Can Yamana Gold Maintain Its Price Strength in 2018?



Yamana Gold’s price performance

Yamana Gold (AUY) stock has fallen 5.4% YTD (year-to-date) as of February 23, 2018. While in absolute terms that is a loss, on a relative basis, it matches the YTD performance of the VanEck Vectors Gold Miners ETF (GDX). It has outperformed most of its close peers. Intermediate miners (GDXJ) Agnico-Eagle Mines (AEM), Eldorado Gold (EGO), New Gold (NGD), and Iamgold (IAG) have fallen 12.2%, 24.5%, 19.8%, and 6.9%, respectively.

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In 2017, AUY rose 11%. Although the stock fell in the first three quarters of the year due to its weak operational performance, it turned around in the last quarter. The stock rose 28% in the last three months. The major catalyst for this price reversal was the beginning of a large silver mine, Cerro Moro, in 2018. The mine, when it’s up to full capacity in 2019, should help Yamana triple its silver production and increase its gold production by 20% YoY (year-over-year). Cerro Moro could also produce silver and gold at lower costs than the company’s current average costs.

AUY’s recent results

Yamana Gold (AUY) released its 4Q17 earnings on February 16, 2018. The company has a history of disappointing the markets with its weaker-than-expected results and inconsistent operational results. AUY’s 4Q17 results were also disappointing since the company reported a loss that was far below analysts’expectations. Its EPS (earnings per share) was -$0.20, which was below analysts’ estimate of $0.03. The major factor driving the loss was $356 million of non-cash impairment related to the remeasurement of the Gualcamayo mine and related expansion projects in Argentina. Yamana stock fell 10% after its results on February 16, 2018.

Series overview

In this series, we’ll look at Yamana’s recent results as well as what they mean for its prospects. We’ll also discuss the company’s 4Q17 earnings call and management comments. We’ll look at its production and cost performance. Let’s start by looking at the company’s production profile.


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