Yamana Gold (AUY, Financial) is expecting strong synergies in the long run. It is anticipating the gold and the commodity markets to improve. Hence, Yamana is engaged in carrying out strategies to make the best use of this opportunity. It is mainly focusing on managing its assets and putting efforts to add value to its core assets. It is largely depending on its cornerstone assets, which it thinks will be key contributors to its goals and plans.
Improving production
The company is pleased to see good production from its mines and with the improving markets, Yamana is looking forward for better financial performance in future. It is mainly counting on Chapada, El Penon, Gualcamayo, Mercedes, Canadian Malartic and Minera Florida and Jacobina out of its production mines. Moreover, there are many underperformers also about which Yamana is concerned but Yamana is largely relying on these above mentioned assets as they contributed well in the case of Cerro Moro in the past and are expected to continue contributing to it. These are expected to offset and mitigate the effect of underperformance of certain assets.
As Yamana is seeing many internal and external opportunities, it is now optimizing its operation to reposition its portfolio. Under this, the company will also be focusing on reducing the overall costs in order to drive better margins and cash flows and as the market moves the company will be altering its portfolio according to it.
Diversification moves
Not only in gold but Yamana is anticipating better results from copper also. It has recently seen a 15% increase in the copper production at Chapada which also resulted in the decrease in the cash costs by 9%. This is a good sign for Yamana and with the further completion of the in-pit crusher, Chapada is expected to perform better. It is also seeing good improvements at its Jacobina operations. At this, Yamana is engaged well in executing its plans for better operations. If it stays in line with its plans, Yamana is expecting increase in the production along with lower costs which will further improve its margins in future.
Yamana is expecting a record production in 2015 which is expected to bring down costs, delivering better margins to it. Cerro Moro is expected continue to perform outstandingly in future as well and be at one of the top priorities of the company.
According to the some analysts the gold prices are expected to remain at the lower end in 2015 as well. Consensus are thinking lower oil prices to be the main reason behind this lower pricing. While USB is anticipating higher gold prices as they are thinking that strength in the dollar and geopolitical fears will boost gold prices.
Conclusion
Now moving on to the fundamentals, the stock doesn’t have a trailing P/E as it is not up to the mark, largely impacted by the soft gold market. But a forward P/E of 30.85 shows string growth in the earnings in the near term. But these trends can trusted as the analysis tells that the gold prices might stay at the lower levels. As of the investors can include Yamana Gold in their portfolio but for the long term, the investors should stay away from the stock.
