Yamana Gold Inc. (AUY, Financial) announced Wednesday its preliminary operational results and estimates of consolidated cost for 2016.
The company met expectations on 2016 gold production. The miner produced approximately 1.27 million ounces of gold at co-product cash costs of $666 per ounce and at all-in sustaining costs (AISC) of $914 per ounce. For the full year, the company expected to produce between 1.26 and 1.33 million ounces of gold at co-product cash costs between $635 and $675 per ounce produced.
The total cost of sales per ounce of gold sold is also in line with expectations for the year. The company estimates to have sustained $1,011 per ounce of gold sold.
Silver production was also in line with the company's expectations for 2016. Yamana produced 7 million ounces of silver at co-product cash costs of $8.96 per ounce and at an AISC of $12.64 per ounce.
Yamana exceeded expectations on 2016 copper production.The miner produced 116 million pounds of copper at co-product cash costs of $1.58 per pound and at an AISC of $2.03 per pound. The company expected to produce 110 million pounds of copper.
Yamana could meet production expectations on gold and silver and exceed on copper production expectations due to a majority of the company's mines performing at or above expectations. Strong performances were reported by the Canadian Malartic, Gualcamayo, Jacobina and Brio Gold mines.
At the Chapada and El Peñón mines, the company experienced some operating challenges. At Minera Florida, production slowed down in December due to “collective bargaining agreement negotiations."
On Dec. 23, 2016, Yamana successfully spun off Brio Gold (TSX:BRIO, Financial), for which the miner received 56,304,648 Canadian dollars (approximately $41.85 million). Yamana will maintain exposure to Brio through a retained equity interest. The company said it will continue “to be a significant shareholder of Brio Gold, holding approximately 85% of the issued and outstanding Brio Shares.”
With the spinoff of Brio Gold, the improvement of the mine’s ore grade at Canadian Malartic and Jacobina and the commencement of production at Cerro Moro in 2018, the miner expects to reach a level of operating efficiency that will allow the company to extract the precious metals at lower operating costs over the coming years.
Yamana Gold shares are currently trading around $3.19, up one cent or 0.31% from Wednesday's close.
The gold stock is trading at 0.62 times its book value and 8.07 times its Ebitda.
As of Thursday, 56.25% of analysts suggest to buy shares of Yamana Gold with an average target price of $4.82 per share.
Disclosure: I have no positions in Yamana Gold Inc.or Brio Gold.
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