Among senior and intermediate gold miners (GDX) (GDXJ), Yamana Gold (AUY) is third based on the highest “buy” ratings from the analysts. Yamana Gold is behind Agnico Eagle Mines (AEM) and Newmont Mining (NEM). Yamana Gold has a “buy” rating from 67% of the analysts. Analysts’ views on Yamana Gold changed due to production starting at its Cerro Moro mine. For a detailed analysis of senior and intermediate miners’ ratings, read Wall Street Is Loving these Five Gold Stocks Lately.
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As we highlighted in Will Yamana’s Chapada Mine Sale Improve Shareholder Returns?, on April 15, Yamana Gold announced that it has agreed to sell its fully owned Chapada mine to Lundin Gold (LUNMF) for $1 billion. Due to the transaction, Yamana Gold will increase the annual dividends 100% to $0.04 per share, which implies a yield of 1.6%. In the investor presentation, Yamana Gold also said that “substantial capital” was required to maintain the gold production at Chapada. The redirection of cash flows towards Chapada would have limited opportunities for increased shareholder returns.
Yamana Gold’s Cerro Moro operations have been working well for the company. Going forward, Cerro Moro is a game changer for Yamana Gold. The mine is expected to contribute significantly to Yamana Gold’s production profile and cost reduction. After the full ramp-up in 2019, Yamana Gold’s silver production should triple, while it’s gold (GLD) production should increase ~20% year-over-year.
Read Checking In on Gold Miners Ahead of Their Q1 2019 Results for more on miners’ earnings preview.