YAMANA GOLD INC. (TSX: YRI; NYSE: AUY) (“Yamana” or “the Company”)
today announced an increase to the three year guidance for its
wholly-owned Jacobina mine and an update on its two-phased plan to
further increase production thereby improving the strategic life of
mine.
The following tables present the Company's
increased production expectations for Jacobina in 2019, 2020, 2021,
and cost guidance for 2019, excluding further potential upside from
the Phase 2 expansion described below and any benefit from higher
grade ore. Increases in production are only attributable to
implementation of the Phase 1 expansion, which is now in
progress.
|
2018 Actual |
2019 Guidance |
2020 Guidance |
2021 Guidance |
Jacobina Gold Production (oz.) |
144,695 |
152,000 |
160,000 |
170,000 |
Previous (oz) |
|
145,000 |
- |
- |
|
Total Cost of Sales per GEO sold(2,3) |
Cash Costs(1,3) per GEO sold |
AISC(1,2,3) per GEO sold |
|
2018 Actual |
2019 Guidance |
2018 Actual |
2019 Guidance |
2018 Actual |
2019 Guidance |
Jacobina |
$967 |
$1,005 |
$675 |
$700 |
$891 |
$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/Q12019
and in Section 10 of the Company’s first quarter 2019 Management’s
Discussion & Analysis, which has been filed on SEDAR.
- Mine site AISC (all-in sustaining costs) 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.
- Yamana reports costs on a gold equivalent ounce basis; Jacobina
produces only gold. Therefore, in the case of Jacobina, gold
equivalent ounces are equal to gold ounces.
The Company is one year ahead of schedule in its
plans to increase sustainable production to 150,000 ounces per year
and now forecasts life of mine production of over 170,000 ounces
per year after 2021. Guidance for 2019 capital costs remains
unchanged. Furthermore, the company expects a similar level of
total capital spending during 2020.
(All amounts are expressed in United States Dollars unless
otherwise indicated.)
JACOBINA PHASE 1 UPDATE
Phase 1 involves a modest plant optimization to
increase throughput to a sustainable level of 6,500 tonnes per day
(“tpd”) by mid-2020. This optimization is ahead of schedule with
quarter to date throughput averaging 6,182 tpd thereby allowing the
Company to increase its guidance. This compares to average
daily throughput of 5,580 tpd in 2018.
Optimization work completed to date includes
improving grinding and crushing with the installation of an
Advanced Process Control system with monitoring devices for the
mill and crushing circuit. Further initiatives to reduce plant
maintenance downtime were completed in May. Remaining work for
Phase 1 is well advanced. Commissioning of a high frequency sieve
and an induction furnace is expected in the third quarter and
commissioning of two gravimetric concentrators and a cyclone
battery to feed the thickener is expected by the first quarter of
2020. As of the end of June, the remaining project capital costs to
complete Phase 1 are approximately $3.4 million. Approximately $2
million of these costs, included in previously guided capital
spending, will be spent over the balance of 2019 with the remainder
in 2020.
Phase 1 is expected to increase the gold
production rate to approximately 170,000 ounces per year by 2021 at
the current mineral reserves grade, a 21% increase compared to
original 2019 production guidance of 145,000 ounces per year.
Following completion of the mill optimization,
there is potential for a further production increase driven by
higher grades. In 2019, exploration work has focused on
supporting the planned expansion and targeting new mineral
resources at a grade of 3.0 grams per tonne (“g/t”) or
better. At year-end 2018, proven and probable mineral
reserves totaled 2.1 million ounces of gold contained in 27.9
million tonnes at an average grade of 2.34 g/t, measured and
indicated mineral resources were 3.2 million ounces of gold
contained in 40.7 million tonnes at 2.47 g/t, and inferred mineral
resources totaled 1.0 million ounces contained in 12.1 million
tonnes at 2.58 g/t. The mineral reserve and mineral resource
estimates for Jacobina at December 31, 2018, are set out below.
Updated mineral reserve and mineral resource estimates at Jacobina
are expected to be provided in the third quarter of 2019. The
update will incorporate infill drilling of the higher grade
inferred mineral resources at João Belo, Canavieiras Sul, Morro do
Cuscuz, and Morro do Vento. Assuming an increase in grade for the
updated mineral reserves, sustainable production resulting from
Phase 1 has the potential to exceed the 170,000 gold ounces per
year production level.
While the updated guidance shows incremental
production increases in the next three years, resulting from the
staged throughput increases as Phase 1 is fully implemented, the
Phase 1 expansion creates a sustainable production level of at
least 170,000 gold ounces per year for the life of mine after the
three year guidance period based on current mineral reserve grades,
which would further increase with grade improvements.
JACOBINA PHASE 2 UPDATE
The Phase 2 plant expansion is expected to
result in a larger increase in plant capacity with a likely
scenario in the range of 7,500 tpd to 8,500 tpd, while maintaining
gold recoveries of between 96%-97%. The higher throughput would
gradually increase Jacobina’s gold production to at least 200,000
ounces per year and up to 225,000 ounces per year by 2023 based on
current mineral reserve grades. A pre-feasibility study (“PFS”) to
identify optimum mining and processing expansion scenarios,
evaluate project economics, and determine a project development
schedule including the timing for permit applications is expected
to be completed in the first quarter of 2020. Investment for Phase
2 is expected to occur mostly in 2021 and 2022 with the objective
of being at the higher throughput level at the beginning of 2023.
No expansionary capital will be committed to the plant expansion
until the PFS is completed. The Company’s hurdle requirement for
expenditure on the Phase 2 expansion is an after-tax IRR exceeding
15%. The decision to proceed with the investment will be driven by
the expansion of the plant throughput, thus bringing forward cash
flows, but also an extension of mine life from continued
exploration success and improvements to Jacobina’s average mineral
reserve grade, which would support the investment decision. To this
end, the Company has approved a $3 million increase to Jacobina’s
exploration budget for the balance of 2019 and builds on the
success from the 2018 program. A dedicated exploration update for
Jacobina will be provided during the third quarter of
2019.
“Jacobina has improved significantly in the last
several years across all measures, and it is now one of our higher
quality, high value operations,” said Daniel Racine, President and
Chief Executive Officer of Yamana. “We believe that it is on the
cusp of becoming a world class mine, particularly once a decision
is made to proceed with the Phase 2 expansion, given strong
production, production growth, increasing mineral inventory at
improving grades, and continuous increases in cash flow.”
The planned expansion at Jacobina is the
continuation of a series of incremental improvements that have been
successfully implemented over the past four years, during which
gold production increased from 75,000 ounces in 2014 to 145,000
ounces in 2018.
The following table shows the incremental gold
production growth trend that Yamana is targeting with the Phase 1
and Phase 2 expansions. These objectives are based on increase in
throughput only and do not include further upside for an increase
in grade as a result of exploration.
|
2018 Actual |
2019 Guidance |
2020 Guidance |
2021 Guidance |
2022 Objective |
2023 Objective |
Jacobina Gold Production (oz.) |
144,695 |
152,000 |
160,000 |
170,000 |
200,000 |
200,000-225,000 |
As of December 31, 2018, mineral reserves and
mineral resources were as follows and supported a mine life of at
least 13 years.
Mineral Reserve Statement,
Jacobina
|
Proven Mineral Reserves |
Probable Mineral Reserves |
Total Proven & Probable |
|
Tonnes |
Grade |
Contained |
Tonnes |
Grade |
Contained |
Tonnes |
Grade |
Contained |
|
(000's) |
(g/t) |
oz. (000's) |
(000's) |
(g/t) |
oz. (000's) |
(000's) |
(g/t) |
oz. (000's) |
Gold |
18,565 |
2.32 |
1,385 |
9,290 |
2.39 |
714 |
27,855 |
2.34 |
2,099 |
|
|
|
|
|
|
|
|
|
|
Mineral Resource Statement,
Jacobina
|
Measured Mineral Resources |
Indicated Mineral Resources |
Total Measured & Indicated |
|
Tonnes |
Grade |
Contained |
Tonnes |
Grade |
Contained |
Tonnes |
Grade |
Contained |
|
(000's) |
(g/t) |
oz. (000's) |
(000's) |
(g/t) |
oz. (000's) |
(000's) |
(g/t) |
oz. (000's) |
Gold |
24,999 |
2.48 |
1,994 |
15,711 |
2.45 |
1,238 |
40,710 |
2.47 |
3,232 |
|
Inferred Mineral Resources |
|
Tonnes |
Grade |
Contained |
|
(000's) |
(g/t) |
oz. (000's) |
Gold |
12,145 |
2.58 |
1,008 |
Mineral Reserve and Mineral
Resource Reporting Notes
- Metal Price, Cut-off Grade, Metallurgical Recovery:
Mineral Reserves |
Mineral Resources |
Price assumptions: $1,250 gold Underground cut-off grade is 1.20
g/t gold Metallurgical recovery is 96% |
Price assumptions: $1,500 goldUnderground cut-off grade is 1.0 g/t
gold with aminimum mining width of 1.5 metresMetallurgical recovery
is 96% |
- All Mineral Reserves and Mineral Resources have been
calculated in accordance with the standards of the Canadian
Institute of Mining, Metallurgy and Petroleum and National
Instrument 43-101 – Standards of Disclosure for Mineral
Projects
- All mineral resources are reported exclusive of mineral
reserves.
- Mineral resources which are not mineral reserves do not have
demonstrated economic viability.
- Mineral reserves and mineral resources are reported as of
December 31, 2018.
- Due to rounding, numbers may not add precisely to the
totals.
A mid-year mineral reserves and resources estimate is planned
for later this summer based on the extensive additional drilling
information obtained since last year. An exploration update showing
further geological potential and expectations will also be
provided.
The Company is also evaluating a paste/backfill plan that will
aim to reduce dilution and further improve production and costs. An
update is planned before the end of the year.
CORPORATE OVERHEAD IMPROVEMENTS
Yamana has been critically evaluating its
general and administrative (“G&A”) expenses to align its cost
structure to its remaining portfolio of assets, as the Chapada sale
is expected to be completed within the next few weeks. The Company
now expects 2019 G&A expenses on a cash basis to be lowered to
$68 million compared with previous guidance of $75 million,
implying a run rate of approximately $60 million per year. The
Company expects G&A expenses to remain at $60 million in 2020,
resulting in savings of over $15 million annually, and the Company
anticipates that further reductions will be realized through
optimizations and cost reduction initiatives.
These savings will be realized from the direct
impact of the Chapada sale and adjustments resulting from a smaller
regional presence in Brazil. Furthermore, the Company’s overall
organizational structure is being streamlined across South America
in particular and over the entire organization more
generally.
“The anticipated saving from the G&A
initiatives that we are implementing align with the strategic
rationale of the Chapada sale,” Racine said. “They will further
strengthen our balance sheet and improve our financial flexibility,
and they will simplify our organizational structure to match the
Company’s remaining portfolio of five mines.”
UPCOMING EVENTS
The Company would like to highlight a number of
notable upcoming events and milestones. These include:
- The pre-feasibility study for Agua Rica.
- The completion of the Chapada sale, expected in early July.
- Following the closing of the Chapada sale, the repayment of the
Company’s outstanding revolving credit facility and near and
medium-term fixed term debt maturities from proceeds of the
transaction.
- Preliminary second quarter operational results, expected during
the second week of July.
- The release of second quarter financial and operational results
on July 25.
- Delivery of an exploration update press release on Jacobina
during the third quarter.
- An investor tour of the Jacobina mine this fall. Details to
follow in the coming weeks.
Qualified Persons
Scientific and technical information contained
in this news release has been reviewed and approved by Sébastien
Bernier, (P.Geo and Senior Director, Geology and Mineral
Resources). Sébastien Bernier is an employee of Yamana and a
"Qualified Person" as defined by Canadian Securities
Administrators' National Instrument 43-101 - Standards of
Disclosure for Mineral Projects. Data verification related to
certain scientific and technical information disclosed in this news
release in connection with Yamana’s material properties can be
found in the Company’s Annual Information Form dated March 28,
2019, available under the Company’s profile on SEDAR at
www.sedar.com and on the Company’s website.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investor Relations 416-815-02201-888-809-0925Email:
investor@yamana.com
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS: CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:
This news release contains or incorporates by reference
“forward-looking statements” and “forward-looking information”
under applicable Canadian securities legislation within the meaning
of the United States Private Securities Litigation Reform Act of
1995. Forward-looking information includes, but is not limited to
information with respect to the Company’s strategy, plans or future
financial or operating performance, expected G&A expenses,
production and costs, the completion of the Chapada sale and
expected use of proceeds, and the 2019, 2020 and 2021 production
and cost guidance with respect to the Jacobina mine, the Company’s
production, exploration, development and expansion plans and
strategy at the Jacobina mine and the expected timing and results
of such plans, the expected timing for completion of the PFS and
the release of updated mineral reserve and mineral resource
estimates. 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 Parties’ expectations in connection with the
development, exploration and construction plans for the integrated
Agua Rica and Alumbrera discussed herein being met, 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, zinc and
molybdenum), currency exchange rates (such as the Argentine peso
versus the United States dollar), the impact of inflation, possible
variations in ore grade or recovery rates, hedging programs,
changes in accounting policies, changes in Mineral Resources and
Mineral Reserves, risks related to other investments, 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 related to fiscal stability agreements,
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 Parties filings with applicable securities regulatory
authorities and publically available. Although the Parties have
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 Parties undertake 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 Parties’
expected plans and objectives and may not be appropriate for other
purposes.
Yamana Gold (NYSE:AUY)
Historical Stock Chart
From Apr 2024 to May 2024
Yamana Gold (NYSE:AUY)
Historical Stock Chart
From May 2023 to May 2024