YAMANA GOLD INC. (TSX:YRI; NYSE:AUY; LSE:AUY) (“Yamana” or the
"Company”) is herein reporting its financial and operational
results for the second quarter of 2022. Production totalled 260,960
gold equivalent ounces ("GEO")(2) at total cost of sales, cash
costs(1) and all-in sustaining costs ("AISC")(1) of $1,168, $734
and $1,084 per GEO(2) sold respectively. The standout production
results, combined with the low-cost performance, delivered strong
cash flow generation, including $187.8 million in cash flows from
operating activities and $195.9 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 guidance for the year in both production and
AISC(1).
SECOND QUARTER HIGHLIGHTS
Financial Results - Strong Earnings and Cash Flow
Generation Strengthening Balance Sheet
- Second quarter net earnings(3) of
$72.1 million or $0.07 per share basic and diluted. Adjusted net
earnings(1)(3) of $85.8 million or $0.09 per share basic and
diluted.
- Cash flows from operating
activities of $187.8 million and cash flows from operating
activities before net change in working capital of $195.9 million,
representing sharp increases from the prior year comparative
quarter of 22.3% and 16.7%, respectively.
- Net free cash flow(1) and free cash
flow before dividends and debt repayments(1) of $136.6 million and
$53.0 million, respectively.
- Cash and cash equivalents totalled
$545.1 million(6). The Company has $750.0 million in available
credit.
Production Results - Exceptional Performance Across
Entire Portfolio
- Production of 260,960 GEO(2) was in
line with plan, despite the gold to silver ratio being near an
all-time high and significantly above that anticipated in the plan
and guidance. Assuming the budget gold equivalent ratio, GEO(2)
production would have exceeded plan. Quarterly GEO(2) production
increased year-over-year, underpinned by strong gold production and
an exceptional performance from Cerro Moro which produced 51,906
GEO(2), an increase of 105% year over year.
- Gold production of 232,542 ounces
exceeded plan and the prior year comparative quarter, following
standout performances from Jacobina with 49,662 ounces, El Peñón
with 46,627 ounces and Cerro Moro with 30,929 ounces.
- Silver production of 2,356,853
ounces was in line with plan, following an exceptional performance
from Cerro Moro.
Cost Results - Maintaining Solid Margins Against
Inflationary Backdrop
- Second quarter total cost of sales,
cash costs(1) and AISC(1) of $1,168, $734, and $1,084 per GEO(2),
respectively, were in line with plan and substantially unchanged
versus the prior year comparative period. Productivity gains along
with stable and, in some cases, better than expected costs, offset
inflationary impacts on certain consumables, notably diesel. By the
end of the quarter, the costs of several commodity-based
consumables appeared to have peaked with prices meaningfully below
recent levels. Strong cash flows, free cash flows and increasing
cash balances in the following quarters will support the modest
planned increases to capital spending.
Capital Allocation and Free Cash
Flow
- 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 opportunities,
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.
- Free cash flow is expected to
steadily increase quarter-over-quarter, with the strongest free
cash flow generation expected in the second half of the year, and
in particular during the fourth quarter. The Company expects cash
balances to increase steadily throughout the year with the
strongest contribution in the latter half of the year, also aided
by the fact that higher income tax installments have been paid, as
customary, in the first half of the year.
Health, Safety and Sustainable
Development
- The Company's Total Recordable
Injury Rate ("TRIR") for the first six months of 2022 was 0.81(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 July 5, 2022 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 96%(5) have received two doses and
more than 84%(5) have received a third dose booster shot.
Approximately 32%(5) of workers have received a fourth dose booster
shot.
- The Company continued the
implementation of its Climate Action Strategy during the quarter,
including advancing analysis of converting approximately 50% of
Cerro Moro's electricity requirements from diesel to wind power to
meet the greenhouse gas (“GHG”) emission reductions required
between now and 2030 to achieve the Company's 1.5ºC science-based
target, reduce operating costs, expand mineral reserves and mine
life. Work also continued to progress on other climate action
objectives, including advancing the evaluation of other operational
projects to reduce GHG emissions and estimation of our Scope 3
emissions.
- Yamana was named as one of Canada’s
Best 50 Corporate Citizens by Corporate Knights Magazine for the
second consecutive year, based on the assessment of a range of ESG
criteria. The Company’s ranking improved one position to 30th
overall and the Company remained the top-ranked mining company on
the list. The Company is proud of this exceptional recognition,
achieved by the dedication and hard work of all employees and
business partners.
- On July 26, 2022, the Company's ESG
rating, as determined by MSCI, was upgraded to "A", further
demonstrating the Company's deep commitment to ESG excellence.
OPERATING RESULTS SUMMARY
|
|
For the three months ended June 30, 2022 |
|
GoldProduction |
SilverProduction |
GEO(2)
Production |
Total cost of sales per GEO(2)
Sold |
Cash Cost(1)per
GEO(2) Sold |
AISC(1)per
GEO(2) Sold |
|
Canadian Malartic (50%) |
87,186 |
— |
87,186 |
$1,205 |
$724 |
$915 |
| Jacobina |
49,662 |
— |
49,662 |
$856 |
$559 |
$775 |
| Cerro Moro |
30,929 |
1,736,872 |
51,906 |
$1,250 |
$842 |
$1,181 |
| El Peñón |
46,627 |
619,981 |
54,068 |
$1,091 |
$712 |
$988 |
| Minera Florida |
18,138 |
— |
18,138 |
$1,718 |
$1,041 |
$1,503 |
|
Total |
232,542 |
2,356,853 |
260,960 |
$1,168 |
$734 |
$1,084 |
|
|
For the three months ended June 30, 2021 |
|
GoldProduction |
SilverProduction |
GEO(2)Production |
Total cost of sales per GEO(2) Sold(7) |
Cash Cost(1)per GEO(2) Sold |
AISC(1)per GEO(2)Sold |
|
Canadian Malartic (50%) |
92,106 |
— |
92,106 |
$1,147 |
$632 |
$911 |
| Jacobina |
47,503 |
— |
47,503 |
$941 |
$660 |
$824 |
| Cerro Moro |
14,488 |
736,823 |
25,313 |
$1,802 |
$1,025 |
$1,499 |
| El Peñón |
39,492 |
891,255 |
52,607 |
$1,183 |
$740 |
$1,053 |
| Minera Florida |
23,813 |
— |
23,813 |
$1,409 |
$798 |
$1,147 |
|
Total |
217,402 |
1,628,078 |
241,341 |
$1,222 |
$720 |
$1,081 |
OPERATIONS UPDATE
Canadian Malartic
Canadian Malartic had a strong second quarter,
producing 87,186 ounces, which was higher than plan. Canadian
Malartic recovery rates have trended higher than comparative
periods, as anticipated from the processing of softer Barnat ore.
As previously guided, to optimize cash flow, the mine is expected
to have lower production and throughput in 2022, relative to
2021.
Total cost of sales, cash costs(1) and AISC(1)
on a per GEO(2) basis for the quarter were $1,205, $724 and $915,
respectively, with AISC(1) largely flat versus the prior year
comparative period and better than plan.
Jacobina
Jacobina had an exceptional second quarter and
delivered record quarterly gold production of 49,662 ounces. The
production results exceeded plan and the comparative quarter,
driven by higher ore tonnes mined. 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 second quarter of $856, $559 and
$775, respectively, were significantly lower than the comparative
prior year quarter. Costs benefited from higher production as a
result of the aforementioned increased mill throughput, and fixed
production costs being distributed over less ounces in the prior
year.
Cerro Moro
Cerro Moro had a standout quarter, producing
51,906 GEO(2) comprising 30,929 ounces of gold and 1,736,872 ounces
of silver, significantly exceeding plan 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 stabilized throughput.
The opening of more mining faces and resultant
increase in mill feed coming from higher-grade underground ore
continued in the second quarter with Zoe contributions becoming
more prevalent. During the second 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 guidance for the year.
Total cost of sales, cash costs(1) and AISC(1)
on a per GEO(2) basis during the second quarter were $1,250, $842,
and $1,181, respectively, better than plan and all well below the
comparative quarter, as a result of the exceptional production in
the quarter.
El Peñón
El Peñón had a strong quarter, with GEO(2)
production of 54,068, comprising gold production of 46,627 ounces,
and 619,981 ounces of silver. June production of 19,077 GEO(2)
benefited from access to the Chiquilla Chica zone which entered
into production at the beginning of the month. Optimized mine
sequencing, bringing forward zones with a higher gold-to-silver
ratio in the first half 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 second half of
2022, due to the mining sequence and the mining of the Providencia
Sur, Dorada SW and Flat zones, where an increase in higher-grade
silver ore is anticipated. The first step to unlock the opportunity
to leverage the currently existing processing capacity at the mine
and increase production was to establish additional mining sectors.
The development of La Paloma, Quebrada Colorada Sur and Pampa
Campamento Deep was an important component of that strategy;
accessing these new areas has now provided increased mining
flexibility. With improved access now in place, and development
rates able to support throughput, the Company expects higher
production to come in the following quarters predominantly driven
by higher grades.
Quarterly total cost of sales, cash costs(1) and
AISC(1) on a per GEO(2) basis of $1,091, $712, and $988,
respectively, were all well below the comparative period, as a
result of the previously-disclosed higher development rates, that
facilitated access to additional mining areas during the quarter.
Mine development is currently occurring at a rate that exceeds
3,000 metres per month. Minera Florida
Minera Florida reported gold production of
18,138 ounces during the quarter, and remains on target for 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 $1,718, $1,041, and
$1,503 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 second half of
the year, 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 throughout the year due to
higher grades, and higher silver and zinc by-product credits.
CONSTRUCTION, DEVELOPMENT AND ADVANCED
STAGE PROJECTS
Wasamac Advancing Bulk Sample Permitting
and Optimized Life-of-Mine Plan
During 2021, the Company made a positive
development decision on its wholly-owned Wasamac project in the
Abitibi-Témiscamingue region of Quebec, Canada. Wasamac solidifies
the Company’s long-term growth profile with a top-tier gold project
in a region where Yamana has deep operational and technical
expertise and experience.
During the second quarter, the Company continued
to advance preparations for its board-approved bulk sample program.
The initiative would allow construction to commence on the ramp,
enabling earlier access to the deposit to increase the level of
confidence in metallurgical and geotechnical variables and optimize
the processing flow sheet and mining sequence. Construction of
surface facilities to support the ramp development activity and
associated environmental requirements would also be advanced.
With a high level of continuity and regular
geometry, combined with a relatively simple structural setting and
average mineralized widths of 13 metres, Wasamac is well positioned
for high-production and low-cost underground mining methods given
the project’s low level of geological risk and favourable
geological environment. Results since mid-2021 continue to confirm
or exceed expected grades and widths within the resource area,
suggesting good opportunities to increase reserves within and
adjacent to the known mineralized envelope. Similarly, the
metallurgical and geomechanical assumptions used in the feasibility
study are based on rigorous lab testing from drill hole samples.
Bulk sampling and industrial-scale tests will build on these
results, enabling development of production-ready models for the
grade, recovery, and geotechnical aspects of the project, to
support the first three years of production.
Additionally, the bulk sample program will allow
the Company to capture opportunities to optimize the processing
performance by testing multiple flowsheet options and confirm stope
stability parameters to optimize stope dimensions, backfilling
strategy and mining sequence while contributing to ensuring a safe
working environment. The accelerated development of the ramp will
also establish drilling platforms to perform both delineation and
exploration drilling at Wasamac main zones, Wildcat and potential
new zones from underground.
Preparation of the documentation for the bulk
sample permits is underway and scheduled for submission in the
third quarter of 2022, with the approval process expected to take
less than 6 months. Permit approvals are expected in early 2023 and
ramp development could begin in spring 2023. While the permit
application is in progress, select site works, including
construction of an access road, a temporary 25 kV power line and
temporary buildings are scheduled to commence in the second half of
2022.
The bulk sample will not require additional
costs above what was included in the feasibility study, rather a
fraction of the costs will be advanced slightly. A modest capital
expenditure of approximately $7 million is planned for the second
half of 2022, in preparation for development to commence in the
first half of 2023.
Opportunities Providing Upside
During the second quarter, the Company completed
an update of the Wasamac strategic life-of-mine (LOM) plan,
building on the 2021 feasibility study and incorporating the
results of several value-adding studies that were advanced
throughout the first half of 2022. The strategic plan demonstrates
an improved gold production profile compared to the feasibility
study, while continuing to establish Wasamac as a modern, low-cost,
responsible underground mine.
Extension of the processing plant site through
land acquisition and additional geotechnical drilling have allowed
optimization of the underground mine design and processing plant
layout. The revised layout avoids environmentally-sensitive areas,
improves the plant configuration, and provides additional space for
ore stockpiling, while continuing to minimize impacts to the
surrounding property holders. Using the revised mine designs, the
mining sequence has been optimized to increase feed grades in the
first two years, resulting in a faster production ramp-up to
200,000 ounces in 2027 and up to 250,000 ounces in 2028.
Furthermore, the ongoing mine design and
sequence optimizations could position the Wasamac mine with the
option for a future incremental expansion from 7,000 tpd to 9,000
tpd in year 3 of operations, to extend the gold production profile
of 250,000 ounces per year until at least 2030. The results of a
comminution trade-off study indicate that the higher throughput of
9,000 tpd could be achieved with limited additional mechanical
equipment at modest capital expenditures and without increasing the
plant footprint.
The strategy to start production at 7,000 tpd,
with a later incremental expansion to 9,000 tpd, balances the
mining equipment fleet and workforce requirements while minimizing
any impact to the ongoing permitting process. As a result, the
Company continues to expect to receive the required permits to
commence project construction in mid-2024 and the initial capital
cost estimate from the feasibility study of $416 million also
remains unchanged.
Positive infill and exploration drilling results
to date indicate the potential for a strategic mine life of 10 to
15 years at 200,000 to 250,000 ounces of gold per year, compared to
the LOM average of 169,000 ounces in the feasibility study. The
Wasamac deposit is not only open at depth and along strike but the
underexplored secondary zones such as Wildcat are showing promising
drilling results. Additional exploration targets on the property,
including the adjacent Francoeur, Arntfield, and Lac Fortune
properties, provide further upside. For highlights of the ongoing
exploration program at Wasamac please see the July 27, 2022 press
release ‘Yamana Gold Announces Positive Exploration Results
Underpinning Strategic Upside at Odyssey and Wasamac’.
As a result of the improved production profile
in the updated strategic LOM plan, unit costs are expected to be
lower than the feasibility study LOM average AISC(1) of $828 per
ounce and, at the feasibility study gold price of US$1,550, the net
present value would approximately double, assuming the strategic
mine life is extended through 2036 at 9,000 tpd.
Other opportunities that continue to be
evaluated but are not yet included in the strategic plan include
the processing flow sheet optimization to increase metallurgical
recoveries by approximately 3% (for which metallurgical testing is
ongoing), optimized configuration of the tailings filter plant and
paste backfill plant, and increased levels of electrification,
automation and renewable energy usage in the project.
The Odyssey Project Advancing on
Schedule and Continues Exploration Success
Yamana and Agnico Eagle Mines Ltd., who each
hold a 50% interest in the Canadian Malartic General Partnership,
owner and operator of the Canadian Malartic mine, announced a
positive construction decision for the Odyssey underground project
at Canadian Malartic on February 11, 2021.
Following significant advancement of the project
in 2021, the Odyssey team is focusing on two key milestones:
- Initiation of shaft sinking by the fourth quarter of 2022
- First gold production from Odyssey South in the first quarter
of 2023
The project continues to be on budget, and on
schedule. Notable developments on progress as follows:
- The concrete pour to construct the
93-metre-tall headframe was completed on schedule in the fourth
quarter of 2021, in preparation for shaft sinking slated to begin
in the fourth quarter of 2022. Structural steel installation inside
the headframe is ongoing and progressed during the second quarter.
The production shaft will be 6.5 metres in diameter and 1,800
metres deep, with the first of two loading stations at 1,135 metres
below surface. Construction of the temporary hoist building and
waste silo is on schedule.
- The first underground ore from
Odyssey South is on track to be processed through the existing
Canadian Malartic plant in early 2023. Underground development
continues to progress with the opening of additional headings.
- Ventilation is now provided
directly through a fresh-air raise to surface and two bays in the
maintenance garage are now available. The garage is fully
functional and occupied by the maintenance team.
- As an employer of choice in the
Abitibi, the Odyssey project continues to successfully build a
highly skilled team and development rates are planned to continue
increasing throughout the year.
- Priority continues to be placed on
the main ramp and also the level 16 exploration drift for infill
drilling of the Odyssey South and Internal zones.
- Concrete, structural steel and
architecture has been completed for both the compressor building
and the fire-water pumping station. These are expected to be
operational in the third quarter.
- The fuel distribution station
foundation began in May, with piping installation ongoing and a
start-up planned for September.
- The construction of the paste fill
plant and 120 KV power distribution line is on schedule to support
the Odyssey South stoping sequence.
- In early July, the Company received
notice that the Decree amendment was approved, a significant
milestone in the permitting process, and all required permits to
commence production from Odyssey South are expected by the end of
2022.
With a significant production platform, material
cash flow generation and a prominent position within Quebec’s
Abitibi District, Canadian Malartic will remain one of the
Company’s cornerstone assets and one of the more prolific and
generational mines in the world, particularly as the Odyssey mine
is developed and comes into production. The Company is taking a
disciplined approach to the development of Odyssey with a
conservative outlook for initial throughput and production. While
the Odyssey mine is expected to initially process 20,000 tonnes per
day and produce 500,000 to 600,000 ounces per year, based on the
current mine plan, the Company recognizes that there is a large
inventory of ounces that is not currently in the mine plan. Odyssey
ores will be processed through a plant with an original design
capacity of over 55,000 tonnes per day, processing closer to 60,000
tonnes per day, which far exceeds the initial expected throughput
of Odyssey. The plant was designed for the larger open pit
operations that will end later this decade, and while the Company
will scale the plant to the level required for the underground
operation, that plant capacity will always be there. The Company’s
approach at its other mines has been to conduct extensive
exploration which provides flexibility to maximize and increase
throughput, and a similar approach will be taken with Odyssey,
where delineation of extensions of underground mineralized zones
and new zones of mineralization is already occurring. The extension
of East Gouldie and discovery of Titan are examples of these
underground exploration successes and opportunities. The Company’s
efforts at East Amphi, Rand and Camflo also provide potential to
add tonnage and production. The Camflo property, which was added to
the Partnership in 2021, covers the past producing Camflo mine
which had historical production of approximately 1.6 million ounces
of gold. An initial evaluation of the Camflo property has
identified porphyry and diorite hosted gold mineralization that
could potentially be mined via an open pit. Additional studies are
underway to initiate an aggressive exploration program in 2023. The
Company firmly believes that in its 10-year outlook period, these
efforts will lead to more mining areas that will allow the Company
to take advantage of available plant capacity, resulting in ore
processing that will exceed 20,000 tonnes per day, and sustainable
production will then significantly exceed the initial production
plan of 500,000 to 600,000 ounces per year.
Infill Drilling and Exploration
Infill drilling in 2022 continues to demonstrate
remarkable grade and width continuity in the East Gouldie
mineralized zone, with indicated resource drilling meeting or
exceeding the grade and width of the reported inferred resource,
validating the inferred resource estimate. With twelve surface
diamond drill rigs active on East Gouldie, as well as four
underground drill rigs on Odyssey South, ongoing drilling is
expected to convert a significant portion of the 2021 year-end
inferred mineral resource to indicated mineral resources for 2022
year-end reporting. As well, drilling is expected to significantly
expand the inferred resource envelope. Up to four drill rigs worked
during the second quarter on exploration of the eastern extension
of the East Gouldie structure from the Rand property, completing
14,600 metres on East Gouldie Extension, 4,600 metres of
exploration at East Amphi and 690 metres on the Midway project.
During the third quarter, exploration will continue with one drill
rig working on exploration testing further targets on the
consolidated property.
The new indicated mineral resources will provide
the basis for updated technical studies in 2023 that will allow
definition of mineral reserves for the Odyssey underground project
over the next few years, starting at the end of 2022. For
highlights of the ongoing exploration program at Odyssey please see
the July 27, 2022 press release ‘Yamana Gold Announces Positive
Exploration Results Underpinning Strategic Upside at Odyssey and
Wasamac’.
Jacobina Expansion Strategy
The Company’s expansion strategy at Jacobina is
well advanced and the Company anticipates that the low-cost
operation will have a mine life that exceeds several decades,
taking reserves and high conviction mineral resources into
consideration. Production is expected to materially increase with
phased expansions providing a pathway to sustainable production of
350,000 ounces per annum. This will increase the already excellent
cash flow generation of the mine and deliver meaningful value. With
well-below average costs at Jacobina, cash flows exceed those from
mines that produce significantly, and as much as fifty per cent,
more ounces. The mine currently has a reserve life of over 15 years
plus a pipeline of resources and exploration targets that we
believe will further extend mine life. Work performed since 2019
has allowed for the systematic exploration of the Company's large
land package in the Jacobina district, which covers 155 kilometres
of exploration potential, allowing for the definition of a
fourteen-kilometre long belt of gold-bearing conglomerate located
north of the mine complex and also extending the known mineralized
reefs south of João Belo in a continuous area extending 2,200
metres. Further areas have been identified during reconnaissance
exploration programs. Work will continue to define mineralized
reefs exposed on surface and follow up with drill testing targeting
both extensions of the mine complex and new standalone mine
targets. Consequently, the Company sees significant opportunities
to grow its regional presence and continue to build the world-class
Jacobina Complex.
The Phase 2 expansion at Jacobina continued to
successfully ramp-up during the quarter, with the mine achieving a
sustained throughput rate of over 8,400 tpd in June. Yamana expects
the throughput objective of 8,500 tpd to be achieved in July,
establishing Jacobina’s sustainable production profile at 230,000
ounces of gold per year.
With the Phase 2 expansion completed ahead of
schedule, the Company is now pursuing the Phase 3 expansion to
10,000 tpd through continued incremental debottlenecking. With the
permit to 10,000 tpd already in hand, Phase 3 is expected to
increase gold production to approximately 270,000 ounces per year
by 2025 with a modest capital expenditure of $20 million to $30
million. The Phase 4 expansion, of up to 15,000 tpd, would increase
gold production in excess of 350,000 ounces per year. To achieve
the target throughput rates, a third grinding line would be added,
as well as an expansion of the leaching and CIP circuits. As the
third ball mill was originally planned as part of the Phase 2
Feasibility Study, engineering for Phase 4 is well advanced. A
comprehensive plan, aligning the processing plant, underground
mine, and tailings management strategy, while managing capital
expenditures and cash flow, is underway.
The Company is further evaluating the strategic
options and direction related to Jacobina and the significant
exploration that is available along the greenstone belt which hosts
the mine. Jacobina is being envisioned as a complex of multiple
mines, and more emphasis is being placed on regional and generative
exploration.
Cerro Moro Scalable Plant and Heap
Leaching Upside Opportunities
Cerro Moro has a significant inventory of
lower-grade veins that are not fully reflected in the current
mineral reserve and mineral resource statements, many of which are
wider than the veins currently being mined. Drilling of these
lower-grade veins was not typically followed up with infill
drilling in the past as the mineralization is below the current
cut-off grade. Cerro Moro was developed as a high-grade,
low-tonnage operation but, from the beginning, the Company has
considered alternative processing options to allow for economic
extraction of lower-grade mineralization, including:
- a scalable plant, where the front
end of the plant anticipates higher 2,000 tpd tonnage, with the
expectation of a modest capital requirement to achieve this
objective,
- heap leaching of near-surface,
lower-grade material to supplement other production.
Year to date, the Company has advanced the plant
expansion study. Similar to the approach that has proven successful
at Jacobina, the Company is considering a low-risk, phased
expansion for Cerro Moro with quick payback from the initial phase
used to fund subsequent phases. As such, the Company is considering
using fine screens instead of cyclones for classification to
improve the efficiency of the existing ball mill. Combined with a
slightly coarser grind size, this initial phase is expected to
increase throughput to at least 1,500 tpd, a 40% to 50% increase in
capacity, without impacting gold and silver recoveries. The
incremental capacity could be used for processing of lower-grade
mineralization, which is expected to increase annual gold and
silver production, and in turn reduce fixed costs per unit at the
mine, as those costs would be distributed over additional ounces.
Preliminary analysis based on current operating data indicates that
the existing crushing and flotation circuits are adequate for the
higher throughput rate and reconfiguration of the leaching circuit
could achieve the target throughput without requiring additional
leach tanks. Upgrades to the concentrate thickener, clarifying
filters, flocculant make-up system, and pumping would likely be
required. The capital cost of this initial phase is estimated at a
modest $15 million to $20 million. Many of the upgrades in phase 1
expansion would be sufficient for a second expansion phase to
increase plant throughput to approximately 2,200 tpd, double the
existing capacity, further increasing production and reducing
operating unit costs. Capital estimates for the phase 2 expansion
are also $15 million to $20 million, for a total capital investment
over the two expansion phases estimated at $30 million to $40
million. The Company is currently evaluating two options for phase
2 expansion, the addition of a high-pressure grinding rolls
("HPGR") unit before the existing ball mill or the addition of a
regrind unit. An expansion of the flotation circuit would also be
required. The Company is undertaking additional test work to
confirm the optimal flow sheet option and will advance the selected
phase 1 and phase 2 expansion options to a pre-feasibility study
level, expected for completion in early 2023.
In parallel, a technical study on the potential
heap leach project was conducted, and while the results obtained in
the second quarter of 2022 were positive, the Company has elected
to prioritize the plant expansion project, as it provides a more
immediate high-return growth prospect, similar to the phased
expansion successfully deployed at Jacobina. As previously
disclosed, a four-month cyanide column leach test program was
conducted on eight samples with gold grades of 0.71 to 3.22 g/t.
and at three different sizes of feed materials, -25 mm, -19 mm and
-9.5 mm. The results indicated good potential for leaching of both
oxidized near-surface vein material, zones with hypogene oxides
(hematite) and some low sulphide gold-bearing veins, with
extractions from column leaching varying from 32.5% to 96.9%,
averaging 68.6%. Gold recoveries at the Domos La Union and Michelle
zones were particularly impressive, averaging 85.6% from the four
samples. Conceptual engineering was conducted for a 5,000 tpd heap
leach operation and the configuration was envisaged with three
stages of crushing to a crushed size P80 of 12.5 mm, followed by
agglomeration and retreat conveyor stacking in a multiple lift,
single-use pad with a design capacity of approximately 14 million
tonnes. The leach pad, solution storage ponds, and Merrill-Crowe
plant would be conceptually planned to be located approximately 2
kilometres east of the current tailings storage facility. Average
feed grade would be estimated at approximately 1.0 to 1.4 g/t of
gold, adding 45,000 to 65,000 ounces of gold production per year in
addition to gold and silver production from the existing processing
plant.
Positive exploration results achieved throughout
2021 successfully replaced depletion of mineral reserves for the
first time, as reflected in increased mineral reserves and mineral
resources at year-end, turning the corner for the operation.
Significantly, the expansion of higher-grade veins, both within the
core mine at Zoe and Martina, and outside the core mine at Naty,
extends the Cerro Moro mine life at the current gold equivalent
feed grade and existing throughput rate of approximately 1,100
tonnes per day. Additional high-grade targets identified in 2021
provide a pipeline of opportunities for continued mineral reserves
replacement going forward which supports the plant expansion
opportunity. Lastly, at a higher level of throughput, the Company
may be able to create a greater inventory of mineral resources.
Current exploration budgets are designed to allow for the
replacement of not only mining depletion but the annual addition of
inferred mineral resources for a constant pipeline of high-quality
mineral resources for an ongoing annual conversion to mineral
reserves.
As Cerro Moro’s mineral inventory increases, the
Company will evaluate its options for alternative sources of power,
which include a connection to the grid and wind power. Both options
are expected to improve costs and further reduce GHG emissions,
thereby accelerating the achievement of the Company’s 1.5ºC
science-based carbon emissions reduction target.
The transition of Cerro Moro from high-cost,
diesel-generated electricity to wind power is the most attractive
and compelling of several viable GHG reduction options. The
conversion of approximately 50% of Cerro Moro's electricity
requirements from diesel to wind power would meet the GHG emission
reductions required between now and 2030 to achieve the Company's
1.5ºC science-based target. Further, it is expected that the
transition to wind power would reduce operating costs, expand
mineral reserves and mine life. A detailed evaluation, including a
third-party feasibility study of this opportunity is underway. The
third-party study to finalize the Company's evaluation of wind
power indicates there should be a sufficient and sustainable supply
of power as the Cerro Moro area of southern Argentina is considered
one of the best on-shore locations in the world for wind energy.
The results of the alternative power analysis will be considered in
the plant expansion pre-feasibility and heap leach studies to
explore synergies between the projects.
The objective at Cerro Moro is to create a
sustainable ten-year production runway of at least 160,000 GEO(2)
per year, and up to 200,000 GEO(2) per year. If the Company were to
develop both the plant expansion and heap leach projects, which
represent significant upside opportunities, along with conversion
of the exploration targets to mineral resources, Cerro Moro could
produce at least 200,000 GEO(2) per year.
MARA Project Advances
The MARA Joint Venture held by the Company
(56.25%), Glencore International AG (25%) and Newmont Corporation
(18.75%) continues to advance engagement with local communities and
stakeholders, and progress the feasibility study and the permitting
process. The pending feasibility study will provide updated mineral
reserves, production and project capital cost estimates, and is
being overseen by the Technical Committee comprised of members of
the three joint venture companies. The engineering effort for the
feasibility study is expected to be substantially completed by the
end of 2022 and the finalized report in the first half of 2023.
MARA is the combined project comprised of the
Agua Rica site, Alumbrera site, as well as the Alumbrera plant and
ancillary buildings and facilities, and will rely on processing ore
from the Agua Rica mine at the Alumbrera plant. The project design
minimizes the environmental footprint of the project, incorporating
the input of local stakeholders. MARA is planned to be a
multi-decade, low-cost copper-gold operation with annual production
in the first ten years of 556 million pounds of copper
equivalent(8) and a life of mine annual production of 469 million
pounds of copper equivalent on a 100% basis. MARA will be among the
top 25 copper producers in the world when in production, and is one
of the lowest capital-intensity copper projects globally.
Work during the second quarter of 2022 focused
on continuing the progress made during 2021: advancing the
feasibility study engineering, mine design and planning,
metallurgical test-work and geotechnical drilling campaigns, other
fieldwork at site, baseline social and environmental studies, as
well as permitting and working with local stakeholders. The work
continues, with the drilling campaign and other fieldwork now
covering the Agua Rica mine infrastructure and is expected to be
completed by the end of fourth quarter of 2022.
The Company is also planning to perform deep
drill holes in 2022 to check the extension of high-grade
chalcopyrite mineralization that could potentially unlock a pit
expansion of Agua Rica, as well as to test for deep extensions of
mineralization in the hypogene area of the porphyry, given the
deposit is open at depth and relatively unexplored beyond the
supergene zone.
The metallurgical test program is now concluding
and the results are well aligned with previous results and
expectations, with indicative improvements to concentrate grades
and mass pull. Pilot plant investigations have also been completed
and have generated samples of final concentrate and process plant
tailings for third party testing and equipment sizing by the
various major equipment vendors.
The MARA project represents a significant
strategic value opportunity and a solid development and growth
project. The Company intends to pursue all available avenues to
continue to advance and unlock its value through its controlling
interest.
EXPLORATION
During the second quarter, exploration drilling
and other field activities were carried out as planned, with only
minor COVID-related impacts to activities, most notably analytical
laboratory delays, which are expected to improve in the coming
months as COVID-related backlogs are expected to decrease.
The Company is continuing to advance its
regional exploration projects, with particular focus being placed
on Jacobina and Lavra Velha, which currently represent the best
opportunities for advancement of the goals of the generative
exploration program. Drilling activities continued in the second
quarter in Brazil at Lavra Velha and Jacobina Norte, as well as at
Ivolândia and Borborema. Field activities also advanced at the
Company’s Colider and Arenopolis projects, with collection of soil
and rock samples and geological mapping at several targets.
Exploration in Chile in the second quarter
included surface evaluation and target development on several
early-stage Yamana projects in several mineral belts, evaluation of
select third-party opportunities, and ongoing regional targeting
efforts in a number of districts. Surface samples collected during
the quarter across all projects in Chile totaled 744 rock and 130
soil samples. Ninety-six days of geological mapping and field
activities related to property reviews were completed. Two new
areas have been covered by exploration concessions based on the
generative work.
In Argentina, field work in the second quarter
continued at the Companies Las Flechas property, including
collection of 426 soil and 39 rock samples, geological mapping and
alteration studies of key areas associated with breccia-related
high-sulphidation epithermal gold and porphyry copper-gold targets.
Soil and rock anomalies have defined excellent targets in
preparation for drilling planned for the first quarter 2023.
Additional exploration work conducted in Argentina during the
second quarter included surface evaluation and target development
on several early-stage Yamana projects, regional targeting programs
in select mineral belts and mining-friendly jurisdictions, and
evaluation of third party properties.
At Monument Bay, Manitoba, results from the
recently-completed deep drilling program are being evaluated with
planning for the next steps for the project ongoing. Exploration
drilling continued at the recently-acquired, advanced Wasamac
property, in the Abitibi-Témiscamingue region, Quebec, where
ongoing infill drilling continues to improve confidence and
demonstrate the wide, consistent nature of mineralization at the
Wasa deposit, and ongoing exploration drilling continues to
intercept important zones of mineralization outside of known
resources. Drilling and other field activities on the Francoeur
property are planned to begin in the third quarter. The 2022
planned field program was initiated on the recently developed
Orogen Royalties Inc. Nevada Alliance and Raven-Callaghan property
option. Data compilation work was started on Yamana’s Quito
property, Nevada.
BUSINESS COMBINATION WITH GOLD
FIELDS
On May 31, 2022, Gold Fields and Yamana
announced that they had entered into a definitive arrangement
agreement (the “Arrangement Agreement”), under which Gold Fields
will acquire all of the outstanding common shares of Yamana
(“Yamana Shares”) pursuant to a plan of arrangement under the
Canada Business Corporations Act (the “Transaction”).
Under the terms of the Transaction, among other
things, all of the outstanding Yamana Shares will be exchanged at a
ratio of 0.6 of an ordinary share in Gold Fields (each whole share,
a “Gold Fields Share”) or 0.6 of a Gold Fields American depositary
share (each whole American depositary share, a “Gold Fields ADS”)
for each Yamana Share.
The Transaction implies a valuation for Yamana
of US$6.7 billion and represents a premium of 33.8% to the 10-day
Volume-Weighted Average Price (“VWAP”) of Yamana’s Shares of US$
5.201 on Friday, May 27, 2022, being the last trading day on the
NYSE prior to the date of the announcement, based on the 10-day
VWAP of Gold Fields ADSs of US$ 11.592. Upon closing of the
Transaction, it is anticipated that Gold Fields Shareholders and
Yamana Shareholders will own approximately 61% and 39% of the
combined company, respectively.
For further information, please refer to the May
31, 2022 press release “Gold Fields to acquire Yamana Gold - a
combination for long-term value creation focused on quality growth,
financial discipline and shareholder returns" and the full text of
the Arrangement Agreement, both available under Yamana’s profile on
SEDAR at www.sedar.com. Further details will be provided upon the
filing of the Management Information Circular related to Yamana’s
proposed shareholder meeting to seek approval for the Transaction,
which is expected to be filed during the third quarter, with the
Transaction expected to close in the fourth quarter.
FINANCIAL SUMMARY AND KEY
STATISTICS
Key financial and operating statistics for the
second quarter 2022 are outlined in the following tables.
|
(In millions of United States Dollars, except for per share and per
unit amounts) |
Three months ended June 30 |
|
|
2022 |
|
|
2021 |
|
|
Revenue |
$ |
485.6 |
|
$ |
437.4 |
|
| Cost of sales excluding
depletion, depreciation and amortization(7) |
|
(192.7 |
) |
|
(186.5 |
) |
| Depletion, depreciation and
amortization |
|
(110.8 |
) |
|
(108.6 |
) |
| Total cost of sales(7) |
|
(303.5 |
) |
|
(295.1 |
) |
| Mine operating earnings |
|
182.1 |
|
|
142.3 |
|
| General and administrative
expenses |
|
(23.4 |
) |
|
(17.0 |
) |
| Exploration and evaluation
expenses |
|
(11.5 |
) |
|
(7.8 |
) |
| Net earnings (loss)
attributable to Yamana equity holders |
|
72.1 |
|
|
(43.9 |
) |
| Net earnings (loss)(3) per
share - basic and diluted(i) |
|
0.07 |
|
|
(0.05 |
) |
| Cash flow from operating
activities |
|
187.8 |
|
|
153.5 |
|
| Cash flow from operating
activities before changes in non-cash working capital(ii) |
|
195.9 |
|
|
167.8 |
|
| Revenue per ounce of gold |
$ |
1,869 |
|
$ |
1,817 |
|
| Revenue per ounce of
silver |
$ |
22.25 |
|
$ |
25.96 |
|
| Average realized gold price
per ounce(1) |
$ |
1,869 |
|
$ |
1,817 |
|
| Average
realized silver price per ounce(1) |
$ |
22.25 |
|
$ |
26.05 |
|
(i) For the three months
ended June 30, 2022, the weighted average number of shares
outstanding was 961,060 thousand (basic) and 962,403 thousand
(diluted).(ii) Net change in working capital movement was a cash
outflow of $8.1 million for the three months ended June 30,
2022.
Reconciliation of Net Earnings
(Loss)(3) to Adjusted Net
Earnings(1)(3)
|
(In millions of United States Dollars, except per share amounts,
totals may not add due to rounding) |
Three months ended June 30 |
|
|
2022 |
|
|
2021 |
|
|
Net earnings (loss)(3) |
$ |
72.1 |
|
$ |
(43.9 |
) |
| |
|
|
|
Adjustments(3) |
|
|
|
Non-cash net foreign exchange (gains) losses |
$ |
(12.0 |
) |
$ |
11.4 |
|
|
Share-based payments/mark-to-market of deferred share units |
|
3.4 |
|
|
1.2 |
|
|
Mark-to-market losses (gains) on derivative contracts, investments
and other assets and liabilities |
|
0.4 |
|
|
(0.3 |
) |
|
Gain on discontinuation of the equity method of accounting |
|
— |
|
|
(9.2 |
) |
|
Standby and other incremental COVID-19 costs |
|
1.8 |
|
|
12.7 |
|
|
Other provisions, write-downs and adjustments |
|
5.8 |
|
|
5.3 |
|
|
Non-cash tax on unrealized foreign exchange (gains) losses |
|
16.8 |
|
|
(13.4 |
) |
|
Income tax effect of adjustments |
|
(1.2 |
) |
|
(1.5 |
) |
|
One-time tax adjustments |
|
(1.3 |
) |
|
110.7 |
|
| Total
adjustments(3) |
$ |
13.7 |
|
$ |
116.9 |
|
| |
|
|
|
Adjusted net
earnings(1)(3) |
$ |
85.8 |
|
$ |
73.0 |
|
|
|
|
|
| Net earnings
(loss) (3) per
share |
$ |
0.07 |
|
$ |
(0.05 |
) |
| Total
adjustments(3) per
share |
$ |
0.01 |
|
$ |
0.12 |
|
|
Adjusted net earnings
(1)(3) per
share |
$ |
0.09 |
|
$ |
0.08 |
|
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 six months ended June 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.
Second Quarter 2022 Conference
Call
The Company will host a conference call and
webcast on Friday, July 29, 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: |
1817985# |
| 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: |
6565448# |
| |
|
The conference call replay will be available
from 12:00 p.m. EDT on July 29, 2022, until 11:59 p.m. EDT on
August 29, 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
416-815-02201-888-809-0925Email: investor@yamana.com
FTI Consulting (UK Public Relations)Sara Powell
/ Ben Brewerton +44 7931 765 223 / +44 203 727 1000Email:
Yamana.gold@fticonsulting.com
END 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 82.93 for the three months ended
June 30, 2022, and 68.01 for the three months ended June 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 $213.8 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 $12.7 million and $20.9 million of
COVID-19-related costs incurred in the three and six months ended
June 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. |
|
|
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS: This news release contains or incorporates by reference
“forward-looking statements” and “forward-looking information”
under applicable Canadian securities legislation and within the
meaning of the United States Private Securities Litigation Reform
Act of 1995. Forward-looking information includes, but is not
limited to, information with respect to the Company’s strategy,
plans or future financial or operating performance, 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
RESOURCESThis 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, 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. 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
|
Cash Cost & AISC Reconciliation - Total |
For the three months ended June 30,
2022 |
For the three months ended June 30, 2021 |
|
(In millions of US Dollars except GEO sold and per GEO sold
amounts) |
|
Total |
|
|
TotalGEO |
|
Non-Sustaining |
|
Total |
|
|
Total GEO |
|
Non-Sustaining |
|
Cost of sales excluding
DDA(7) |
$ |
192.7 |
|
$ |
192.7 |
|
$ |
— |
$ |
186.5 |
|
$ |
186.5 |
|
$ |
— |
|
DDA |
|
110.8 |
|
|
110.8 |
|
|
— |
|
108.6 |
|
|
108.6 |
|
|
— |
|
Total cost of sales(7) |
$ |
303.5 |
|
$ |
303.5 |
|
$ |
— |
$ |
295.1 |
|
$ |
295.1 |
|
$ |
— |
| DDA |
|
(110.8 |
) |
|
(110.8 |
) |
|
— |
|
(108.6 |
) |
|
(108.6 |
) |
|
— |
| Standby
and other incremental COVID-19 costs(7) |
|
(1.8 |
) |
|
(1.8 |
) |
|
— |
|
(12.7 |
) |
|
(12.7 |
) |
|
— |
|
Total cash costs |
$ |
190.9 |
|
$ |
190.9 |
|
$ |
— |
$ |
173.8 |
|
$ |
173.8 |
|
$ |
— |
| AISC adjustments: |
|
|
|
|
|
|
|
General and administrative expenses |
|
23.4 |
|
|
23.4 |
|
|
— |
|
17.0 |
|
|
17.0 |
|
|
— |
|
Community costs in other operating expenses |
|
2.2 |
|
|
2.2 |
|
|
— |
|
1.1 |
|
|
1.1 |
|
|
— |
|
Reclamation & remediation - accretion & amortization |
|
8.6 |
|
|
6.2 |
|
|
2.4 |
|
9.0 |
|
|
7.1 |
|
|
1.8 |
|
Exploration capital expenditures |
|
19.2 |
|
|
9.2 |
|
|
10.0 |
|
17.2 |
|
|
9.6 |
|
|
7.6 |
|
Exploration and evaluation expenses |
|
11.5 |
|
|
0.9 |
|
|
10.6 |
|
7.8 |
|
|
0.7 |
|
|
7.2 |
|
Sustaining capital expenditures |
|
42.1 |
|
|
42.1 |
|
|
— |
|
46.1 |
|
|
46.1 |
|
|
— |
|
Leases (IFRS 16 Adjustment) |
|
7.0 |
|
|
7.0 |
|
|
— |
|
5.7 |
|
|
5.7 |
|
|
— |
|
Total AISC |
|
$ |
281.9 |
|
|
|
$ |
261.0 |
|
|
| GEO
sold(2) |
|
|
259,989 |
|
|
|
|
241,481 |
|
|
| |
|
|
|
|
|
|
| Cost of sales
excluding DDA per GEO sold(7) |
|
$ |
741 |
|
|
|
$ |
772 |
|
|
| DDA per GEO
sold |
|
$ |
426 |
|
|
|
$ |
450 |
|
|
| Total cost of sales
per GEO sold(7) |
|
$ |
1,168 |
|
|
|
$ |
1,222 |
|
|
| Cash costs per GEO
sold |
|
$ |
734 |
|
|
|
$ |
720 |
|
|
|
AISC per GEO sold |
|
$ |
1,084 |
|
|
|
$ |
1,081 |
|
|
|
Cash Cost & AISC Reconciliation - Total |
For the six months endedJune 30,
2022 |
For the six months ended June 30, 2021 |
|
(In millions of US Dollars except GEO and per GEO amounts) |
|
Total |
|
|
TotalGEO |
|
Non-sustaining |
|
Total |
|
|
Total GEO |
|
Non-Sustaining |
|
Cost of sales excluding
DDA(7) |
$ |
371.9 |
|
$ |
371.9 |
|
$ |
— |
$ |
358.6 |
|
$ |
358.6 |
|
$ |
— |
|
DDA |
|
219.6 |
|
|
219.6 |
|
|
— |
|
209.1 |
|
|
209.1 |
|
|
— |
|
Total cost of sales(7) |
$ |
591.5 |
|
$ |
591.5 |
|
$ |
— |
$ |
567.7 |
|
$ |
567.7 |
|
$ |
— |
| DDA |
|
(219.6 |
) |
|
(219.6 |
) |
|
— |
|
(209.1 |
) |
|
(209.1 |
) |
|
— |
| Standby
and other incremental COVID-19 costs(7) |
|
(6.5 |
) |
|
(6.5 |
) |
|
— |
|
(20.9 |
) |
|
(20.9 |
) |
|
— |
|
Total cash costs |
$ |
365.4 |
|
$ |
365.4 |
|
$ |
0.0 |
$ |
337.7 |
|
$ |
337.7 |
|
$ |
0.0 |
| AISC adjustments: |
|
|
|
|
|
|
|
General and administrative expenses |
|
46.5 |
|
|
46.5 |
|
|
— |
|
35.3 |
|
|
35.3 |
|
|
— |
|
Community costs in other operating expenses |
|
3.9 |
|
|
3.9 |
|
|
— |
|
2.3 |
|
|
2.3 |
|
|
— |
|
Reclamation & remediation - accretion & amortization |
|
16.7 |
|
|
12.8 |
|
|
3.9 |
|
17.1 |
|
|
13.4 |
|
|
3.7 |
|
Exploration capital expenditures |
|
35.1 |
|
|
16.9 |
|
|
18.2 |
|
33.2 |
|
|
17.7 |
|
|
15.5 |
|
Exploration and evaluation expenses |
|
16.6 |
|
|
1.7 |
|
|
14.9 |
|
13.9 |
|
|
1.3 |
|
|
12.6 |
|
Sustaining capital expenditures |
|
78.2 |
|
|
78.2 |
|
|
— |
|
88.3 |
|
|
88.3 |
|
|
— |
|
Leases (IFRS 16 Adjustment) |
|
14.0 |
|
|
14.0 |
|
|
— |
|
10.4 |
|
|
10.4 |
|
|
— |
|
Total AISC |
|
$ |
539.4 |
|
|
|
$ |
506.4 |
|
|
| GEO
sold(2) |
|
|
497,599 |
|
|
|
|
476,215 |
|
|
| Cost of sales
excluding DDA per GEO sold(7) |
|
$ |
747 |
|
|
|
$ |
753 |
|
|
| DDA per GEO
sold |
|
$ |
441 |
|
|
|
$ |
439 |
|
|
| Total cost of sales
per GEO sold(7) |
|
$ |
1,189 |
|
|
|
$ |
1,192 |
|
|
| Cash costs per GEO
sold |
|
$ |
734 |
|
|
|
$ |
709 |
|
|
|
AISC per GEO sold |
|
$ |
1,084 |
|
|
|
$ |
1,064 |
|
|
| Cash
Cost & AISC Reconciliation - Operating Segments |
For the three months ended June 30, 2022 |
|
(In millions of US Dollars except GEO sold and per GEO sold
amounts) |
|
Total |
|
|
Canadian MalarticGEO |
|
|
JacobinaGEO |
|
|
Cerro MoroGEO |
|
|
El PeñónGEO |
|
|
Minera FloridaGEO |
|
|
Corporate & Non-Sustaining |
|
|
Cost of sales excluding DDA |
$ |
192.7 |
|
$ |
64.9 |
|
$ |
27.5 |
|
$ |
41.8 |
|
$ |
40.1 |
|
$ |
18.4 |
|
$ |
— |
|
|
DDA |
|
110.8 |
|
|
41.9 |
|
|
14.6 |
|
|
19.8 |
|
|
20.1 |
|
|
11.9 |
|
|
2.5 |
|
|
Total cost of sales |
$ |
303.5 |
|
$ |
106.8 |
|
$ |
42.1 |
|
$ |
61.6 |
|
$ |
60.2 |
|
$ |
30.3 |
|
$ |
2.5 |
|
| DDA |
|
(110.8 |
) |
|
(41.9 |
) |
|
(14.6 |
) |
|
(19.8 |
) |
|
(20.1 |
) |
|
(11.9 |
) |
|
(2.5 |
) |
| Standby
and other incremental COVID-19 costs(7) |
|
(1.8 |
) |
|
(0.7 |
) |
|
— |
|
|
(0.3 |
) |
|
(0.8 |
) |
|
— |
|
|
— |
|
|
Total cash costs |
$ |
190.9 |
|
$ |
64.2 |
|
$ |
27.5 |
|
$ |
41.5 |
|
$ |
39.3 |
|
$ |
18.4 |
|
$ |
— |
|
| AISC adjustments: |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
23.4 |
|
|
1.0 |
|
|
0.2 |
|
|
0.2 |
|
|
0.3 |
|
|
0.3 |
|
|
21.4 |
|
|
Community costs in other operating expenses |
|
2.2 |
|
|
0.1 |
|
|
— |
|
|
1.9 |
|
|
— |
|
|
— |
|
|
0.2 |
|
|
Reclamation & remediation - accretion & amortization |
|
8.6 |
|
|
3.2 |
|
|
0.6 |
|
|
0.5 |
|
|
0.5 |
|
|
1.2 |
|
|
2.6 |
|
|
Exploration capital expenditures |
|
19.2 |
|
|
— |
|
|
2.3 |
|
|
1.6 |
|
|
3.7 |
|
|
1.5 |
|
|
10.1 |
|
|
Exploration and evaluation expenses |
|
11.5 |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
11.4 |
|
|
Sustaining capital expenditures |
|
42.1 |
|
|
12.3 |
|
|
4.7 |
|
|
11.1 |
|
|
9.4 |
|
|
4.4 |
|
|
0.2 |
|
|
Leases (IFRS 16 Adjustment) |
|
7.0 |
|
|
0.2 |
|
|
2.8 |
|
|
1.3 |
|
|
1.3 |
|
|
0.8 |
|
|
0.6 |
|
|
Total AISC |
|
$ |
81.1 |
|
$ |
38.1 |
|
$ |
58.1 |
|
$ |
54.5 |
|
$ |
26.6 |
|
|
| GEO sold(2) |
|
|
88,600 |
|
|
49,238 |
|
|
49,285 |
|
|
55,193 |
|
|
17,672 |
|
|
| Cost of sales excluding DDA
per GEO sold |
|
$ |
732 |
|
$ |
559 |
|
$ |
848 |
|
$ |
727 |
|
$ |
1,043 |
|
|
| DDA per GEO sold |
|
$ |
473 |
|
$ |
297 |
|
$ |
401 |
|
$ |
365 |
|
$ |
675 |
|
|
| Total cost of sales per GEO
sold |
|
$ |
1,205 |
|
$ |
856 |
|
$ |
1,250 |
|
$ |
1,091 |
|
$ |
1,718 |
|
|
| Cash costs per GEO sold |
|
$ |
724 |
|
$ |
559 |
|
$ |
842 |
|
$ |
712 |
|
$ |
1,041 |
|
|
| AISC
per GEO sold |
|
$ |
915 |
|
$ |
775 |
|
$ |
1,181 |
|
$ |
988 |
|
$ |
1,503 |
|
|
| Cash
Cost & AISC Reconciliation - Operating Segments |
For the three months ended June 30, 2021 |
|
(In millions of US Dollars except GEO sold and per GEO sold
amounts) |
|
Total |
|
|
Canadian MalarticGEO |
|
|
JacobinaGEO |
|
|
Cerro MoroGEO |
|
|
El PeñónGEO |
|
|
Minera FloridaGEO |
|
|
Corporate & Non-Sustaining |
|
|
Cost of sales excluding DDA(7) |
$ |
186.5 |
|
$ |
60.5 |
|
$ |
32.0 |
|
$ |
36.6 |
|
$ |
38.4 |
|
$ |
19.0 |
|
$ |
— |
|
|
DDA |
|
108.6 |
|
|
47.8 |
|
|
12.9 |
|
|
12.8 |
|
|
20.9 |
|
|
11.8 |
|
|
2.4 |
|
|
Total cost of sales(7) |
$ |
295.1 |
|
$ |
108.2 |
|
$ |
44.9 |
|
$ |
49.4 |
|
$ |
59.3 |
|
$ |
30.8 |
|
$ |
2.4 |
|
| DDA |
|
(108.6 |
) |
|
(47.8 |
) |
|
(12.9 |
) |
|
(12.8 |
) |
|
(20.9 |
) |
|
(11.8 |
) |
|
(2.4 |
) |
| Standby
and other incremental COVID-19 costs(7) |
|
(12.7 |
) |
|
(0.8 |
) |
|
(0.5 |
) |
|
(8.5 |
) |
|
(1.3 |
) |
|
(1.6 |
) |
|
— |
|
|
Total cash costs |
$ |
173.8 |
|
$ |
59.6 |
|
$ |
31.5 |
|
$ |
28.1 |
|
$ |
37.1 |
|
$ |
17.5 |
|
$ |
— |
|
| AISC adjustments: |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
17.0 |
|
|
0.9 |
|
|
0.2 |
|
|
0.2 |
|
|
0.2 |
|
|
0.3 |
|
|
15.2 |
|
|
Community costs in other operating expenses |
|
1.1 |
|
|
0.1 |
|
|
0.1 |
|
|
0.7 |
|
|
— |
|
|
— |
|
|
0.2 |
|
|
Reclamation & remediation - accretion & amortization |
|
9.0 |
|
|
4.3 |
|
|
0.4 |
|
|
0.5 |
|
|
0.6 |
|
|
1.2 |
|
|
2.0 |
|
|
Exploration capital expenditures |
|
17.2 |
|
|
— |
|
|
2.1 |
|
|
1.8 |
|
|
4.8 |
|
|
1.0 |
|
|
7.5 |
|
|
Exploration and evaluation expenses |
|
7.8 |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.8 |
|
|
Sustaining capital expenditures |
|
46.1 |
|
|
20.8 |
|
|
3.3 |
|
|
8.4 |
|
|
9.1 |
|
|
4.2 |
|
|
0.3 |
|
|
Leases (IFRS 16 Adjustment) |
|
5.7 |
|
|
0.2 |
|
|
1.6 |
|
|
1.4 |
|
|
1.0 |
|
|
1.0 |
|
|
0.5 |
|
|
Total AISC |
|
$ |
85.9 |
|
$ |
39.3 |
|
$ |
41.1 |
|
$ |
52.8 |
|
$ |
25.1 |
|
|
| GEO sold(2) |
|
|
94,335 |
|
|
47,696 |
|
|
27,443 |
|
|
50,136 |
|
|
21,871 |
|
|
| Cost of sales excluding DDA
per GEO sold(7) |
|
$ |
641 |
|
$ |
670 |
|
$ |
1,335 |
|
$ |
766 |
|
$ |
869 |
|
|
| DDA per GEO sold |
|
$ |
507 |
|
$ |
271 |
|
$ |
467 |
|
$ |
417 |
|
$ |
540 |
|
|
| Total cost of sales per GEO
sold(7) |
|
$ |
1,147 |
|
$ |
941 |
|
$ |
1,802 |
|
$ |
1,183 |
|
$ |
1,409 |
|
|
| Cash costs per GEO sold |
|
$ |
632 |
|
$ |
660 |
|
$ |
1,025 |
|
$ |
740 |
|
$ |
798 |
|
|
| AISC
per GEO sold |
|
$ |
911 |
|
$ |
824 |
|
$ |
1,499 |
|
$ |
1,053 |
|
$ |
1,147 |
|
|
| Cash
Cost & AISC Reconciliation - Operating Segments |
For the six months ended June 30, 2022 |
|
(In millions of US Dollars except GEO and per GEO amounts) |
|
Total |
|
|
MalarticGEO |
|
JacobinaGEO |
|
Cerro MoroGEO |
|
El PeñónGEO |
|
Minera FloridaGEO |
|
Corporate & Non-Sustaining |
|
|
Cost of sales excluding DDA |
$ |
371.9 |
|
$ |
126.6 |
|
$ |
53.5 |
|
$ |
82.6 |
|
$ |
77.5 |
|
$ |
31.7 |
|
$ |
— |
|
|
DDA |
|
219.6 |
|
|
83.8 |
|
|
28.7 |
|
|
40.4 |
|
|
38.9 |
|
|
22.9 |
|
|
4.9 |
|
|
Total cost of sales |
$ |
591.5 |
|
$ |
210.4 |
|
$ |
82.2 |
|
$ |
123.0 |
|
$ |
116.4 |
|
$ |
54.6 |
|
$ |
4.9 |
|
| DDA |
|
(219.6 |
) |
|
(83.8 |
) |
|
(28.7 |
) |
|
(40.4 |
) |
|
(38.9 |
) |
|
(22.9 |
) |
|
(4.9 |
) |
| Standby
and other incremental COVID-19 costs(7) |
|
(6.5 |
) |
|
(1.2 |
) |
|
(1.3 |
) |
|
(1.4 |
) |
|
(2.4 |
) |
|
(0.2 |
) |
|
— |
|
|
Total cash costs |
$ |
365.4 |
|
$ |
125.4 |
|
$ |
52.2 |
|
$ |
81.2 |
|
$ |
75.1 |
|
$ |
31.5 |
|
$ |
— |
|
| AISC adjustments: |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
46.5 |
|
|
1.9 |
|
|
0.4 |
|
|
0.2 |
|
|
0.3 |
|
|
0.3 |
|
|
43.4 |
|
|
Community costs in other operating expenses |
|
3.9 |
|
|
0.4 |
|
|
0.1 |
|
|
3.4 |
|
|
— |
|
|
— |
|
|
— |
|
|
Reclamation & remediation - accretion & amortization |
|
16.7 |
|
|
7.1 |
|
|
1.3 |
|
|
0.8 |
|
|
1.1 |
|
|
2.2 |
|
|
4.2 |
|
|
Exploration capital expenditures |
|
35.1 |
|
|
— |
|
|
4.4 |
|
|
3.1 |
|
|
6.3 |
|
|
3.1 |
|
|
18.2 |
|
|
Exploration and evaluation expenses |
|
16.6 |
|
|
0.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
16.4 |
|
|
Sustaining capital expenditures |
|
78.2 |
|
|
21.5 |
|
|
9.2 |
|
|
20.0 |
|
|
19.6 |
|
|
7.4 |
|
|
0.5 |
|
|
Leases (IFRS 16 Adjustment) |
|
14.0 |
|
|
0.3 |
|
|
5.4 |
|
|
2.7 |
|
|
2.7 |
|
|
1.7 |
|
|
1.2 |
|
|
Total AISC |
|
$ |
156.8 |
|
$ |
73.0 |
|
$ |
111.4 |
|
$ |
105.1 |
|
$ |
46.2 |
|
|
| GEO sold(2) |
|
|
166,914 |
|
|
95,928 |
|
|
96,653 |
|
|
105,852 |
|
|
32,252 |
|
|
| Cost of sales excluding DDA
per GEO sold |
|
$ |
759 |
|
$ |
558 |
|
$ |
855 |
|
$ |
732 |
|
$ |
982 |
|
|
| DDA per GEO sold |
|
$ |
502 |
|
$ |
299 |
|
$ |
417 |
|
$ |
368 |
|
$ |
711 |
|
|
| Total cost of sales per GEO
sold |
|
$ |
1,260 |
|
$ |
858 |
|
$ |
1,272 |
|
$ |
1,099 |
|
$ |
1,693 |
|
|
| Cash costs per GEO sold |
|
$ |
751 |
|
$ |
545 |
|
$ |
840 |
|
$ |
709 |
|
$ |
974 |
|
|
| AISC
per GEO sold |
|
$ |
939 |
|
$ |
761 |
|
$ |
1,152 |
|
$ |
992 |
|
$ |
1,430 |
|
|
| Cash
Cost & AISC Reconciliation - Operating Segments |
For the six months ended June 30, 2021 |
|
(In millions of US Dollars except GEO and per GEO amounts) |
Total |
|
MalarticGEO |
|
JacobinaGEO |
|
Cerro MoroGEO |
|
El PeñónGEO |
|
Minera FloridaGEO |
|
Corporate & Non-Sustaining |
|
|
Cost of sales excluding DDA(7) |
$ |
358.6 |
|
$ |
113.5 |
|
$ |
59.9 |
|
$ |
68.8 |
|
$ |
75.9 |
|
$ |
40.5 |
|
$ |
— |
|
|
DDA |
|
209.1 |
|
|
89.6 |
|
|
24.5 |
|
|
26.1 |
|
|
40.9 |
|
|
23.2 |
|
|
4.8 |
|
|
Total cost of sales(7) |
$ |
567.7 |
|
$ |
203.1 |
|
$ |
84.4 |
|
$ |
94.9 |
|
$ |
116.8 |
|
$ |
63.7 |
|
$ |
4.8 |
|
| DDA |
|
(209.1 |
) |
|
(89.6 |
) |
|
(24.5 |
) |
|
(26.1 |
) |
|
(40.9 |
) |
|
(23.2 |
) |
|
(4.8 |
) |
| Standby
and other incremental COVID-19 costs(7) |
|
(20.9 |
) |
|
(1.4 |
) |
|
(0.8 |
) |
|
(13.3 |
) |
|
(2.7 |
) |
|
(2.7 |
) |
|
— |
|
|
Total cash costs |
$ |
337.7 |
|
$ |
112.1 |
|
$ |
59.1 |
|
$ |
55.5 |
|
$ |
73.2 |
|
$ |
37.8 |
|
$ |
— |
|
| AISC adjustments: |
|
|
|
|
|
|
|
|
General and administrative expenses |
|
35.3 |
|
|
1.7 |
|
|
0.3 |
|
|
0.2 |
|
|
0.2 |
|
|
0.3 |
|
|
32.6 |
|
|
Community costs in other operating expenses |
|
2.3 |
|
|
0.2 |
|
|
0.2 |
|
|
1.7 |
|
|
— |
|
|
— |
|
|
0.2 |
|
|
Reclamation & remediation - accretion & amortization |
|
17.1 |
|
|
7.9 |
|
|
0.8 |
|
|
1.1 |
|
|
1.1 |
|
|
2.4 |
|
|
3.8 |
|
|
Exploration capital expenditures |
|
33.2 |
|
|
— |
|
|
3.4 |
|
|
3.6 |
|
|
8.6 |
|
|
2.1 |
|
|
15.5 |
|
|
Exploration and evaluation expenses |
|
13.9 |
|
|
0.1 |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
13.7 |
|
|
Sustaining capital expenditures |
|
88.3 |
|
|
40.3 |
|
|
6.0 |
|
|
15.2 |
|
|
18.2 |
|
|
8.1 |
|
|
0.5 |
|
|
Leases (IFRS 16 Adjustment) |
|
10.4 |
|
|
0.4 |
|
|
2.6 |
|
|
2.7 |
|
|
2.1 |
|
|
1.7 |
|
|
0.9 |
|
|
Total AISC |
|
$ |
162.7 |
|
$ |
72.4 |
|
$ |
80.0 |
|
$ |
103.5 |
|
$ |
52.4 |
|
|
| GEO sold(2) |
|
|
182,528 |
|
|
90,655 |
|
|
62,319 |
|
|
96,144 |
|
|
44,569 |
|
|
| Cost of sales excluding DDA
per GEO sold(7) |
|
$ |
622 |
|
$ |
660 |
|
$ |
1,104 |
|
$ |
790 |
|
$ |
909 |
|
|
| DDA per GEO sold |
|
$ |
491 |
|
$ |
270 |
|
$ |
419 |
|
$ |
426 |
|
$ |
520 |
|
|
| Total cost of sales per GEO
sold(7) |
|
$ |
1,113 |
|
$ |
930 |
|
$ |
1,523 |
|
$ |
1,215 |
|
$ |
1,429 |
|
|
| Cash costs per GEO sold |
|
$ |
614 |
|
$ |
652 |
|
$ |
890 |
|
$ |
762 |
|
$ |
849 |
|
|
| AISC
per GEO sold |
|
$ |
892 |
|
$ |
798 |
|
$ |
1,283 |
|
$ |
1,077 |
|
$ |
1,175 |
|
|
NET FREE CASH FLOW AND FREE CASH FLOW BEFORE
DIVIDENDS AND DEBT REPAYMENTS
The Company uses the financial measures "Net
Free Cash Flow" and "Free Cash Flow Before Dividends and Debt
Repayment", which are non-GAAP financial performance measures, to
supplement information in its Consolidated Financial Statements.
Net Free Cash Flow and Free Cash Flow 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 flow capacity to meet
non-discretionary outflows of cash or to meet dividends and debt
repayments. The presentation of Net Free Cash Flow and Free Cash
Flow are not meant to be substitutes for the cash flow information
presented in accordance with IFRS, but rather should be evaluated
in conjunction with such IFRS measures. Net Free Cash Flow 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 Flow
further deducts remaining capital expenditures and payments for
lease obligations. Reconciliations of Net Free Cash Flow and Free
Cash Flow are provided below.
|
|
Three months ended June 30 |
|
(In millions of United States Dollars) |
|
2022 |
|
|
2021 |
|
|
Cash flows from operating activities |
$ |
187.8 |
|
$ |
153.5 |
|
| Adjustments to operating cash
flows: |
|
|
|
Amortization of deferred revenue |
|
4.3 |
|
|
4.5 |
|
|
Standby and other incremental COVID-19 costs(7) |
|
1.8 |
|
|
12.7 |
|
| |
|
|
| Non-discretionary items
related to the current period |
|
|
|
Sustaining capital expenditures |
|
(42.1 |
) |
|
(46.1 |
) |
|
Interest paid |
|
(8.4 |
) |
|
(21.8 |
) |
|
Payment of lease liabilities |
|
(5.6 |
) |
|
(4.3 |
) |
|
Cash used in other financing activities |
|
(1.2 |
) |
|
(2.2 |
) |
| Net free cash flow |
$ |
136.6 |
|
$ |
96.3 |
|
| Discretionary and other items
impacting cash flow available for dividends and debt
repayments |
|
|
|
Expansionary and exploration capital expenditures |
|
(79.8 |
) |
|
(47.3 |
) |
|
Cash (used in) from other investing activities |
|
(2.0 |
) |
|
2.0 |
|
|
Effect of foreign exchange of non-USD denominated cash |
|
(1.8 |
) |
|
0.3 |
|
|
Free cash flow before dividends and debt
repayments |
$ |
53.0 |
|
$ |
51.3 |
|
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 June 30, |
2022 |
|
2021 |
|
|
Quantitysold |
|
Revenue per ounce/pound |
Revenue(In millions of US Dollars) |
|
Quantitysold |
|
Revenueper ounce/pound |
Revenue(In millions of US Dollars) |
|
Gold |
232,418 |
oz |
$ |
1,869 |
$ |
434.5 |
|
216,039 |
oz |
$ |
1,817 |
$ |
392.5 |
| Silver |
2,296,791 |
oz |
$ |
22.25 |
|
51.1 |
|
1,731,620 |
oz |
$ |
25.96 |
|
44.9 |
|
Revenue |
|
|
|
$ |
485.6 |
|
|
|
|
$ |
437.4 |
| For the
three months ended June 30, |
2022 |
|
2021 |
|
|
|
Quantitysold |
|
Average RealizedPrice |
Revenue(In millions of US Dollars) |
|
Quantitysold |
|
Average RealizedPrice |
Revenue(In millions of US Dollars) |
|
Gold |
232,418 |
oz |
$ |
1,869 |
$ |
434.5 |
|
216,039 |
oz |
$ |
1,817 |
$ |
392.5 |
|
| |
|
|
|
|
|
|
|
|
|
| Silver |
1,996,791 |
oz |
$ |
22.34 |
|
44.6 |
|
1,431,620 |
oz |
$ |
26.73 |
|
38.3 |
|
| Silver subject to metal sales
agreement* |
300,000 |
oz |
$ |
21.60 |
|
6.5 |
|
300,000 |
oz |
$ |
22.77 |
|
6.8 |
|
| |
2,296,791 |
oz |
$ |
22.25 |
|
|
1,731,620 |
oz |
$ |
26.05 |
|
| Gross
revenue |
|
|
|
$ |
485.6 |
|
|
|
|
$ |
437.6 |
|
| (Deduct) add: |
|
|
|
|
|
|
|
|
|
|
Other adjustments |
|
|
|
|
— |
|
|
|
|
|
(0.2 |
) |
|
Revenue |
|
|
|
$ |
485.6 |
|
|
|
|
$ |
437.4 |
|
| For the
six months ended June 30, |
2022 |
|
2021 |
|
|
Quantitysold |
|
Revenueper ounce/pound |
Revenue(In millions of US Dollars) |
|
Quantitysold |
|
Revenue per ounce/pound |
Revenue(In millions of US Dollars) |
|
Gold |
439,746 |
oz |
$ |
1,873 |
$ |
823.8 |
|
419,579 |
oz |
$ |
1,805 |
$ |
757.5 |
| Silver |
4,663,342 |
oz |
$ |
22.23 |
|
103.7 |
|
3,861,806 |
oz |
$ |
26.43 |
|
102.0 |
|
Revenue |
|
|
|
$ |
927.5 |
|
|
|
|
$ |
859.5 |
| For the
six months ended June 30, |
2022 |
|
|
2021 |
|
|
|
Quantitysold |
|
Average RealizedPrice |
Revenue(In millions of US Dollars) |
|
Quantitysold |
|
Average RealizedPrice |
Revenue(In millions of US Dollars) |
|
Gold |
439,746 |
oz |
$ |
1,873 |
$ |
823.8 |
|
|
419,579 |
oz |
$ |
1,805 |
$ |
757.5 |
|
| |
|
|
|
|
|
|
|
|
|
|
Silver |
3,985,254 |
oz |
$ |
23.27 |
|
92.8 |
|
|
3,226,107 |
oz |
$ |
26.46 |
|
85.4 |
|
|
Silver subject to metal sales agreement* |
678,088 |
oz |
$ |
21.25 |
|
14.4 |
|
|
635,699 |
oz |
$ |
22.72 |
|
14.4 |
|
| |
4,663,342 |
oz |
$ |
22.98 |
|
|
3,861,806 |
oz |
$ |
25.84 |
|
| Gross
revenue |
|
|
|
$ |
931.0 |
|
|
|
|
|
$ |
857.3 |
|
|
(Deduct) add: |
|
|
|
|
|
|
|
|
|
|
Deferred revenue adjustment** |
|
|
|
|
(3.5 |
) |
|
|
|
|
|
2.4 |
|
|
Other adjustments |
|
|
|
|
0.0 |
|
|
|
|
|
|
(0.2 |
) |
|
Revenue |
|
|
|
$ |
927.5 |
|
|
|
|
|
$ |
859.5 |
|
*Balance represents metal sold under the metal
sales agreement.**Consideration from the Company's metal sales
agreement is considered variable. Revenue can be subject to
cumulative adjustments when the number of ounces to be delivered
under the agreement changes. During the three months ended March
31, 2022 and 2021, the Company recognized an adjustment to revenue
and finance costs due to a change in the Company's reserve and
resource estimates, and therefore, the number of ounces expected to
be delivered under the life of the 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.
Earnings adjustments for the comparative period reflect both
continuing and discontinued operations.
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.
(All amounts are expressed in United States Dollars unless
otherwise indicated.)
Yamana Gold (TSX:YRI)
Historical Stock Chart
From Dec 2024 to Jan 2025
Yamana Gold (TSX:YRI)
Historical Stock Chart
From Jan 2024 to Jan 2025
