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



Cerro Moro starts up

Yamana Gold’s (AUY) newest mine, Cerro Moro in Argentina, has started production. The first ore was fed to the mill on April 25. The start-up of the mine is progressing well, and the milling rates and feed grades are expected to ramp up through the second quarter. Yamana expects the first doré from the operation in May.

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Cerro Moro, a game-changer

Cerro Moro is a very significant operation for Yamana. It’s expected to contribute meaningfully to Yamana’s production growth at costs below the company’s current average costs. Once Cerro Moro fully ramps up in 2019, it should lead Yamana to triple its silver production and increase its gold production by ~20% year-over-year (or YoY). Yamana’s all-in sustaining costs (or AISC) are expected to be less than $600 per ounce of gold. The company is expecting a steep change in cash flows and free cash flows beginning in 2H18 because of the start-up of Cerro Moro.

More details expected

Investors can expect more details from this project on Yamana’s 1Q18 earnings call today.

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), Newmont Mining (NEM), 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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