Yamana Gold Upgraded Its Production Guidance



Higher production

Yamana Gold’s (AUY) production for the third quarter was 246,788 ounces, which is an improvement of 11% YoY (year-over-year) and 10% sequentially. The production was higher than management’s expectations for the quarter. The Cerro Moro mine reached commercial production towards the end of the second quarter. The mine had its first full quarter of production in the third quarter. In addition to Cerro Moro, Yamana’s Canadian Malartic mine and Jacobina mine contributed to the annual increase.

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Updated production guidance

Due to Yamana Gold’s higher-than-expected production for the first nine months of the year and the favorable ramp-up of the Cerro Moro mine, the company increased the gold and copper production guidance for 2018. Yamana Gold is guiding for 920,000 ounces of gold production compared to the original 900,000 ounces. The company is guiding for 125 million pounds of copper production compared to 120 million pounds that were initially guided.

However, Yamana Gold reduced the silver guidance from 8.15 million ounces to 7.55 million ounces due to weaker-than-expected silver production from its El Penon mine in the first nine months of the year.

Cerro Moro mine and production boost

In the third quarter, the Cerro Moro mine’s production was 38,000 ounces of gold at an average grade of 16.15 grams per ton and a recovery of 92.5%. The company also mentioned that the Cerro Moro mine is a strong contributor to the overall performance. The mine is seeing a production run rate at a level that’s needed to meet the guidance for 2018 and 2019.

In addition to the favorable near-term production increase, the company also cited exploration projects as being instrumental to the expected increase in resources and reserves.

Yamana Gold’s peers (GDX) are also trying to increase their profitable production. While Barrick Gold’s (ABX) production has fallen, Agnico Eagle Mines (AEM), Newmont Mining (NEM), and Goldcorp (GG) have steadily increased their production with their strong project pipelines. The upside to Kinross Gold’s (KGC) production lies in its Tasiast Phase I and Tasiast Phase II expansions.


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