cerro Moro, which, as previously
noted, will begin planned operations in 2018, and to the Canadian
Malartic Extension Project (formerly the Barnat extension).
At Chapada, the Company has various development,
optimization and expansion opportunities under consideration that
are not included in the current 2018 expansionary capital
expenditures. These opportunities include plant throughput
increases, and the broader Suruca complex. Sucupira and Baru are
immediately adjacent to the existing pit, and the potential to
bring forward production from these deposits is currently being
evaluated. Opportunities to expand the mill capacity to treat
Sucupira/Baru mineralization, and potentially low-grade ore
stockpiles, which are expected to grow further in 2018 by
approximately 15 million tonnes, are also being evaluated.
The Company is also advancing development efforts at the Suruca
oxide project while considering recent drill results from Suruca
Southwest and Suruca sulphide (located beneath the oxide
deposit). The Company is now assessing a broader Suruca
complex and expects to complete studies of a comprehensive scenario
in 2018. Additional detail on the range of development
opportunities and related plans for Chapada is expected to be
provided in the second quarter of 2018.
At Cerro Moro, the Company expects to spend
approximately $61 million in construction capital in 2018.
The planned expenditures at Cerro Moro include previously planned
2018 spending of approximately $55 million plus $6 million carried
forward from 2017.
At Canadian Malartic, the Company expects to
spend approximately $52 million (50%-basis) in expansionary capital
in 2018. The majority, or approximately $37 million, relates
to the Canadian Malartic Extension Project. The remainder
predominantly includes capital expenditures for studies relating to
the Odyssey and East Malartic projects.
At Minera Florida, the Company expects to spend
approximately $28 million in expansionary capital in 2018.
This includes approximately $10 million for the last payment
relating to the land concessions acquired in 2016 with the majority
of the remainder allocated to expansionary mine development in the
Hornitos and Pataguas tunnels.
The Company expects higher depreciation,
depletion and amortization (“DDA”) in 2018 compared to 2017 mainly
due to the start-up of production at Cerro Moro. DDA at Cerro
Moro is expected to decrease to lower levels as the exploration
program advances toward its target of adding 1.0 million ounces of
mineral resources by 2021. The Company will spread
expansionary mine development capital and exploration expenditures
across a number of years.
GUALCAMAYO
The Company is pursuing alternatives to maximize
value at Gualcamayo such as the rationalization of the mine’s
production platform and cost structure, the extension of mine life
from exploration efforts focused on oxide resource delineation and
additions, and the advancement of the Deep Carbonate project.
As the Company has decided to focus its efforts on assets
that are better aligned with its strategic objectives, Gualcamayo
has been classified as an asset held for sale, which signifies the
intent of disposal within 12 months. Guidance is only
provided for 2018.
The following table presents Gualcamayo’s 2018
outlook.
|
2017 Actual |
2018Guidance |
Gold production (ounces) |
|
154,052 |
|
110,000 |
Total cost of sales per gold ounce sold |
$1,293 |
$1,050 |
Co-product cash costs per gold ounce produced (1) |
$942 |
$1,080 |
Co-product AISC per gold ounce produced (1) |
$990 |
$1,145 |
Sustaining capital (in millions) |
$6.6 |
$6.8 |
Exploration (in millions) |
$10.7 |
$8.0 |
- Refers to a non-GAAP financial measure or an additional line
item or subtotal in financial statements. Reconciliations for
all non-GAAP financial measures are available at
www.yamana.com/Q42017 and in Section 14 of the Company’s fourth
quarter 2017 Management’s Discussion & Analysis, which has been
filed on SEDAR simultaneously with this press release.
- Mine site AISC includes cash costs, mine site general and
administrative expense, sustaining capital and exploration
expense. Consolidated AISC incorporates additional non-mine
site costs including corporate general and administrative
expense.
Based on mineral reserves and reasonable
conversion of mineral resources, the Company expects Gualcamayo’s
production platform to be in excess of 100,000 ounces of gold for
the next several years following 2018. The production outlook
for Gualcamayo excludes the sizeable district exploration potential
and the Deep Carbonates project.
The Company is committed to delivering
production from quality mines and projects thereby maximizing
returns, improving its cash balances and cash return on invested
capital, reducing its net debt, and properly managing its balance
sheet and overall financial position. Monetization
initiatives, the recent issue of the senior notes, the recently
entered into copper advanced sales program considerably advance
these goals, as have continued operational and financial
performance from the Company’s continuing five mines along with the
contribution to be provided by Cerro Moro, beginning in 2018.
ASSUMPTIONS
2018 metal price and foreign exchange rate
assumptions are presented in the table below.
|
2017 Actual |
2018Assumptions |
Gold |
$1,264 |
$1,300 |
Silver |
$16.83 |
$18.00 |
Copper |
$2.78 |
$3.25 |
C$/US$ |
|
1.30 |
|
1.28 |
BRL/US$ |
|
3.19 |
|
3.25 |
CLP/US$ |
|
649.01 |
|
615.00 |
ARS/US$ |
|
16.56 |
|
21.00 |
2017 metal prices and exchange rates shown in
the table above are the average realized exchange rates for the 12
months ended December 31, 2017.
About Yamana
Yamana is a Canadian-based gold producer with
significant gold production, gold 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 existing operating mine
expansions and optimization initiatives, development of new mines,
the advancement of its exploration properties and, at times, by
targeting other gold consolidation opportunities with a primary
focus in the Americas.
FOR FURTHER INFORMATION PLEASE CONTACT: Investor
Relations416-815-02201-888-809-0925Email: investor@yamana.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS: 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
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, 2018, 2019 and 2020 production and cost guidance
including on a per mine basis, 2018 foreign exchange rate
assumptions, various development, optimization and expansion
opportunities under consideration, and the expected start of
operations and production from Cerro Moro in the second quarter.
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 the Company’s expectations in connection with the
production and exploration, development and expansion plans at the
Company's projects discussed herein being met, the impact of
proposed optimizations at the Company's projects, the impact of the
proposed new mining law in Brazil, 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, copper, 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 disposition and the Brio Gold investment, risks
related to metal purchase agreements, risks related to
acquisitions, changes in project parameters as plans continue to be
refined, changes in project development, construction, production
and commissioning time frames, 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 operations,
title disputes or claims, limitations on insurance coverage and
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.
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