YAMANA GOLD INC. (TSX:YRI; NYSE:AUY) (“Yamana” or the “Company”)
herein provides 2019, 2020 and 2021 production, and 2019 cost
guidance.
2019-2021 PRODUCTION AND COST OUTLOOK
The following table presents the Company's total
gold equivalent ounce ("GEO") production expectations for Yamana
Mines in 2019, 2020 and 2021.
|
2018 Actual |
2019Guidance |
2020Guidance |
2021Guidance |
Total Gold Equivalent Production (oz.)(1,2) |
1,041,300 |
1,060,000 |
1,100,000 |
1,100,000 |
- GEO includes gold plus silver with silver converted to a gold
equivalent at a ratio of 79.6:1 for 2018 and a forecast ratio of
82.5:1 for 2019, 2020 and 2021.
- Excluding copper and any attribution from Yamana’s interest in
Leagold Mining Corporation and Gualcamayo (sold in 2018).
The Company’s GEO production guidance includes
contribution from gold and silver with silver converted to
gold-equivalent production at a ratio of 82.5:1 across the guidance
period. In addition, for each of 2019, 2020, and 2021 the Company
is guiding for 120 million pounds of copper production.
|
2018Guidance(1) |
2018 Actual(1) |
2019Guidance |
2020Guidance |
2021Guidance |
Total Gold Production (oz.) |
|
|
|
|
|
Current |
- |
940,619 |
940,000 |
955,000 |
955,000 |
Previous(2) |
920,000 |
- |
940,000 |
970,000 |
- |
Total Silver Production (oz.) |
|
|
|
|
|
Current |
- |
8,023,046 |
10,000,000 |
12,000,000 |
12,000,000 |
Previous(2) |
7,550,000 |
- |
10,400,000 |
12,950,000 |
- |
Total Copper Production (M lbs.) |
|
|
|
|
|
Current |
- |
129 |
120 |
120 |
120 |
Previous(2) |
125 |
- |
120 |
120 |
- |
- Excluding any attribution from Yamana’s interest in Leagold
Mining Corporation and Gualcamayo (sold in 2018).
- Details related to previous guidance forecasts for 2018 are
presented in the Company press release issued on October 25, 2018,
while previous guidance forecasts for 2019 and 2020 are presented
in the Company press release issued on February 15, 2018.
With the development and ramp-up in 2018 of the
high-grade Cerro Moro mine, the Company’s newest mine, in the near
and medium-term the Company remains focused on optimizing the
existing portfolio of six operating mines while also advancing
studies for various expansion projects and longer term development
assets.
Gold and silver production are expected to
increase in the guidance period, increasing to 955,000 ounces and
12 million ounces, respectively, by 2020. Gold production is
expected to benefit from continued strong performance across the
portfolio, led by production increases at Canadian Malartic, while
silver production is expected to benefit from grade and production
increases at Cerro Moro, in line with current mine plans. Copper
production, all of which is from Chapada, is expected to remain
constant throughout the guidance period.
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.
The following table presents per unit cost
guidance for 2019. Total cost of sales is presented per unit of GEO
sold, while cash costs and all-in sustaining costs (“AISC”) are
presented per unit of GEO sold with copper applied as a by-product
credit.
Reflecting new methodology(see below) |
Total Cost of Sales(2) per GEO sold |
By-Product Cash Costs(1,2) per GEO sold |
By-Product AISC(1,2) per GEO sold |
2018Actual(4) |
2019 Guidance |
2018Actual(4) |
2019 Guidance |
2018Actual(4) |
2019 Guidance |
Gold Equivalent (/oz.) (3) |
$1,028 |
$1,020-$1,060$ |
501 |
$510 - $550$ |
835 |
$850 - $890 |
- 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/Q42018 and in Section 11 of the Company’s
fourth quarter 2018 Management’s Discussion & Analysis, which
has been filed on SEDAR simultaneously with this press
release.
- Excluding any attribution from Yamana’s interest in Leagold
Mining Corporation and Gualcamayo (sold in 2018).
- GEO includes gold plus silver with silver converted to a gold
equivalent at a ratio of 79.6:1 for 2018 and a forecast ratio of
82.5:1 for 2019.
- 2018 actuals are adjusted to reflect the updated methodology
for reporting of the Company’s per unit cost metrics.
Costs are forecasts to remain in the indicated
ranges through the guidance period.
2019 cost guidance reflects a change to the
presentation methodology. Specifically, the Company, as an active
member of the World Gold Council (“WGC”), has adopted the updated
version of the Guidance Note on AISC, among other changes, that are
detailed in Section 2 of the Company’s fourth quarter 2018
Management’s Discussion & Analysis, which has been filed on
SEDAR. In addition, cost of sales, cash costs and AISC have been
adjusted to reflect the effect of the Argentinean export tax, the
historical Bocamina tax in Argentina, and certain existing export
taxes in Brazil. Previously, these items were treated as deductions
to revenue. Going forward, all will be included in the Company’s
cost metrics. The Company believes this approach better reflects
costs in operations. Cash flows would not be affected with this
approach as these items, having been deductions to revenue, would
have been taken into account in determining cash flows, and now as
inclusions in costs, will continue to do so and, as such, cash flow
is not changed.
To facilitate year-on-year comparisons of cost
guidance, 2018 actuals have been adjusted for these changes. Full
reconciliation of 2018 cost metrics to the new reporting
methodology is presented in the Appendix to this release.
Before application of copper as a by-product
credit, the Company’s per unit cost guidance is as follows:
Reflecting new methodology |
Total Cost of Sales per unit sold(2) |
Cash Costs(1,2) per unit sold |
AISC(1,2) per unit sold |
|
2018 Actual(3) |
2019 Guidance |
2018Actual (3) |
2019 Guidance |
2018 Actual(3) |
2019 Guidance |
Gold Equivalent (/oz.) (4) |
$1,028 |
$1,020 - $1,060 |
$656 |
$640 - $680 |
$931 |
$920 - $960 |
|
|
|
|
|
|
|
Copper (/lbs.) (Chapada) |
$1.78 |
$1.75 - $1.95 |
$1.74 |
$1.60 - $1.80 |
$2.06 |
$1.90 - $2.10 |
- 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/Q42018
and in Section 11 of the Company’s fourth quarter 2018 Management’s
Discussion & Analysis, which has been filed on SEDAR
simultaneously with this press release.
- Excluding any attribution from Yamana’s interest in Leagold
Mining Corporation and Gualcamayo (sold in 2018).
- 2018 actuals are adjusted to reflect the updated methodology
for reporting of the Company’s per unit cost metrics.
- GEO includes gold plus silver with silver converted to a gold
equivalent at a ratio of 79.6:1 for 2018 and a forecast ratio of
82.5:1 for 2019.
PRODUCTION AND COST OUTLOOK BY MINE
The following table presents mine-by-mine
production results for 2018 and expectations for 2019.
|
2018 Guidance(2,3) |
2018 Actual(2) |
2019 Guidance |
Gold (oz.) & GEO(1) |
Gold (oz.) |
Gold (oz.) |
GEO(1) |
Gold (oz.) |
GEO(1) |
Chapada |
110,000 |
121,003 |
121,003 |
100,000 |
100,000 |
Canadian Malartic (50%) |
325,000 |
348,600 |
348,600 |
330,000 |
330,000 |
El Peñón |
145,000 |
151,893 |
201,065 |
150,000 |
198,500 |
Cerro Moro |
85,000 |
92,793 |
144,352 |
130,000 |
203,000 |
Jacobina |
135,000 |
144,695 |
144,695 |
145,000 |
145,000 |
Minera Florida |
90,000 |
81,635 |
81,635 |
85,000 |
85,000 |
Total |
890,000 |
940,619 |
1,041,300 |
940,000 |
1,060,000 |
Silver (oz.) |
|
|
|
|
|
El Peñón |
4,400,000 |
3,903,961 |
- |
4,000,000 |
- |
Cerro Moro |
3,750,000 |
4,119,085 |
- |
6,000,000 |
- |
Total |
8,150,000 |
8,023,046 |
- |
10,000,000 |
- |
Copper (M lbs.) |
|
|
|
|
|
Chapada |
120 |
129 |
129 |
120 |
120 |
- GEO includes gold plus silver with silver converted to a gold
equivalent at a ratio of 79.6:1 for 2018 and a forecast ratio of
82.5:1 for 2019.
- Excluding copper and any attribution from Yamana’s interest in
Leagold Mining Corporation and Gualcamayo (sold in 2018).
- Details related to 2018 mine-by-mine guidance are presented in
the Company press release issued on February 15, 2018.
The following table presents cost of sales, cash
costs and AISC results in 2018 and guidance by mine for 2019.
Reflecting new methodology |
Total Cost of Sales per GEO sold(2,4) |
Cash Costs(1,4) per GEO sold |
AISC(1,2,4) per GEO sold |
|
2018
Actual(3) |
2019 Guidance |
2018Actual(3) |
2019Guidance |
2018
Actual(3) |
2019 Guidance |
Chapada |
$420 |
$490 |
$388 |
$430 |
$473 |
$525 |
El Peñón |
$1,314 |
$1,100 |
$851 |
$800 |
$1,117 |
$1,050 |
Canadian Malartic (50%) |
$967 |
$965 |
$573 |
$560 |
$732 |
$730 |
Cerro Moro(3) |
$1,096 |
$1,240 |
$629 |
$690 |
$848 |
$890 |
Jacobina |
$967 |
$1,005 |
$675 |
$700 |
$891 |
$890 |
Minera Florida |
$1,398 |
$1,225 |
$917 |
$760 |
$1,327 |
$990 |
- 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/Q42018 and in Section 11 of the Company’s
fourth quarter 2018 Management’s Discussion & Analysis, which
has been filed on SEDAR simultaneously with this press release.
Also included is a reconciliation of 2018 actuals for cash costs
and AISC per GEO.
- Mine site AISC includes cash costs, mine site general and
administrative expense, sustaining capital, capitalized exploration
and expensed exploration. Consolidated AISC incorporates additional
non-mine site costs including corporate general and administrative
expense.
- 2018 actuals are adjusted to reflect the updated methodology
for reporting of the Company’s per unit cost metrics.
- GEO includes gold plus silver with silver converted to a gold
equivalent at a ratio of 79.6:1 for 2018 and a forecast ratio of
82.5:1 for 2019.
The following table presents expansionary
capital, sustaining capital and total exploration (capitalized and
expensed) results for 2018 and expectations by mine for 2019.
|
ExpansionaryCapital(1) |
SustainingCapital(1) |
TotalExploration(2) |
(in millions) |
2018 Actual |
2019
Guidance |
2018 Actual |
2019
Guidance |
2018 Actual |
2019
Guidance |
Chapada |
$4.1 |
$13.0 |
$35.2 |
$35.0 |
$7.8 |
$4.0 |
El Peñón |
$1.1 |
$2.0 |
$31.8 |
$27.0 |
$17.9 |
$17.0 |
Canadian Malartic (50%) |
$31.4 |
$37.0 |
$46.4 |
$47.0 |
$4.3 |
$2.0 |
Cerro Moro |
$61.3 |
$2.0 |
$15.0 |
$28.0 |
$11.3 |
$15.0 |
Jacobina |
$20.6 |
$28.0 |
$21.0 |
$21.0 |
$6.1 |
$5.0 |
Minera Florida |
$32.2 |
$10.0 |
$14.5 |
$14.0 |
$14.0 |
$5.0 |
Other Capex |
$18.6 |
$3.0 |
$3.4 |
$10.0 |
— |
— |
Other Exploration and
Overhead |
— |
— |
— |
— |
$17.1 |
$20.0 |
Total |
$169.3 |
$95.0 |
$167.3 |
$182.0 |
$78.5 |
$68.0 |
- Excluding any attribution from Yamana’s interest in Leagold
Mining Corporation and Gualcamayo (sold in 2018).
- Includes capitalized and expensed exploration. The Company
expects approximately 77% of exploration spending will be
capitalized in 2019.
Capital expenditure totals for 2019 do not
include costs to add to lower-grade, longer-term ore stockpiles at
Chapada and Canadian Malartic (50%). These costs are estimated at
$57 million and $40 million (50% interest), respectively, for 2019,
compared to expenditures of $43.0 million and $27.0 million (50%
interest) for the year ended December 31, 2018.
The lower-grade stockpile at Chapada measures
approximately 99 million tonnes grading 0.22% copper and 0.16 g/t
gold for contained pre-recovery metal of 513,880 ounces of gold and
487 million pounds of copper. With mining costs already incurred
and metallurgical recoveries enhanced as a result of recent
improvements to the processing plant, the economic potential of the
stockpile material has improved, and as such, the existing
stockpile and planned increases are expected to improve the
development studies being reviewed at Chapada, specifically be
considered for the plant expansion.
The following table presents other expenditure
results in 2018 and expectations for 2019:
(in millions) |
2018 Actual (1) |
2019 Guidance |
Total depreciation, depletion and amortization (“DDA”) |
$412 |
$475 |
Total general and administrative (“G&A”) expense |
$84 |
$87 |
Cash based G&A |
$78 |
$75 |
Stock-based G&A |
$6 |
$12 |
- Excluding any attribution from Yamana’s interest in Leagold
Mining Corporation and Gualcamayo (sold in 2018).
The Company expects higher DDA in 2019 compared
to 2018 mainly due to a full year of production at Cerro Moro and
the draw down of unrefined inventory of gold and silver carried
over from 2018, mostly from Cerro Moro. Cerro Moro DDA reflects
both the costs of construction as well as the historical
acquisition costs.
ASSUMPTIONS
Key assumptions, in relation to the above
guidance, are presented in the table below.
|
|
|
2019 Impact |
|
2018
Actual(1) |
2019Guidance Assumptions |
Change |
AISC(3)/GEO |
EBITDA(3)
($M) |
Changein Cash
($M) |
GEO Ratio(2) |
79.6 |
82.5 |
— |
— |
— |
— |
Gold |
$1,264 |
$1,275 |
$50 |
n/a |
$47 |
$35 |
Silver |
$15.87 |
$15.50 |
$1.00 |
n/a |
$9 |
$7 |
Copper |
$2.99 |
$2.75 |
$0.25 |
n/a |
$24 |
$18 |
C$/US$ |
1.30 |
1.31 |
5% |
$11.00 |
$10 |
$7 |
BRL/US$ |
3.65 |
3.60 |
5% |
$6.00 |
$11 |
$11 |
CLP/US$ |
641.00 |
680.00 |
5% |
$10.00 |
$9 |
$7 |
ARS/US$ |
28.09 |
37.00 |
5% |
$2.00 |
$2 |
$1 |
- 2018 metal prices and exchange rates shown in the table above
are the average realized metal prices and exchange rates for the
year ended December 31, 2018. Excludes Yamana’s interest in Leagold
Mining Corporation and Gualcamayo (sold in 2018).
- GEO includes gold plus silver with silver converted to a gold
equivalent at a ratio of 79.6:1 for 2018 and a forecast ratio of
82.5:1 for 2019.
- 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/Q42018 and in Section 11 of the Company’s
fourth quarter 2018 Management’s Discussion & Analysis, which
has been filed on SEDAR simultaneously with this press release.
Also included is a reconciliation of 2018 actuals for cash costs
and AISC per GEO.
MINE-BY-MINE OUTLOOK
ChapadaCopper grades are expected to remain
constant through the guidance period while mill feed grades for
gold will decline. This is consistent with mine sequencing as
reflected in previously published technical reports. Chapada is
mostly a copper mine with significant gold contribution and, as
such, gold grades will vary as the mine is sequenced while copper
grades will remain more consistent. For 2019, mill feed grades are
expected to average 0.21 g/t gold and 0.28% copper and, as is
customary for Chapada, production will be weighted to the back half
of the year. The Company has various development, optimization and
expansion opportunities under review at Chapada that are not
included in the 2019 expansionary capital expenditures. The plan
for 2019 does, however, consider the continuation of Phase 1, which
targets plant optimization for further copper and gold recovery
increases in the range of 2 percent for all ore types.
Approximately, $9 million of Phase 1 expansionary capital is
earmarked for 2019. Results from the ongoing feasibility study for
Chapada Phases 2 and 3 are expected in mid-2019. Further details on
the Chapada Phases and Suruca are presented in the Company’s Q4
2018 MD&A. Further exploration successes, as in prior years,
may also lead to modifications to the mine plans resulting in
higher gold production in later years.
El Peñón Gold-equivalent production in 2019 is
forecast to be in line with production guidance for 2018, with cash
costs and AISC expected to be lower to those reported in 2018.
Underground mine development activities in the first half of 2019
are expected to increase access to higher gold and silver grades in
the second half of 2019, which will afford the operation greater
flexibility, including for blending activities. 56 percent of the
gold and 62 percent of the silver are expected to be produced in
the second half of 2019 with cost metrics commensurately lower in
the second half of 2019.
Canadian Malartic (50%)Production and costs were
better than expectations at Canadian Malartic in 2018 and should
continue in 2019. Production in 2019 is forecast to be 330,000
ounces, in line with plan, with production costs similar to those
reported in 2018. The Extension Project is continuing according to
plan with contributions from Barnat expected to begin in late 2019
with more meaningful contributions in 2020 and 2021. On a 50%
basis, expansionary capex is expected to be $37 million in 2019, of
which $34 million is earmarked for the Extension Project. Work
continues to focus on the highway 117 road deviation, pit
preparation and tailings expansion.
Cerro MoroGold-equivalent production for 2019 is
expected to be in line with plan and prior guidance. The operation
will focus on optimizing the underground mining design and
processing practices, building on the successes delivered in 2018,
the first six months of commercial production. As per the approach
applied to the Company’s other mines, guidance reflects the
adoption of the WGC methodology for cost reporting. Furthermore,
for Cerro Moro, unit costs for 2018 and 2019 have been adjusted to
reflect the effects of the export tax in Argentina and the
historical Bocamina tax. The inclusion of the export tax, which is
in effect through 2020, and the Bocamina tax add approximately $130
per GEO and $40 per GEO, respectively, to the guided costs for
2019. With respect to planned exploration, the budget has been
increased by 33 percent over 2018. The budget will be used for an
aggressive drill program designed to test major structures with
potential to host a significant new mineralized zone, while
continuing to generate new targets through multi-disciplinary
fieldwork.
JacobinaThe forecast for 2019 is similar to that
of 2018 in terms of production and costs. 2019, however, includes
an additional $8 million of expansionary capex with this
attributable to the internalization of development activities.
Looking ahead to 2019, with significant underground development
work complete and a surface stockpile of approximately 100,000
tonnes grading 2.0 g/t the mine continues to be well positioned to
deliver on its production and cost targets.
Minera FloridaWith the completion in 2018 of
raise boring activity in the new Aguas Fria concession, which hosts
the PVS and Pataguas zones, development rates continue to trend
higher. Looking ahead to 2019, higher mining rates are expected in
these zones with overall production expected to improve modestly,
as lower production from the historic mining concession provides a
partial offset. Several cost containment initiatives planned for
2019 are expected to continue to lower costs overall. With respect
to planned exploration, the budget has declined to $5 million from
$14 million. Funds are expected to focus on infill drilling to
extend mineral reserves. Prior year programs have generated new
exploration potential, which is being reviewed in the context of
the mine plan updates and optimization efforts. A return to higher
exploration spending rates is expected in 2020.
STRATEGY OVERVIEW
Over the years, the Company has grown through
phases of strategic acquisitions to upgrade its portfolio and by
pursuing organic growth to increase cash flows and unlock value at
both existing mines and non-producing assets. Looking ahead, the
Company’s primary objectives include the following:
- Continued focus on the Company’s operational excellence
program, advancing near-term and ongoing optimizations related to
production, operating costs, and the Company’s key performance
objectives in health, safety, environment and community;
- Maximizing per share metrics related to the Net Asset Values
("NAV"), profitability and free cash flow of Yamana Mines, and cash
returns on invested capital, first on producing and then
non-producing assets:
- Within the producing portfolio, attention remains on per share
metrics related to the growth and quality of mineral reserves and
mineral resources. Primary objectives include mine life extensions,
scope for throughput increases, metal grade and recovery
improvements, and cost reductions that are expected to improve
margins and cash flow returns;
- For non-producing assets, the focus is on improving NAV through
exploration, drilling and technical/financial reviews, the
advancements of exploration and mining permits, and community
engagement. Over time, the Company will also consider strategic
alternatives to enhance returns from the non-producing assets. This
may include advancing the projects to producing assets, developing
the assets through a joint venture or other strategic arrangements,
or through monetization;
- Continuing balance sheet and financial performance
improvements, with a targeted Net Debt leverage ratio of 1.5 or
better with a coincident reduction in gross debt to $1.2 to $1.3
billion or better. The Company’s revolver is to be addressed first
and fully repaid. In time, the objective is to reduce Net Debt
further with a targeted Net Debt leverage ratio at or below 1.0.
The Company also focusses on tenor of debt preferring long-term
debt that is consistent with life of mines;
- Optimizing and increasing mine life at the Company’s existing
operating mines through exploration targeted on the most
prospective properties, including:
- Chapada, Canadian Malartic, Cerro Moro, Jacobina, and Minera
Florida as a result of exploration success and prospective
geological settings;
- Minera Florida, El Peñón, Chapada, and Jacobina with the
objectives of increasing mine life while also improving grade and
delivering potential for production increases through further
delineation and infill drilling;
- Maximizing value from the long-life Chapada mine and the vast
exploration opportunities through the evaluation of a phased
approach to a plant expansion and the targeting of higher grades
and higher plant recoveries;
- Advancing several value realization and monetization
initiatives over the guidance period, through the ongoing strategic
and technical reviews of its asset portfolio; and
- Pursuing the above with health and safety at the core to the
Company's values, evidenced by the Company's continued commitment
to the "One Team, One Goal: Zero" vision for sustainability, which
reflects the Company's commitment to zero harm to employees, the
environment and communities near mine operations.
In 2018, Yamana delivered on a number of
strategic objectives, including:
- The development and ramp up of the high-grade Cerro Moro gold
and silver mine in Argentina;
- Further progress with Company portfolio rationalization
initiatives with the sale of the Kirkland Lake exploration and
assets, and Gualcamayo mine, the latter of which achieved various
corporate objectives and provides both immediate and periodic
future payments. Future payments from currently identified
opportunities, new discoveries, mine life extensions and higher
metal prices, are expected to provide upside in value in relation
to its current carrying value; and
- The transaction with Leagold Mining Corporation for the
purchase of Brio Gold Inc. which provides Yamana with exposure to a
combined equity with greater scale in terms of production and
market capitalization.
These changes, together with a right-sized
production platform, strong cash flows from operations, and the
transition to a period of lower capital requirements will position
the Company to achieve one of its main objectives, which is to
strengthen the balance sheet. With the completion of Cerro Moro and
after completion of the Canadian Malartic Extension project,
currently in progress, there will be a significant reduction in
expansionary capital. This, when considered with the outlook for
continued strong operating results, positions the Company well to
deliver near-term step up changes in cash flow and net free cash
flow with this effect becoming more pronounced in mid-2019 with the
completion of the advanced copper sales agreement.
The Company will analyze and pursue development
opportunities in a manner consistent with its main objective to
preserve the balance sheet, through improving cash flows and
returns on invested capital. In addition to the usual project
gating items, project scheduling and expenditures will be largely
sequential so as not to interfere with the aforementioned
objectives. Monetization of certain assets or other strategic
alternatives may ultimately provide additional flexibility to both
the balance sheet and project timing. Agua Rica and the Company’s
interest in Leagold are notable two examples of opportunities over
the 2019-2021 guidance period. The Company expects that progress on
technical studies, stakeholder contributions and other factors such
as commercial agreements will contribute to enhance the value of
Agua Rica. The Company also expects that Leagold will continue to
deliver on its development assets and business plan, ultimately
generating value accretion to the Company.
In terms of the Company’s approach to capital
allocation, priority is to be given to the aforementioned balance
sheet objectives. At current spot metal prices, both the leverage
ratio and gross debt targets are expected to be met during the
guidance period, excluding consideration from any potential
monetization. Going forward, the Company’s strategic objective is
to maintain these balance sheet targets through the metal price
cycle as a means to enhance financial flexibility. Importantly,
this approach also affords the Company the ability to be
opportunistic, such as to build or buy assets off cycle, with
consideration to shareholder returns including dividends and
buy-backs, while balancing these initiatives with the
sustainability of cash flows through portfolio optimizations.
In the evaluation and assessment of projects,
the Company’s approach is to target projects for which it has the
technical expertise to develop and operate. The Company is
targeting after-tax returns of a multiple of its weighted average
cost of capital and, as a rule of thumb, approximately 15%. These
returns may be adjusted to reflect the complexity of the
construction and operation, whether technical or geopolitical. The
timing of any construction activity would follow detailed
engineering to mitigate against late-cycle design and scope
changes. This approach was fundamental to the success of Cerro Moro
and remains the template for Yamana going forward.
The Company is an Americas company operating in
mining friendly jurisdictions with adherence to best practices for
mining. Presently, Yamana operates in Canada, Brazil, Chile, and
Argentina. Consideration will be given to operating in other
jurisdictions in North and South America, so long as there are
established protocols for permitting and adherence to best
practices. Given the significant exploration and expansion
opportunities, along with advancing projects in jurisdictions in
which the Company presently operates, it is unlikely that Yamana
will be in other jurisdictions in the foreseeable future.
Yamana intends to remain a significant
intermediate-sized company. It considers an optimal portfolio
consisting of six to eight mines with a production platform of 1 to
2 million ounces. In that context, Yamana considers copper
production as an equivalent only for determination of size and
scale. Presently, Yamana produces approximately 1.4 million gold
equivalent ounces on this basis from six mines. This means that the
Company remains a dominant intermediate-sized company, and has room
for substantial further growth.
On size of mines, Yamana prefers each mine to
produce at least 130,000 ounces as that represents sufficient size
and scale by mine. Presently, four mines exceed 200,000
gold-equivalent ounces (again, treating copper as a gold equivalent
for purposes of determining scale) and two of those are over
300,000 gold equivalent ounces. Five mines exceed, or soon will
exceed, 150,000 gold equivalent ounces. Only one mine produces
below a threshold of 130,000 ounces, although with exploration
success, this may change.
APPENDIX
|
2018 Actual $/GEO oz
sold |
2018 Actual $/copper lb
sold |
Cash Costs
(co-product, current methodology, per ounce/lb
produced) |
614 |
1.51 |
Production vs.
sales |
11 |
0.07 |
Inventory movement and
adjustments |
13 |
0.01 |
Commercial costs |
3 |
0.09 |
Sales tax |
11 |
0.06 |
Others |
4 |
— |
Subtotal |
42 |
0.23 |
Cash Costs
(co-product, revised methodology) |
656 |
1.74 |
Less: by-product
credit |
(155) |
|
Cash Costs
(by-product, revised methodology) |
501 |
|
|
2018 Actual $/GEO
oz sold |
2018 Actual $/copper lb
sold |
All-in Sustaining Costs (co-product, current methodology,
per ounce/lb produced) |
816 |
1.76 |
Production
vs. sales |
17 |
0.08 |
Inventory
movement and adjustments |
13 |
0.01 |
Commercial
costs |
3 |
0.09 |
Sales
tax |
11 |
0.06 |
G&A
stock based comp |
4 |
— |
Exploration
CAPEX |
59 |
0.03 |
Community
social programs |
1 |
— |
Closure
related expenses |
6 |
0.03 |
Closure
depletion |
5 |
— |
Others |
(5) |
— |
Subtotal |
114 |
0.30 |
All-in
Sustaining Costs (co-product, revised methodology) |
931 |
2.06 |
Less:
by-product credit |
(96) |
|
All-in Sustaining Costs (by-product, revised
methodology) |
835 |
|
About Yamana
Yamana is a Canadian-based gold, silver and
copper producer with a significant portfolio comprised of operating
mines, development stage projects, and exploration and mineral
properties throughout the Americas, mainly in 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.
The Company is listed on the Toronto Stock Exchange (trading symbol
"YRI") and the New York Stock Exchange (trading symbol "AUY").
FOR FURTHER INFORMATION PLEASE CONTACT: Investor
Relations416-815-02201-888-809-0925Email:
investor@yamana.com
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 continued advancements at Chapada, Jacobina,
Canadian Malartic, Cerro Moro, El Peñón and Minera Florida,
expected production and costs, future work and drilling programs,
and the potential for future additions to mineral resources and
mineral reserves. 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 changes in the administration or 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, 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,
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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