Could Cerro Moro Be a Game-Changer for Yamana Gold?


Apr. 22 2018, Updated 10:30 a.m. ET

Yamana Gold’s performance

Yamana Gold’s (AUY) stock has also underperformed the gold miners’ index (GDX) year-to-date by returning -6.6% as of April 17. AUY’s 4Q17 results disappointed, with the company reporting earnings far below analysts’ expectations. Its EPS (earnings per share) were -$0.20, below analysts’ estimate of $0.03. The major factor driving the loss was a $356 million non-cash impairment charge related to the remeasurement of its Gualcamayo mine and related expansion projects in Argentina. Investors are wary of Yamana’s inconsistent operational results.

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AUY’s 1Q18 results

The company plans to release its detailed 1Q18 earnings report on May 2 after the market closes. It’s slated to hold a conference call on May 3.

On March 29, Yamana announced the completion of its previously announced sale of its 50% indirect interest in certain jointly owned exploration properties of the Canadian Malartic Corporation for cash proceeds of $162.5 million.

A Cerro Moro update

Yamana Gold has provided an update on Cerro Moro, which is going forward as planned—both on time and on budget. AUY mentioned that the commissioning and ramp-up schedule of Cerro Moro should enable it to achieve its previous production guidance. Attentive investors should be listening closely to management’s comments during the 1Q18 earnings call.

Yamana’s peers (GDX) are also trying to increase their profitable productions. Barrick Gold’s (ABX) production growth is falling, but Agnico-Eagle Mines (AEM) and Goldcorp (GG) have steadily increased their production profiles due to their strong project pipelines. The upside to Kinross Gold’s (KGC) production growth lies in the Tasiast Phase I and Tasiast Phase II expansions.


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