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Yamana Gold (AUY) Reports Preliminary Q2 Production Numbers

·4 min read

Yamana Gold Inc. AUY announced upbeat preliminary second-quarter 2022 operating results with gold equivalent ounces (“GEO”) at 260,960, which indicates an 8% increase from the last-year quarter. This was aided by standout performances by Canadian Malartic, Jacobina, Cerro Moro and El Peñón. The company stated that second-quarter all-in sustaining costs (“AISC”) would be lower than $1,090 per GEO. Backed by the year-to-date operating results, the company believes it is on track to achieve both its production and cost guidance set forth for 2022.
Yamana Gold’s second-quarter production of 260,960 GEOs comprised 232,542 ounces of gold and 2.36 million ounces of silver. This compares favorably with 241,341 GEOs reported in the second quarter of 2021, which included gold production of 217,402 ounces and silver production of 1.63 million ounces.

In the second quarter of 2022, Jacobina delivered a record quarterly production of 49,662 ounces of gold. El Peñón produced 54,068 GEOs, while Canadian Malartic produced 87,186 ounces of gold (50% basis) in the quarter. Meanwhile, Cerro Moro produced 51,906 GEOs. Cerro Moro’s production numbers so far this year mark its highest half-yearly production since 2019.

The company mentioned that it ended the quarter with a cash balance of more than $328 million, aided by strong cash flows during the April to June period.

In February, the company announced that it is maintaining its 2022 production guidance and expects production to exceed 1,000,000 GEOs. AUY anticipates the total cost of sales, cash costs and AISC to be lower than $1,215, $725 and $1,080 per GEO, respectively.

Production at Jacobina is expected to maintain the streak of increasing numbers for the ninth consecutive year. It is anticipated 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. El Peñón is expected to achieve full-year GEO production guidance. The company added that at Canadian Malartic, permitting at the Odyssey project remains on schedule, and construction is on track and within budget. The first production from Odyssey South is expected in the first quarter of 2023.

In May, Gold Fields Limited GFI and Yamana Gold announced that they have entered into a definitive agreement per which Gold Fields would acquire all of the outstanding common shares of Yamana in a deal valued at around $6.7 billion. This will create a top-four global gold major with a diversified portfolio of high-quality, long-life flagship assets across some of the world’s most established gold mining jurisdictions with tangible near- and long-term growth opportunities.

The combined group will be headquartered in Johannesburg with operations across South Africa, Ghana, Australia, Canada and South America. Yamana is a strategic fit for Gold Fields, with its high-quality, diversified portfolio of long-life assets located in mining-friendly rules-based jurisdictions across the Americas.

The combined group will benefit from the near-term growth of Gold Fields’ Salares Norte and South Deep mines, longer-term growth from Yamana’s Wasamac, Malartic Odyssey and MARA projects, and additional opportunities in Yamana’s high-quality exploration pipeline. The transaction is expected to close in the second half of 2022, subject to the satisfaction of other customary closing conditions. In a recent development, Gold Fields has promised higher dividends and a Toronto Stock Exchange listing to sweeten the proposed takeover.

Price Performance

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Shares of Yamana Gold have gained 16.3% over the past year against the industry’s decline of 12.8%.

Zacks Rank & Key Picks

Yamana Gold currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Albemarle Corporation ALB and Cabot Corporation CBT, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Albemarle has a projected earnings growth rate of 231.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 112.4% upward in the past 60 days.

Albemarle's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20%. ALB has rallied roughly 10% in a year.

Cabot has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 6% upward in the past 60 days.

Cabot's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%. CBT has risen around 12% in a year.

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