TIDMAUY
RNS Number : 4158E
Yamana Gold Inc.
28 October 2022
YAMANA G OLD REPORTS THIRD QUARTER 2022 RESULTS; STRONG
PRODUCTION AT CANADIAN MALARTIC AND JACOBINA HIGHLIGHTS THE
COMPANY'S GROWING SUSTAINABLE PRODUCTION PLATFORM AND EXCEPTIONAL
EXECUTION ACROSS ITS ENTIRE ASSET PORTFOLIO; INFORMATION CIRCULAR
PUBLICLY FILED WITH UNANIMOUS BOARD RECOMMATION TO VOTE IN FAVOUR
OF THE DEAL
TORONTO, October 27, 2022 - YAMANA GOLD INC. (TSX:YRI; NYSE:AUY;
LSE:AUY) ("Yamana" or the "Company") is herein reporting its
financial and operational results for the third quarter of 2022.
Production totalled 241,302 gold equivalent ounces ("GEO") (2) at
total cost of sales, cash costs (1) and all-in sustaining costs
("AISC") (1) of $1,299, $794 and $1,148 per GEO (2) respectively.
The standout production results, which were realized despite the
gold-to-silver ratio being near an all-time high and significantly
above that anticipated in guidance, delivered strong cash flow
generation including $164.7 million in cash flows from operating
activities and $157.1 million in cash flows from operating
activities before net change in working capital. With solid results
across its operations, the Company is well positioned to achieve
its annual production guidance of 1,000,000 GEO (2) with AISC (1)
expected to be within the upper end of guidance when adjusted for
the impact of the higher gold-to-silver ratio.
THIRD QUARTER HIGHLIGHTS
Financial Results - Strong Earnings and Cash Flow Generation
Highlight Resiliency of Operations
-- Third quarter net earnings(3) of $19.8 million or $0.02 per
share basic and diluted. Adjusted net earnings(1)(3) of $44.5
million or $0.05 per share basic and diluted.
-- Cash flows from operating activities of $164.7 million for
the three months ended September 30, 2022.
-- Net free cash flows(1) and free cash flows before dividends
and debt repayments(1) of $108.4 million and $24.4 million,
respectively.
-- Cash flows from operating activities are expected to increase
in the fourth quarter, with increased production contributions
driving sequential improvement.
-- Cash and cash equivalents totalled $539.2 million(6) . The
Company's revolving credit facility remains undrawn.
Production Results - Continuing to Execute as Planned
-- Strong GEO (2) production of 241,302 GEO (2) (.) The Company
remains on track to meet its guidance for gold, silver and GEO (2)
production, despite the gold-to-silver ratio remaining elevated as
compared to the ratio assumed in guidance due to lower silver
prices . Moreover, the Company is on track with its guidance for
production in the second half of the year to be comparable with
that in the first half, with a sequential increase in the fourth
quarter over the third quarter expected to mirror that realized in
the second quarter over the first quarter. While gold and silver
production were in line during the third quarter, GEO (2) ounces
were impacted by the aforementioned realized GEO (2) ratio being
significantly higher than that assumed in guidance, de spite higher
than planned gold production. The effect of a higher gold-to-silver
ratio based on comparatively lower silver-to-gold prices is to
reduce GEO (2) produced, although the production of underlying
metals remain the same.
-- Gold production of 216,673 ounces exceeded plan, following
standout performances from Canadian Malartic with 75,262 ounces and
Jacobina with 50,113 ounces. Jacobina in particular had an
exceptional third quarter and delivered record quarterly gold
production, exceeding the 50,000 ounce threshold for the first
time. El Peñón and Cerro Moro, which produced 43,912 ounces and
24,888 ounces respectively, also had strong quarters.
-- Silver production of 2,212,765 ounces was in line with plan.
With El Peñón entering higher-grade silver zones in the fourth
quarter, the Company is well positioned to achieve its annual
silver production guidance.
(All amounts are expressed in United States Dollars unless
otherwise indicated.)
(See notes at end of this news release)
Cost Results - Maintaining Solid Margins Against Inflationary
Backdrop
-- Quarterly total cost of sales, cash costs (1) and AISC (1) on
a per GEO (2) basis of $1,299, $794, and $1,148 respectively.
-- While underlying costs for metals sold in the third quarter
were within plan, the higher gold-to-silver ratio, as compared to
metals prices assumed in guidance, increased unitary costs per
GEO(2) sold by over $27 per ounce as compared to plan.
-- The inflationary impact on costs in the third quarter was
mostly offset by productivity gains. Moreover, commodity input
inflation on consumables that impact costs appears to have peaked
in the second and third quarters, with many inputs off their recent
highs. Despite realized inflation being above what was assumed in
the Company's guidance for the year, AISC (1) is expected to be
within the upper end of guidance when adjusted for the impact of
the gold-to-silver ratio as noted above.
Capital Allocation and Free Cash Flows
-- The Company employs a balanced approach to capital
allocation, which is expected to generate significant and growing
cash balances during the guidance period. The cash balances are
expected to be more than sufficient to finance and support the
Company's planned growth campaign, while maintaining financial
strength, and strengthening and increasing returns of capital to
shareholders. To achieve this, the Company employs a disciplined
capital spend framework during the guidance period with a target of
$150 per GEO (2) of sustaining capital and net expansionary capital
to not exceed $175.0 million per year on average.
Health, Safety and Sustainable Development
-- The Company's Total Recordable Injury Rate ("TRIR") for the
first nine months of 2022 was 0.85(4) . We have modified our TRIR
reporting to align with our financial reporting standards which
include our wholly-owned operations, exploration projects,
development projects (Wasamac and MARA), proportional consolidation
of Canadian Malartic (50%), and closed projects. For comparison,
the corresponding full-year 2021 result was 1.11(4) .
-- As of early October more than 98%(5) of the Company's
employees and contractors at its wholly-owned operations and
exploration projects have received at least one dose of a COVID-19
vaccine, more than 97%(5) have received two doses and more than
82%(5) have received a third dose booster shot. Approximately
43%(5) of workers have received a fourth dose booster shot.
-- Yamana received updated performance ratings from two major
ESG research and ratings organizations in the third quarter of
2022. The Company's 2022 S&P Corporate Sustainability
Assessment score increased from 48 to 50, and its MSCI rating
improved from 'BBB' to 'A', reflecting continued progress in the
Company's deep commitment to ESG excellence.
OPERATING RESULTS SUMMARY
For the three months ended September 30, 2022
-------------------
Total cost Cash Costs
of sales (1) AISC (1)
Gold Silver GEO (2) per GEO (2) per GEO per GEO
Production Production Production Sold (2) Sold (2) Sold
------------------- ----------- ----------- ----------- ------------ ---------- ---------
Canadian Malartic
(50%) 75,262 - 75,262 $1,366 $803 $1,098
Jacobina 50,113 - 50,113 $907 $586 $801
Cerro Moro 24,888 1,375,661 40,201 $1,481 $926 $1,263
El Peñón 43,912 837,104 53,228 $1,211 $775 $1,034
Minera Florida 22,497 - 22,497 $1,721 $1,041 $1,382
----------- ----------- ----------- ------------ ---------- ---------
Total 216,673 2,212,765 241,302 $1,299 $794 $1,148
------------------- ----------- ----------- ----------- ------------ ---------- ---------
For the three months ended September 30, 2021
-------------------
Total cost Cash Costs
of sales (1) AISC (1)
per per GEO per GEO
Gold Silver GEO (2) GEO (2) Sold (2) (2)
Production Production Production (7) Sold Sold
------------------- ----------- ----------- ----------- ------------- ---------- --------
Canadian Malartic
(50%) 86,803 - 86,803 $1,168 $687 $887
Jacobina 47,373 - 47,373 $858 $518 $722
Cerro Moro 19,261 1,370,486 37,853 $1,664 $966 $1,422
El Peñón 50,229 902,698 62,545 $996 $631 $885
Minera Florida 21,890 - 21,890 $1,539 $917 $1,239
----------- ----------- ----------- ------------- ---------- --------
Total 225,556 2,273,183 256,464 $1,181 $702 $1,041
------------------- ----------- ----------- ----------- ------------- ---------- --------
OPERATIONS UPDATE
Canadian Malartic
Canadian Malartic had a strong third quarter, producing 75,262
ounces, in line with plan. With the processing of softer Barnat
ore, Canadian Malartic recovery rates have continued to trend
higher than comparative periods. The Barnat pit, which has a higher
strip ratio in the upper benches, contributed approximately half of
the ore processed during the third quarter. The Canadian Malartic
pit provided approximately a quarter of the mill feed, while the
remaining ore came from the surface stockpile. As planned, Canadian
Malartic is on track to achieve its guidance with the mining
sequence and transition from the Canadian Malartic pit optimizing
cash flows.
Total cost of sales, cash costs (1) and AISC (1) on a per GEO
(2) basis for the quarter were $1,366, $803, and $1,098
respectively, with cash costs (1) and AISC (1) better than
plan.
Jacobina
Jacobina had an exceptional third quarter and delivered record
quarterly gold production of 50,113 ounces. The production results
were in line with plan and exceeded the comparative quarter, driven
by higher ore tonnes processed. Underground mine development work
is in line with the mine plan at 1,500 metres per month to gain
access to new mining panels, and together with the higher ore
tonnes mined, provides additional flexibility through the
development of stockpiles supporting the higher throughput expected
from the ongoing phased expansion. As previously guided, production
for 2022 is expected to increase for the ninth consecutive year, a
trend that is expected to continue in the coming years, as a result
of the phased expansion strategy and the exploration programs aimed
at generating significant value from the remarkable geological
upside of the property.
Total cost of sales, cash costs (1) and AISC (1) on a per GEO
(2) basis for the third quarter of $907, $586, and $801,
respectively.
Cerro Moro
Cerro Moro produced 40,201 GEO (2) comprising 24,888 ounces of
gold, and 1,375,661 ounces of silver, consistent with or exceeding
production guidance and production from the comparative period.
Production continued to benefit from access to additional mining
faces, which supported the increase in mill feed coming from
higher-grade underground ore, which accounts for nearly 80% of the
now stabilized throughput.
The opening of more mining faces and resultant increase in mill
feed coming from higher-grade underground ore continued in the
third quarter with Zoe contributions becoming more prevalent.
During the third quarter, most of the ore delivered to the plant
came from Escondida Far West, Zoe, Escondida Central and Escondida
West. Over the past year, Cerro Moro has optimized the operation of
the processing plant to increase daily throughput to approximately
1,100 tonnes per day (tpd). With improvements to mine development
and flexibility, and modifications to the mining sequence for the
year, the Company anticipates more balanced quarterly production
profile over the second half of year, with production reflecting
reserve grades. This positions Cerro Moro well to meet or exceed
gold and silver guidance for the year.
Total cost of sales, cash costs (1) and AISC (1) on a per GEO
(2) basis during the third quarter were $1,481, $926, and $1,263,
respectively, better than plan and all well below the comparative
quarter, as a result of the exceptional production in the quarter.
There was a brief illegal labour action at the Cerro Moro mine in
the latter part of July 2022, which was resolved.
El Peñón
El Peñón produced 53,228 GEO (2) , comprising gold production of
43,912 ounces, which exceeded plan, and 837,104 ounces of silver.
Optimized mining sequencing, bringing forward zones with a higher
gold-to-silver ratio in the first three quarters of the year, has
put El Peñón in an excellent position to achieve full year GEO(2)
production guidance. The Company expects higher silver production
in the fourth quarter, due to the mining of higher-grade silver
zones such as Fortuna, Providencia, Pampa Campamento and Martillo
Flats.
Quarterly total cost of sales, cash costs (1) and AISC (1) on a
per GEO (2) basis of $1,211, $775, and $1,034, respectively.
Minera Florida
Minera Florida reported gold production of 22,497 ounces during
the quarter, increasing production for the third consecutive
quarter, and remains on target to achieve its annual production
guidance range. During the past year, Minera Florida has seen
improved operational efficiency and reduced haulage distances as a
result of re-establishing ore passes. Internalization of mining
activities, ongoing optimization of the haulage infrastructure, and
increasing disposal storage of development waste into underground
voids will further improve mine productivity going forward. A
review of the processing plant in the first quarter identified
several opportunities to increase recovery. Management is
prioritizing these opportunities, focusing on the initiatives that
can be implemented quickly with minimal investment.
Total cost of sales, cash costs (1) and AISC (1) on a per GEO
(2) basis during the quarter were $1,721, $1,041, and $1,382
respectively. AISC(1) was impacted by several factors during the
quarter, including mining sequence which saw extraction from a
higher number of mining zones in preparation for the fourth
quarter, with both linear development and exploration expenses
being in line with plan, despite the lower production profile.
Costs per GEO(2) are expected to improve in the fourth quarter due
to higher grades, and higher silver and zinc by-product
credits.
VALUE CREATION AND UPSIDE OPTIONALITY UNDERPINNING CORE
PORTFOLIO OF GENERATIONAL ASSETS
The Company's exploration success and track record of mineral
reserve replacement and mineral resource growth supports a clear
pathway toward realizing significant and progressive production
increases and increased cash flows generation. The board-approved
YAMANA 1.5 Plan supports the measured and prudent production growth
of approximately 50% to 1.5 million GEO (2) within the ten-year
outlook horizon, with upside optionality from longer-term
development projects which potentially extend the production
platform beyond that timeframe and above that production level.
The YAMANA 1.5 Plan is underpinned by multiple low-risk,
low-capital projects which are modular, meaning that the sequencing
can be modified to accommodate changes in assumptions on capital
allocation, permitting, etc., and adhere to the Company's balanced
approach to capital allocation, which is expected to generate
significant and growing cash balances during the guidance period,
positioning projects to be funded from those free cash flows
generation. The multiple projects further benefit from being
largely brownfield in nature, allowing for added flexibility with
regards to sequencing and timing of such projects in response to
prevailing market conditions, enabling each component to provide
incremental growth and free cash flows generation on the path to
achieving the growth plan. Such flexibility allows the Company to
re-arrange, adjust or defer the projects at its discretion while
still having the confidence in achieving the overall plan.
The Company's near-term guided growth to 1.06 million GEO (2) is
supported by the recently completed Phase 2 expansion at Jacobina
and first production from the Odyssey Project in early 2023.
Thereafter, to achieve the YAMANA 1.5 Plan, the Company's advanced,
low-capital projects, which can be pursued and re-sequenced to add
GEO (2) in a responsible and self-funded manner, include:
-- The construction of Wasamac, for which the recently completed
strategic life-of-mine plan shows a faster production ramp-up to
200,000 ounces in 2027 and up to 250,000 ounces in 2028;
-- The Phase 3 Plant expansion at Jacobina with expected
incremental production of 40,000 ounces of gold;
-- The Cerro Moro plant expansion with expected incremental
production of 50,000 to 60,000 ounces of GEO (2) ;
-- The Minera Florida expansion with expected incremental production of 35,000 ounces of gold;
-- The Phase 4 Plant expansion at Jacobina with expected
incremental production of 75,000 to 125,000 ounces of gold; and
-- The Lavra Velha heap leach project with expected incremental
production of 60,000 to 70,000 ounces of gold.
For further details on the above projects, please refer to the
MD&A for the three- and nine-month periods ended September 30,
2022, specific ally the Strategic Developments, Construction
Developments and Advanced Stage Projects section, Section 5:
Construction, Development and Other Initiatives and Section 6:
Exploration .
The Odyssey Project at Canadian Malartic represents one
important step towards realizing the YAMANA 1.5 Plan as it will
establish a large sustainable gold production platform of 500,000 -
600,000 ounces (100% basis) with a strategic mine life into the
2040's. As of December 31, 2021, the Odyssey mineral resource holds
2.35 million ounces of gold in 25.2 million tonnes of ore at a
grade of 2.9 grams per tonne of indicated mineral resources and
13.15 million ounces of gold in 173.7 million tonnes of ore at a
grade of 2.4 grams per tonne of inferred mineral resources of which
7.3 million ounces, approximately 47% of the total mineral
resource, is included in the technical study mine plan.
-- The construction decision made by the Canadian Malartic
Partnership ("the Partnership") in the first quarter of 2021, prior
to the declaration of mineral reserves, was made on the basis of
0.8 million ounces of Indicated Mineral Resources (100% basis),
13.5 million ounces of Inferred Mineral Resources (100% basis), an
aggressive infill program to convert a significant component of
inferred mineral resources to indicated mineral resources and to
establish mineral reserves by the end of 2022, and the very strong
continuity and homogeneous nature of the East Gouldie deposit with
favourable geometry and good rock quality similar to the open pit
operation. Further, the proposed operations at the Odyssey Project
were based on the results of an internal technical study conducted
by the Partnership. The study presented a brownfield project with
the utilization of the existing processing plant and
infrastructure, as well as a clear path towards receiving a
Certificate of Authorization for the underground project. Based on
these strong attributes of the project, the Partnership determined
that there was an opportunity to create significant value and
extend the mine life of the asset making the decision to advance
the project starting the underground development including the
construction of the shaft, with limited to no risk in making such
decision.
-- The size and continuity of the East Gouldie mineralized zone
is highlighted by the rapid resource growth. The new zone was
discovered in the fourth quarter of 2018 and the decision to start
the shaft development was made in the first quarter of 2021. By the
end of 2021 that decision was validated by further infill drilling,
when 1.5 million ounces (11.9 million tonnes grading 3.88 g/t gold)
had been converted to indicated mineral resources and an additional
1.2 million ounces (10.7 million tonnes at 3.4 g/t gold) had been
added to new inferred mineral resources, largely within the 2020
East Gouldie resource envelope. The predictive exploration model
consistently shows mineralization where the model expects it, and
the Company has tested the reliability of that predictability. The
successful infill drilling, discussed more fully in the section
above, continues to confirm the remarkable continuity of grade and
width in the East Gouldie mineralized zone, and continues to
improve the ore body, with indicated resource drilling meeting or
exceeding the grade and width of the reported inferred
resource.
-- Drilling results already in hand to support the conversion of
a significant portion of inferred mineral resources declared in
2021 to indicated mineral resources by the end of 2022. These new
indicated resources will provide the basis for a full preliminary
feasibility study in early 2023 that will allow definition of
mineral reserves for the Odyssey underground project over the next
few years, starting at the end of 2022.
-- Initial expansionary capital spend through to the end of 2022
is expected at less than $150 million (50% basis), with over half
of that spend supporting ramp access and development of the Odyssey
ore body. As underground development has now entered areas with
established ore, once the plant feed commences in the first quarter
of 2023, immediate return on capital spend is achieved and, as
previously disclosed and discussed below, gold ounces produced will
subsidize the further and more significant initial expansionary
capital spend.
-- The initial expansionary capital of approximately $572
million (50% basis) to be spent from 2021 to 2028, with an average
of approximately $70 million per year in that period, does not
include any offsetting gross margin from this pre-commercial
production due to amendments to the relevant accounting standard,
which represents a practical consequence of IFRS application,
however cash outlays are expected to be mostly offset by 466,000
ounces (50% basis) of production during the construction period.
Assuming a gold price of $1,550 per ounce, more than half of this
initial expansionary capital spend would be effectively offset and
subsidized from this gro ss margin, such that the remaining net
initial expansionary capital requirements from September 30, 2022
to 2028 would be approximately $120 million, representing a very
modest per year spend. Production and cash flows from the
underground are expected to begin in the first quarter of 2023. For
further details on the Odyssey project, please refer to the
MD&A for the three- and nine-month periods ended September 30,
2022, specifically the Strategic Developments, Construction
Developments and Advanced Stage Projects section, and Section 5:
Construction, Development and Other Initiatives.
-- The overall project continues to be on schedule, with the
first key milestone of gold production from Odyssey South in the
first quarter of 2023 remaining on target. Underground development
costs have been tracking below budget since the initiation of the
project, and together with further productivity improvement
opportunities, such as the internalization of development in the
second and third quarters, have been able to mitigate any
inflationary pressures on surface infrastructure costs. Further, a
weaker Canadian Dollar versus the US Dollar, in relation to the PEA
assumptions, continues to be beneficial to costs.
-- Canadian Malartic also benefits from strategic optionality
and production-level upside from future available mill capacity as
mining transitions underground. While the Odyssey mine is expected
to initially process up to 19,000 tonnes per day, ore will be
processed through a plant with a current design capacity of up to
61,000 tonnes per day. The Company believes that continuing
exploration efforts at East Gouldie, Titan, East Amphi, Camflo and
Rand represent exceptional geological upside and offer strategic
optionality and production-level upside. The Company believes that
the underground development will support a significantly higher
level of production than assumed in the current mine plan with more
production from the upper zones where a ramp will be utilized and
can support a higher extraction rate, and a possible second shaft
in the lower zones, where mineralization is now seen to
significantly extend up-dip to the east of the inferred mineral
resource.
Further supporting the YAMANA 1.5 Plan is the district potential
at Jacobina. The track record of growth in mineral reserves and
mineral resources at Jacobina underpins its significant
prospectivity and geological upside, which supports the planned low
risk, brownfield phased expansion strategy that is expected to
materially increase production and cash flows, generating strong
returns on investment.
-- Gold mineral reserves have grown by 55% or more than 1
million ounces net of depletion over the past four years to 2.94
million ounces contained in 42 million tonnes at a grade of 2.18
grams per tonne as of December 31, 2021. Mineral resources have
increased by 69% over the same period. With the Phase 2 expansion
throughput objective achieved, Jacobina's sustainable production
platform is now approximately 230,000 ounces per year, more than
triple the 75,000 ounces produced in 2014 when the company launched
a major initiative to unlock the asset's full potential. With
throughput now established at 8,500 tpd and the focus now on the
Phase 3 expansion to 10,000 tpd through continued incremental
debottlenecking, Jacobina is well positioned to increase production
to approximately 270,000 ounces per year by 2025 with modest
capital and to maintain that production profile for the foreseeable
future. A Phase 4 expansion, of up to 15,000 tpd, which is part of
the Company's strategic life of mine planning would increase
production to in excess of 350,000 ounces per year. For further
details on the Jacobina phased plant expansion, please refer to the
MD&A for the three- and nine-month periods ended September 30,
2022, specifically the Strategic Developments, Construction
Developments and Advanced Stage Projects section and Section 5:
Construction, Development and Other Initiatives.
-- Jacobina's recent success in growing both mineral reserves
and mineral resources supports a strategic mine life of at least 20
years at these higher production rates at some of the lowest
underground operating costs in the Americas. Further, the mine
currently has a pipeline of resources and exploration targets that
the Company believes will further extend the mine life as it
continues to systematically explore the large land package in the
Jacobina district, which covers approximately 150 kilometres of
exploration potential.
El Peñón, which achieved a fourth consecutive year of adding
mineral reserves in excess of depletion with mineral reserves
increasing 23% to 1.3 million GEO (2) over that period, represents
another source of value creation for the Company as it continues to
extend the mine life at a production rate of 220,000 to 230,000 GEO
(2) per year. Daily throughput is now approximately 3,300 tpd
versus the currently available plant capacity of up to 4,200 tpd,
representing an opportunity to increase production as the operation
endeavours to build its mineral inventory in wake of consistent
exploration results.
-- Positive initial drill results have been received from the
early-stage, developing South Deeps target located under cover and
to the south of the El Peñón deposit. The Company believes these
results have opened up a significant new near-mine area for
exploration with the potential for adding primary and secondary
veins which could ultimately result in the Company leveraging the
higher processing capacity of the plant.
Yamana continues to balance cash flow generation and exploration
expenditures to maximize the value of its asset portfolio, and is
confident the low-capex nature of its growth plans, largely
centered on mine life extensions that are near the existing
infrastructure, will demonstrate a focus on measured, responsible
growth and the sustainability of cash flows.
Further growth beyond this level, for a production platform of
2.75 million to 3.1 million GEO (2) would come from the MARA and
Suyai projects, and opportunities currently within the generative
exploration portfolio such as Jacobina Norte, Las Fechas, Falcon,
and Borborema, among others; these opportunities provide additional
upside potential to the ten-year outlook. The MARA Project is one
of the largest copper-gold projects in the world, of which Yamana
owns 56.25%, and which has an average annual production of 556
million pounds of copper equivalent(8) (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. 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.
BUSINESS COMBINATION WITH GOLD FIELDS - INFORMATION CIRCULAR
PUBLICLY FILED WITH UNANIMOUS BOARD RECOMMATION TO VOTE IN FAVOUR
OF THE DEAL
Shareholders and other interested parties should be aware that
the management information circular (the "Information Circular")
and related meeting and proxy materials in connection with the
special meeting of shareholders (the "Yamana Meeting"), scheduled
to be held on November 21, 2022, have been filed and made publicly
available. The purpose of the Yamana Meeting is to seek approval
for the previously-announced proposed business combination whereby
all of the issued and outstanding common shares of Yamana will be
acquired by a wholly-owned subsidiary of Gold Fields Limited (JSE,
NYSE: GFI) ("Gold Fields") by way of a plan of arrangement under
the Canada Business Corporations Act.
Shareholders of record on October 18, 2022 will be eligible to
vote at the Yamana Meeting. In addition to the public filing of the
Information Circular, the materials are currently being mailed to
Yamana shareholders of record on the above-mentioned record date.
The Information Circular provides detailed information regarding
the proposed business combination, which underpins the Yamana board
of directors' conclusions and recommendation.
The Yamana board of directors has unanimously recommended voting
in favour of the business combination. Shareholders and other
interested parties are strongly advised to read the Information
Circular for a detailed description of the transaction and the
reasons for the board's recommendation. The Information Circular is
available under Yamana's profile on www.sedar.com and is also
available on the Company's website at www.yamana.com.
FINANCIAL SUMMARY AND KEY STATISTICS
Key financial and operating statistics for the third quarter
2022 are outlined in the following tables.
Three months ended
September 30
----------------------------------------------------
(In millions of United States Dollars, except for
per share and per unit amounts) 2022 2021
---------------------------------------------------- --------- ---------
Revenue $422.4 $452.2
Cost of sales excluding depletion, depreciation and
amortization (7) (196.4) (185.1)
Depletion, depreciation and amortization (120.9) (113.1)
Total cost of sales (7) (317.3) (298.2)
Temporary suspension costs (7) (1.7)
Mine operating earnings 103.4 154.0
General and administrative expenses (22.4) (19.5)
Exploration and evaluation expenses (13.2) (10.9)
Net earnings attributable to Yamana equity holders 19.8 27.0
Net earnings (3) per share - basic and diluted(i) 0.02 0.03
Cash flows from operating activities 164.7 190.6
Cash flows from operating activities before changes
in non-cash working capital(ii) 157.1 202.9
Revenue per ounce of gold $1,728 $1,789
Revenue per ounce of silver $19.31 $24.23
Average realized gold price per ounce (1) $1,728 $1,789
Average realized silver price per ounce (1) $19.31 $24.23
---------------------------------------------------- --------- ---------
(i) For the three months ended September 30, 2022, the weighted
average number of shares outstanding was 961,057 thousand (basic)
and 962,513 thousand (diluted).
(ii) Net change in working capital movement was a cash inflow of
$7.6 million for the three months ended September 30, 2022.
Reconciliation of Net Earnings (3) to Adjusted Net Earnings
(1)(3)
Three months ended
September 30
-------------------------------------------------------------
(In millions of United States Dollars, except per
share amounts, totals may not add due to rounding) 2022 2021
------------------------------------------------------------- --------- ---------
Net earnings (3) $19.8 $27.0
Adjustments (3)
Non-cash net foreign exchange gains $(5.3) $(12.1)
Share-based payments/mark-to-market of deferred share
units 5.1 3.1
Mark-to-market losses on derivative contracts, investments
and other assets and liabilities 0.4 1.0
Temporary suspension costs (7) 1.7 -
Standby and other incremental COVID-19 costs (7) 0.2 7.9
Early note redemption premium - 53.3
Other provisions, write-downs and adjustments(i) 12.8 4.0
Non-cash tax on unrealized foreign exchange losses 10.5 7.2
Income tax effect of adjustments (2.1) (16.0)
One-time tax adjustments 1.4 (1.6)
--------- ---------
Total adjustments (3) $24.7 $46.8
Adjusted net earnings (1) (3) $44.5 $73.7
------------------------------------------------------------- --------- ---------
Net earnings (3) per share $0.02 $0.03
Total adjustments (3) per share $0.03 $0.05
Adjusted net earnings (3) per share (1) $0.05 $0.08
------------------------------------------------------------- --------- ---------
(i) This balance includes, among other things, transaction costs
related to the Gold Fields transaction, in addition to revisions in
estimates and write-downs & provisions, or reversals of
provisions, for items such as tax credits and legal
contingencies.
For a full discussion of Yamana's operational and financial
results and mineral reserve and mineral resource estimates, please
refer to the Company's Management's Discussion & Analysis and
Condensed Consolidated Interim Financial Statements for the three-
and nine-month periods ended September 30, 2022, and the Company's
Management's Discussion & Analysis for the year ended December
31, 2021, which are available on the Company's website at
www.yamana.com, on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov.
Third Quarter 2022 Conference Call
The Company will host a conference call and webcast on Friday,
October 28, 2022, at 9:00 a.m. EDT.
Toll Free (North America): 1-800-806-5484
Toronto Local and International: 416-340-2217
Toll Free (UK): 00-80042228835
Passcode: 2614947#
Webcast: www.yamana.com
Conference Call Replay
Toll Free (North America): 1-800-408-3053
Toronto Local and International: 905-694-9451
Toll Free (UK): 00-80033663052
Passcode: 6191894#
The conference call replay will be available from 12:00 p.m. EDT
on October 28, 2022, until 11:59 p.m. EST on November 30, 2022.
Qualified Persons
Scientific and technical information contained in this news
release has been reviewed and approved by Sébastien Bernier (P. Geo
and Senior Director, Reserves and 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 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
416-815-0220
1-888-809-0925
Email: investor@yamana.com
FTI Consulting (UK Public Relations)
Sara Powell / Ben Brewerton
+44 7931 765 223 / +44 203 727 1000
Email: Yamana.gold@fticonsulting.com
NOTES
(1) This is a non-GAAP financial performance measure. Refer to the
Non-GAAP Financial Performance Measures section 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 89.84 for the three months ended
September 30, 2022, and 73.55 for the three months ended September
30, 2021. GEO calculations for actuals are based on an average
market gold-to-silver price ratio for the relevant period. Guidance
and forward-looking GEO assumes gold ounces plus the equivalent
of silver ounces using a ratio of 72.00.
(3) Net earnings and adjustments to net earnings represent amounts
attributable to Yamana Gold Inc. equity holders.
(4) Calculated on a 200,000 exposure hour basis, including employees
and contractors.
(5) Vaccination rates are exclusive of Canadian Malartic, in which
we hold a 50% interest. Vaccination rates at Canadian Malartic
are in line with the high Abitibi-Témiscamingue regional
rates.
(6) Cash balances include $211.3 million available for utilization
by the MARA Project.
(7) In the prior year, standby and other incremental costs associated
with the COVID-19 pandemic were presented in the financial statement
line item "Temporary suspension, standby and other incremental
COVID-19 costs" on the Statement of Operations in the Company's
Consolidated Financial Statements. During the first quarter of
2022, the Company considered that such costs would be presented
in the financial statement line item "Cost of sales excluding
depletion, depreciation and amortization" going forward, and included
in the calculation of "Gross Margin excluding depletion, depreciation
and amortization". Comparatives have been reclassified to conform
to the change of presentation adopted in the current period, with
the $7.9 million and $28.8 million of COVID-19 related costs incurred
in the three and nine months ended September 30, 2021, respectively,
reclassified from "Temporary suspension, standby and other incremental
COVID-19 costs" to "Cost of sales excluding depletion, depreciation
and amortization". This change also affected the prior year calculation
of the GAAP metrics "Total Cost of Sales per GEO Sold" and "Cost
of Sales excluding DDA per GEO sold", both of which have been
recalculated based on standby and other incremental COVID-19 costs
being included in the numerator. This change did not affect the
calculation of prior year non-GAAP metrics "Cash costs per GEO
sold" and "AISC per GEO sold", as the Company's policy is for
standby and other incremental COVID-19 costs to be excluded from
the calculation of such metrics. The "Temporary suspension, standby
and other incremental COVID-19 costs" financial statement line
item has been renamed "Temporary suspension costs" to reflect
the fact that COVID-19 related costs are no longer included in
this cost account.
(8) Copper equivalent metal includes copper with gold, molybdenum,
and silver converted to copper-equivalent metal based on the following
metal price assumptions: $6,614 per tonne of copper, $1,250 per
ounce for gold, $24,250 per tonne for molybdenum, and $18.00 per
ounce for silver.
(9) Included in General & Administrative expenses for the three and
nine months ended September 30, 2022 are $5.7 million of expenses
associated with the pending transaction with Gold Fields. These
costs are not indicative of the Company's normal course expenses
and have been excluded from the calculation of AISC.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This
Management's Discussion and Analysis 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, results of feasibility studies, repayment of debt,
updates regarding mineral reserves and mineral resources and
information with respect to the Transaction with Gold Fields.
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, 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, copper and zinc), currency exchange rates (such as
the Canadian Dollar, 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, construction, production and commissioning time
frames, risks associated with infectious diseases, including
COVID-19, 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, , 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, timing and possible outcome of pending and outstanding
litigation and labour disputes, risks related to enforcing legal
rights in foreign jurisdictions, risks associated with Gold Fields'
and Yamana's ability to obtain the requisite shareholder approval
of the Transaction; risks associated with not the timing for
completion of the Transaction, including the risk that the
conditions to the Transaction are not satisfied on a timely basis
or at all and the failure of the Transaction to close for any other
reason; the risk that a consent or authorization that may be
required for the Transaction is not obtained or is obtained subject
to conditions that are not anticipated; risks relating to Gold
Fields' and Yamana's business and future performance including,
without limitation, volatility in the price of gold and other
metals, currency fluctuations, operational risks, supply chain
shortages, rising inflation, increased production costs and
variances in ore grade or recovery rates from those assumed in
mining plans, political and country risk, community relations,
increased regulation of environmental and sustainability matters,
the impact of climate change on Gold Fields' and Yamana's
operations, conflict resolution governmental regulation and
judicial outcomes, the inherent risks and uncertainty associated
with financial or other projections; the risk that the Combined
Group is unsuccessful in promptly and effectively integrating the
business of Gold Fields and Yamana, the risk of ; unanticipated
difficulties or expenditures relating to the Transaction, the risk
of unexpected responses of business partners and retention as a
result of the announcement and pendency of the Transaction;
potential volatility in the price of the Gold Fields Shares or Gold
Fields ADSs due to the Transaction; the anticipated size of the
markets and continued demand for Gold Fields' and Yamana's
resources and the impact of competitive responses to the
announcement of the Transaction, and the diversion of management
time on Transaction-and related issues, 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.
CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATES
OF MEASURED, INDICATED AND INFERRED MINERAL RESOURCES
This news release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which
differ in certain material respects from the disclosure
requirements promulgated by the Securities and Exchange Commission
(the "SEC"). For example, the terms "mineral reserve", "proven
mineral reserve", "probable mineral reserve", "mineral resource",
"measured mineral resource", "indicated mineral resource" and
"inferred mineral resource" are Canadian mining terms as defined in
accordance with Canadian National Instrument 43-101 Standards of
Disclosure for Mineral Projects and the Canadian Institute of
Mining, Metallurgy and Petroleum (the "CIM") - CIM Definition
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as amended. These definitions differ from the
definitions in the disclosure requirements promulgated by the SEC.
Accordingly, information contained in this news release may not be
comparable to similar information made public by U.S. companies
reporting pursuant to SEC disclosure requirements.
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;
-- Net Free Cash Flow and Free Cash Flow Before Dividends and Debt Repayment
-- Average Realized Price per ounce of gold/silver sold; and
-- Adjusted Net Earnings and Adjusted Net Earnings per Share
The Company believes that these financial performance 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 non-GAAP
financial performance 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 and standby and other incremental COVID-19 costs,
realized gains from foreign exchange mechanisms utilized to benefit
local currency production costs, net of treatment and refining
charges. The attributable cost is calculated net of by-products by
applying zinc net revenues, which are incidental to the production
of precious metals, as a credit to GEO sold, thereby allowing the
Company's management and stakeholders to assess net costs of
precious metal sales. These costs are then divided by GEO sold.
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 standard is an attempt to create
uniformity and a standard amongst the industry and those that adopt
it. Nonetheless, the cost measures presented herein may not be
comparable to other similarly titled measures of other
companies.
AISC 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 (as 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, and excludes non-recurring items..
AISC does 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 are computed on a
weighted average basis as follows:
-- 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 but net of by-product revenue credits from sales of
zinc.
Reconciliation of Total Cost of Sales to Cash Costs and AISC
For the three months For the three months
Cash Cost & AISC Reconciliation ended ended
- Total September 30, 2022 September 30, 2021
-------------------------------------- -------------------------------- --------------------------------
(In millions of US Dollars
except GEO sold and per GEO Total Total
sold amounts) Total GEO Non-Sustaining Total GEO Non-Sustaining
-------------------------------------- ------- ------- -------------- ------- ------- --------------
Cost of sales excluding DDA
(7) $196.4 $196.4 $- $185.1 $185.1 $-
DDA 120.9 120.9 113.1 113.1 -
-------------------------------------- ------- ------- -------------- ------- ------- --------------
Total cost of sales (7) $317.3 $317.3 $- $298.2 $298.2 $-
Cash cost adjustments:
DDA (120.9) (120.9) - (113.1) (113.1) -
Standby and other incremental
COVID-19 costs (7) (0.2) (0.2) - (7.9) (7.9) -
Impact of realized foreign exchange
gains (2.2) (2.2) -
-------------------------------------- ------- ------- -------------- ------- ------- --------------
Total cash costs $194.0 $194.0 $- $177.2 $177.2 $-
AISC adjustments:
General and administrative expenses
(9) 22.4 16.7 5.7 19.5 19.5 -
Community costs in other operating
expenses 1.1 1.1 - 1.5 1.5 -
Reclamation & remediation -
accretion & amortization 8.5 6.0 2.5 8.8 6.9 1.8
Exploration capital expenditures 14.9 8.8 6.1 15.5 8.8 6.7
Exploration and evaluation expenses 13.2 0.9 12.3 10.9 0.7 10.2
Sustaining capital expenditures 45.8 45.8 - 41.1 41.1 -
Leases (IFRS 16 Adjustment) 7.1 7.1 - 7.3 7.3 -
-------------------------------------- ------- ------- -------------- ------- ------- --------------
Total AISC $280.4 $263.0
GEO sold (2) 244,327 252,637
Cost of sales excluding DDA
per GEO sold (7) $804 $733
DDA per GEO sold $495 $448
Total cost of sales per GEO
sold (7) $1,299 $1,181
Cash costs per GEO sold $794 $702
AISC per GEO sold $1,148 $1,041
-------------------------------------- ------- ------- -------------- ------- ------- --------------
Cash Cost & AISC Reconciliation For the three months ended September
- Operating Segments 30, 2022
------------------------------- -------------------------------------------------------------------------------------
(In millions of US Dollars
except Canadian Cerro Minera
GEO sold and per GEO sold Malartic Jacobina Moro El Peñón Florida Corporate
amounts) Total GEO GEO GEO GEO GEO & Non-Sustaining
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Cost of sales excluding DDA $196.4 $61.7 $29.6 $40.1 $41.8 $23.2 $-
DDA 120.9 43.0 16.2 20.8 23.4 15.1 2.4
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Total cost of sales $317.3 $104.7 $45.8 $60.9 $65.2 $38.3 $2.4
Cash cost adjustments:
DDA (120.9) (43.0) (16.2) (20.8) (23.4) (15.1) (2.4)
Standby and other incremental
COVID-19 costs (7) (0.2) (0.2) - 0.1 (0.1) (0.1) -
Impact of realized foreign
exchange
gains (2.2) - - (2.2) - - -
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Total cash costs $194.0 $61.5 $29.6 $38.0 $41.7 $23.1 $-
AISC adjustments:
General and administrative
expenses
(9) 22.4 0.8 0.3 - - - 21.3
Community costs in other
operating
expenses 1.1 0.1 - 1.0 - - -
Reclamation & remediation -
accretion
& amortization 8.5 3.6 0.6 0.4 0.4 0.9 2.6
Exploration capital
expenditures 14.9 - 1.5 1.3 4.4 1.6 6.1
Exploration and evaluation
expenses 13.2 0.1 - - - - 13.1
Sustaining capital
expenditures 45.8 17.9 5.3 9.7 8.2 4.4 0.3
Leases (IFRS 16 Adjustment) 7.1 0.2 3.2 1.4 1.0 0.7 0.6
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Total AISC $84.2 $40.5 $51.8 $55.7 $30.7
GEO sold (2) 76,608 50,579 41,102 53,797 22,241
Cost of sales excluding DDA per
GEO sold $805 $586 $976 $776 $1,043
DDA per GEO sold $561 $321 $505 $435 $678
Total cost of sales per GEO
sold $1,366 $907 $1,481 $1,211 $1,721
Cash costs per GEO sold $803 $586 $926 $775 $1,041
AISC per GEO sold $1,098 $801 $1,263 $1,034 $1,382
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Cash Cost & AISC Reconciliation For the three months ended September
- Operating Segments 30, 2021
------------------------------- -------------------------------------------------------------------------------------
(In millions of US Dollars
except Canadian Cerro Minera
GEO sold and per GEO sold Malartic Jacobina Moro El Peñón Florida Corporate
amounts) Total GEO GEO GEO GEO GEO & Non-Sustaining
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Cost of sales excluding DDA (7) $185.1 $58.0 $24.7 $38.5 $41.1 $22.8 $-
DDA 113.1 39.7 15.7 20.5 21.9 12.8 2.5
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Total cost of sales (7) $298.2 $97.7 $40.4 $59.0 $63.0 $35.6 $2.5
Cash cost adjustments:
DDA (113.1) (39.7) (15.7) (20.5) (21.9) (12.8) (2.5)
Standby and other incremental
COVID-19 costs (7) (7.9) (0.6) (0.3) (4.2) (1.2) (1.6) -
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Total cash costs $177.2 $57.4 $24.4 $34.3 $39.9 $21.2 $-
AISC adjustments:
General and administrative
expenses 19.5 0.9 0.2 - - - 18.4
Community costs in other
operating
expenses 1.5 0.1 0.4 0.9 - - 0.1
Reclamation & remediation -
accretion
& amortization 8.8 3.9 0.4 0.9 0.5 1.1 2.0
Exploration capital
expenditures 15.5 - 2.1 0.7 4.7 1.4 6.6
Exploration and evaluation
expenses 10.9 - 0.1 - - - 10.9
Sustaining capital
expenditures 41.1 11.6 3.9 12.2 9.3 4.1 -
Leases (IFRS 16 Adjustment) 7.3 0.2 2.6 1.4 1.7 0.8 0.6
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
Total AISC $74.1 $34.1 $50.4 $56.1 $28.6
GEO sold (2) 83,550 47,147 35,475 63,288 23,177
Cost of sales excluding DDA per
GEO sold (7) $694 $524 $1,086 $649 $986
DDA per GEO sold $475 $334 $578 $346 $554
Total cost of sales per GEO
sold
(7) $1,168 $858 $1,664 $996 $1,539
Cash costs per GEO sold $687 $518 $966 $631 $917
AISC per GEO sold $887 $722 $1,422 $885 $1,239
------------------------------- ------- --------- -------- ------ ------------------ -------- -----------------
NET FREE CASH FLOWS AND FREE CASH FLOWS BEFORE DIVIDS AND DEBT
REPAYMENTS
The Company uses the financial measures "net free cash flows"
and "free cash flows before dividends and debt repayments", which
are non-GAAP financial performance measures, to supplement
information in its Consolidated Financial Statements. Net free cash
flows and free cash flows before dividends and debt repayments 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 flows
capacity to meet non-discretionary outflows of cash or to meet
dividends and debt repayments. The presentation of net free cash
flows and free cash flows before dividends and debt repayments are
not meant to be substitutes for the cash flows information
presented in accordance with IFRS, but rather should be evaluated
in conjunction with such IFRS measures. Net free cash flows is
calculated as cash flows from operating activities adjusted for
advance payments received pursuant to metal purchase agreements,
non-discretionary expenditures from sustaining capital expenditures
and interest paid related to the current period. Free cash flows
before dividends and debt repayments further deducts remaining
capital expenditures and payments for lease obligations.
Reconciliations of net free cash flows and free cash flows before
dividends and debt repayments are provided below.
Three months ended
September 30
(In millions of United States Dollars) 2022 2021
----------------------------------------------------- --------- ---------
Cash flows from operating activities $164.7 $190.6
Adjustments to operating cash flows:
Amortization of deferred revenue 4.3 2.4
Standby and other incremental COVID-19 costs (7) 0.2 7.9
Temporary suspension costs 1.7 -
Non-discretionary items related to the current
period
Sustaining capital expenditures (45.8) (41.1)
Interest paid (8.5) (12.0)
Payment of lease liabilities (6.0) (5.7)
Cash used in other financing activities (2.2) (2.9)
--------- ---------
Net free cash flows $108.4 $139.2
Discretionary and other items impacting cash flow
available for dividends and debt repayments
Expansionary and exploration capital expenditures (88.0) (52.1)
Cash from (used in) other investing activities 5.9 (4.6)
Effect of foreign exchange of non-USD denominated
cash (1.9) (0.9)
----------------------------------------------------- --------- ---------
Free cash flows before dividends and debt repayments $24.4 $81.6
===================================================== ========= =========
AVERAGE REALIZED METAL PRICES
The Company uses the financial measures "average realized gold
price" and "average realized silver price", which are non-GAAP
financial performance measures, to supplement in its Consolidated
Financial Statements. Average realized price does 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
vis-à-vis average market prices of metals for the period. The
presentation of average realized metal prices is not meant to be a
substitute for the revenue information presented in accordance with
IFRS, but rather should be evaluated in conjunction with such IFRS
measure.
Average realized metal price represents the sale price of the
underlying metal before deducting treatment and refining charges,
and other quotational and pricing adjustments. Average realized
prices are calculated as the revenue related to each of the metals
sold, i.e. gold and silver, divided by the quantity of the
respective units of metals sold, i.e. gold ounce and silver ounce.
Reconciliations of average realized metal prices to revenue are
provided below.
Reconciliation of average realized metal prices to revenue
For the three months
ended September 30, 2022 2021
--------------------- --------------------------------------------- ------------------------------------------
Revenue Revenue
Revenue (In millions Revenue (In millions
Quantity per ounce/ of US Quantity per ounce/ of US
sold pound Dollars) sold pound Dollars)
--------------------- ---------- --- ------------ -------------- --------- ----------- --------------
Gold 219,465 oz $1,728 $379.3 223,229 oz $1,789 $399.5
Silver 2,233,177 oz $19.31 43.1 2,176,658 oz $24.23 52.7
-------------- --------------
Revenue $422.4 $452.2
--------------------- ---------- --- ------------ -------------- --------- ----------- --------------
For the three months
ended September 30, 2022 2021
------------------------ ----------------------------------------- ----------------------------------------
Revenue Revenue
Average (In millions Average (In millions
Quantity Realized of US Quantity Realized of US
sold Price Dollars) sold Price Dollars)
------------------------ --------- --- ---------- ------------- --------- ---------- -------------
Gold 219,465 oz $1,728 $379.3 223,229 oz $1,789 $399.5
Silver 1,933,177 oz $19.21 37.1 2,016,028 oz $24.33 49.0
Silver subject to metal
sales agreement* 300,000 oz $19.98 6.0 160,630 oz $23.01 3.7
--------- ---------- --------- ----------
2,233,177 oz $19.31 2,176,658 oz $24.23
------------- -------------
Gross revenue $422.4 $452.2
(Deduct) add:
Other adjustments - -
------------------------ --------- --- ---------- ------------- --------- ---------- -------------
Revenue $422.4 $452.2
------------------------ --------- --- ---------- ------------- --------- ---------- -------------
*Balance represents metal sold under the metal sales
agreement.
ADJUSTED NET EARNINGS OR LOSS AND ADJUSTED NET EARNINGS OR LOSS
PER SHARE
The Company uses the financial measures "Adjusted Net Earnings
or Loss" and the non-GAAP ratio "Adjusted Net Earnings or Loss per
share" to supplement information in its Consolidated Annual
Financial Statements. 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. The presentation of adjusted measures
and ratios are not meant to be a substitute for Net Earnings or
Loss or Net Earnings or Loss per share presented in accordance with
IFRS, but rather should be evaluated in conjunction with such IFRS
measures. Adjusted Net Earnings or Loss and Adjusted Net Earnings
or Loss per share are calculated as net earnings excluding
non-recurring items, items not related to or having a
disproportionate effect on results for a particular periods and/or
not directly related to the core mining business such as (a)
share-based payments and other compensation, (b) unrealized foreign
exchange (gains) losses related to revaluation of deferred income
tax asset and liability on non-monetary items, (c) unrealized
foreign exchange (gains) losses related to other items, (d)
unrealized (gains) losses on derivatives, (e) impairment losses and
reversals on mineral interests and other assets, (f) deferred
income tax expense (recovery) on the translation of foreign
currency inter-corporate debt, (g) mark-to-market (gains) losses on
other assets, (h) one-time tax adjustments to historical deferred
income tax balances relating to changes in enacted tax rates, (i)
reorganization costs, (j) non-recurring provisions, (k) (gains)
losses on sale of assets, (l) any other non-recurring adjustments
and the tax impact of any of these adjustments calculated at the
statutory effective rate for the same
jurisdiction as the adjustment. Non-recurring adjustments from
unusual events or circumstances are reviewed from time to time
based on materiality and the nature of the event or
circumstance.
The terms "Adjusted Net Earnings or Loss" and "Adjusted Net
Earnings or Loss per share" do not have a standardized meaning
prescribed by IFRS, and therefore the Company's definitions are
unlikely to be comparable to similar measures presented by other
companies. Management uses these measures for internal valuation of
the core mining performance for the period and to assist with
planning and forecasting of future operations. Management believes
that the presentation of Adjusted Net Earnings or Loss and Adjusted
Net Earnings or Loss per share provide useful information to
investors because they exclude non-recurring items, items not
related to or not indicative of current or future periods' results
and/or not directly related to the core mining business and are a
better indication of the Company's profitability from operations as
evaluated by internal management and the board of directors. The
items excluded from the computation of Adjusted Net Earnings or
Loss and Adjusted Net Earnings or Loss per share, which are
otherwise included in the determination of Net Earnings or Loss and
Net Earnings or Loss per share prepared in accordance with IFRS,
are items that the Company does not consider to be meaningful in
evaluating the Company's past financial performance or the future
prospects and may hinder a comparison of its period-to-period
profitability. A reconciliation of Net Earnings to Adjusted Net
Earnings is included earlier in this news release
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END
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