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Yamana Gold’s Q1 Results Miss Expectations, Cerro Moro Starts Up

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Yamana’s 1Q18 earnings miss

Yamana Gold (AUY) released its 1Q18 earnings yesterday after the market closed. The company missed analysts’ consensus earnings per share (or EPS) estimate of $0.02, reporting adjusted EPS of $0.01. 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 far below analysts’ expectations.

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Beat on revenues

The company, however, registered a slight beat of $17 million on revenues in 1Q18, which came in at ~$450 million. In after-hours trading, the stock was trading down 1.7%, in sharp contrast to the ~3.9% gain it registered at yesterday’s close.

Yamana’s stock—along with many of its peers’, including Eldorado Gold (EGO), Alamos Gold (AGI), and New Gold (NGD)—was trading higher on the Fed’s calmness about inflation reaching its goal. With inflation picking up, the Fed is still content with its gradual pace of rate hikes. Gold prices (GLD) and, subsequently, gold miners reacted positively to this development.

Gold production exceeded the plan

Yamana’s total attributable gold production for the first quarter came in at 248,088 ounces, and copper production was 30.4 million pounds. The company’s gold production exceeded the plan for the first quarter. Its all-in sustaining costs (or AISC) came in at $714 per gold equivalent ounce (or GEO). Yamana reiterated its production and cost guidance for 2018 at 1,013,000 GEO at AISC of $725–$745 per ounce. These figures imply a significant improvement year-over-year (or YoY). While production would imply growth of 13.6%, AISC reflects an improvement of 11.1% at the midpoint. A major part of these improvements is the start-up of Yamana’s newest mine, Cerro Moro.

We’ll discuss this mine and its economics in the next part of this series.

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