Yamana Gold Inc. (AUY, Financial) delivered its fourth-quarter and full-year 2016 results on Feb. 16.
The Canadian mid-tier gold producer also provided the market with a valuation of its gold, silver and copper reserves and resources.
The miner generated EPS of one cent, a 200% increase on a year-over-year basis and in line with analysts’ expectations.
During the final quarter of 2016, Yamana Gold produced 319,265 ounces of gold, 1.63 million ounces of silver and 36.9 pounds of copper. The production of gold attributable to the company was lower than in fourth-quarter 2015 due to the sale of its Mercedes mine in the third quarter of 2016.
Cash costs sustained by the miner per ounce of gold and silver produced and per pound of copper produced, on a co-product basis, were $667, $10.07 and $1.44.
All-in sustaining costs per ounce of gold and silver produced and per pound of copper produced, on a co-product basis, were $928, $14.48 and $1.80.
During the last quarter of 2016, the Canadian gold producer sold 324,197 ounces of gold for $1,210 per ounce, 1.62 ounces of silver for $17.17 per ounce and 34.2 pounds of copper for $2.48 per pound. The price realized per ounce of gold, silver and copper sold increased by 9.8%, 17.4% and 9.7% compared to the same quarter of the previous year.
Higher metal prices led to fourth-quarter revenue of $484.4 million, a 10.3% increase from $439.1 million reported in the comparable quarter of 2015.
Total cost of sales of $412.4 million were higher in the quarter compared to the same quarter of 2015, when the miner reported total cost of sales of $389.9 million.
Higher gold, silver and copper prices during the year had a huge positive impact on adjusted earnings and cash flow from ongoing operations.
Yamana  reported 2016 revenue of $1.8 billion, a 5.9% increase on a year-over-year basis, and adjusted earnings from ongoing operations of $43.3 million (or five cents per share), a 167.1% increase from the $64.5 million loss reported in 2015. In 2016, the miner sold 1,188,267 ounces of gold, a 2.2% increase from 2015.
The full-year gross margin and cash flow from ongoing operations increased by 7.5% from $705.5 million in 2015 to $758.7 million in 2016, and by 26.8% from $514.0 million in 2015 to $651.9 million in 2016.
After having considered advance payments on a metal purchase agreement of $64 million, sustaining capital expenditures of $280.5 million and payments for interest and finance expenses of $96.2 million, the net free cash flow for 2016 was $211.2 million, a 21.5% increase from the same figure of 2015.
The 31% increase in sustaining capital expenditures and an increase in expenses for the advancement of projects, along with higher operating costs exacerbated by the adverse effect of stronger local currencies versus the U.S. dollar, caused the AISC to increase.
The AISC per ounce of gold, silver and copper produced – on a co-product basis – increased  6% (6.5% including Brio Gold’s assets), 9.9% and 14.7% on a year-over-year basis.
In 2016, Yamana Gold produced 1,269,015 ounces of gold (up 1.5% from 2015) at an AISC of $911 per ounce, 6.71 million ounces of silver (down 22.2% from 2015) at an AISC of $12.65 per ounce and 115.5 million pounds of copper (down 11.8% from 2015) at an AISC of $2.03 per pound.
The company said the “gold production for 2016 was higher than the comparative period in 2015" due to either producing gold in line with guidance or higher than expected. If it was not for gold production declines at Chapada, Gualcamayo and Minera Florida due to machinery being down, lower mill recovery and throughput, the company would have produced even more gold.
The production of silver in 2016 was impacted by lower grades, but it was in line with the company’s expectations.
At Chapada, broken machinery and bad weather conditions that made it difficult for the workers to mine the metal at higher grades caused a decline in copper production for the year.
As of Dec. 31, 2016, Yamana Gold had 16,680,000 ounces of gold, 80,290,000 ounces of silver and 3,298 million pounds of copper in proven and probable reserves.
As of the fourth quarter, the gold producer had $97.4 million in cash and securities and $1,573.8 million in total long-term debt, of which 39% matures in 2024. The portion that will mature in 2017 is $18.6 million.
Yamana Gold is currently trading at $3.09 per share and has gained 9.96% year to date following the uptrend in the price of gold, which constitutes the main source of the company’s total revenue.
The gold stock is trading at 0.60 times the book value and 7.17 times the Ebitda.
Disclosure: I have no positions in Yamana Gold.
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