Yamana Gold (AUY, Financial) recently reported a 15% increase in copper production and a 9% reduction in copper-related cash costs at Chapada during the quarter. In addition, gold production also matched the production and costs forecasts for the quarter. This cost reduction and improved production highlights the company’s enhanced operations.
El Penon also produced exceptionally on a steady pace. The production at Gualcamayo expanded completely by 56% on year-over-year basis compared to second quarter. Moreover, there’s improvement in the recoveries and Gualcamayo is expected to witness considerable improvements in costs in line with the production with the successful start of the underground conveyor.
Production assets are strong
Canadian Malartic is seen as an exceptional performer with the throughput improvement continued into the successive years coupled with grades enhancements. At Jacobina, there’s improvement in the operations owing to the company’s solid efforts for bringing the operations back on the track from significant losses suffered last year. This mine estimates ramping up to about 130,000 ounces per year.
At Florida, Yamana Gold saw continued production and costs improvement in line with the expectations and turning to be a dependable performer. The assets discussed above have resulted in impressive production in the quarter and enhancements in fourth-quarter production in line with the expectations and further again into complete 2015. Cerro Moro is estimated to further add to the production once up and working.
However, the production at Pilar missed the expectations with a very modest production at significantly higher costs. Going forward, the drill spacing and mine efficiency are improving and the solid exploration activities at the nearby Maria Lazarus deposit highlights that its growth will largely expand the value of Pilar.
Adopting the right strategies
Yamana Gold has made some significant changes to its top management in the efforts to drive integration, unhindered operations, develop efficiencies and expand value at current operations and project developments. These key developments are believed to bring back the company operations on the right track.
Yamana Gold has shifted the carriage of the underground operations at Pilar and Jacobina to its Santiago office and is getting superb results.
At El Penon, Yamana Gold produced approximately 117,000 gold equivalent ounces in-line with the expectations for the second quarter and was affected higher grade for the silver pit, leading to 16% enhancement in silver production. But, Ore production for the quarter declined slightly lesser than the second quarter due to higher dilution than planned in a key mine. However, this is concerning but the gold major has taken some significant measures to lower dilution to planned levels.
Further, much more improvement in gold production coupled with lowered costs is expected in the fourth quarter with silver grade and gold equivalent ounce production estimated to increase by 14%.
There was 12% increase in production and 17% reduction in the costs as compared to the second quarter primarily due to increased throughput, better feed grade and continued company efforts to reduce costs by lowering the supplementary headcount and improvements in process control techniques.
Conclusion
Investors are advised to invest into Yamana Gold Inc. looking at the solid long-term growth prospects indicated by the CAGR for the next 5 years per annum of 16.15% comparable to the industry’s average of 20.88% and expect promising returns in a long run.
