Yamana Gold (AUY, Financial) reported striking results for the second quarter. Its performance during the second quarter was backed by higher production and reduced costs. It managed to produce approximately 331,765 ounces of gold during the second quarter, an increase of nearly 22% as compared to the first quarter 2014. Also, it’s overall sustaining cash costs decreased about 4% to $915 per ounces of gold as against $950 per ounces of gold the corresponding period last year.
The way ahead
Looking ahead, the company expects this strong trend in production to continue in the second-half as well that should drive its top and bottom line performance. Yamana expects the total production for the left half to be above 1.42 million ounces and all-in sustaining co-product cash costs to remain between $900 per ounce and $950 per ounce. It expects its all-in sustaining cash cost by-product to be in the range of $845 per ounce to $875 per ounce.
In addition, CEO Peter Marrone said, "The integration of Canadian Malartic into our portfolio and the expected continued performance from our cornerstone operations has us well positioned to deliver significant value to shareholders as we maximize cash flow and ultimately free cash flow."
Additionally, the company remains on track to maintain a strong production operation and implementing various cost control and reduction measures that should enhance its performance in the second half. Yamana is committed to reset its portfolio of assets such as reduction and containing the operating costs and lowering down its capital expenditure. It also remains on track to focus on its core operation such as obtaining, expanding and mapping up fresh assets that contribute the highest production and enhanced cash flow and leverage its asset portfolio. These strategic moves will certainly drive its growth and performance going forward.
Production expectations
Yamana anticipates its Canadian Malartic plant to yield strong production of gold in the second-half of the year that started its first production a couple of weeks ago. The company expects its Canadian Malartic plant to produce between 510,000 ounces and 530,000 ounces of gold in the remaining quarters for the year. Also, this plant is expected to have by-product all-in sustaining cash costs of only $695 per ounces.
Apart from this, the company is conducting various research activities such as improving the mine plan; optimizing the blasting and drilling techniques in the open pit; reducing general, administrative, and investigation expenditures; and saving the equipment and consumables for decreasing costs. These strategic moves will certainly assist the company to tap many other opportunities and enhance its performance in the future.
Meanwhile, the company is exploring many other potential opportunities that should increase its production in the long run. It has completed the feasibility steady for its Cerro Moro facility. The company expects its Cerro Moro plant to yield healthy production and contribute tremendously to its cash flow in the long run. The company expects first production from its Cerro Moro plant in 2016. In addition, Yamana is also evaluating various other operations such as Gualcamayo and Jacobina in order to enhance its output. It is also carrying a feasibility study at its Agua Rica facility so as to improvise the product values and level of work. It is also exploring many other strategic alliances for Agua Rica facility that should enable the company to maximize its scale of productivity at the plant. Above all, the company is also concentrating on the other aspects such as optimization of its core assets, expansions of the plants, and cost reductions on each of its plans that should certainly uplift its performance and create values for shareholders.
Conclusion
Yamana Gold is undoubtedly making various strategic moves that should enhance its production in the future and yield handsome returns to its shareholders and investors. Its smart moves such as asset optimization and cost reductions are creating strong cash flow for the company. Moreover, the analysts have forecasted CAGR of 16.15% for the next five years that indicate remarkable growth prospects for the company in the coming years. Investors can certainly include the stock that promises a great return going forward.
