Yamana Gold Inc. (AUY, Financial) closed week 43 up 8 cents or plus 3.24% to $2.55 per share following third-quarter figures (released Oct. 26) with which the Canadian midtier gold producer beat expectations on adjusted EPS – both on a basic and diluted basis – by 1 cent and on revenue by $3.7 million.
The Canadian miner closed the quarter with an adjusted EPS of approximately 3 cents, a 100% increase year over year, or an adjusted net profit of $24.9 million. This figure came from continuing Yamana’s operations in the third quarter. This income – net of adjustments – is shared between Yamana equity holders for a net profit and investors owning a minority interest stake in the Canadian mining company for a net loss of $2.5 million.
Revenue for the quarter came in at $493.4 million. This was a 6.3% increase from the comparable of 2016, thanks to 3,258 more ounces of gold sold in the third quarter compared to the prior-year quarter, for a total sales volume (including Brio Gold) of 299,588 ounces at an average realized price of $1,278 per ounce of the yellow metal ($1,337 per ounce in the third quarter of 2016), and thanks to a 1.9% increase in the silver sales volume (ounces) to 1.57 million at an average realized silver price of $16.66 per ounce ($19.53 per ounce sold in third-quarter 2016) and to 14.4 more pounds of copper sold in the quarter for a total volume of 36.5 million (ounces) at an average copper price of $2.89 per pound ($2.14 per pound sold in third-quarter 2016).
Compared to the third quarter of 2016, the total production of gold attributable to the company went down nearly 8% to 281,315 in the third quarter. The production of the gray metal went down 160,000 ounces to 1.43 million ounces while the production of copper at Chapada mine increased by 25.3% to a total volume of 37.1 million pounds in the quarter that closed Sept. 30.
On a year-over-year basis, costs were generally lower in the third quarter; the total cost of sales applicable to the yellow metal went down 2.3% to $999 per ounce, the cash cost on a co-product basis was almost flat at $672 per ounce while the all-in sustaining cost on a co-product basis also went down 6.6% to $874 per ounce.
For full fiscal, Yamana has increased its guidance on gold, silver and copper production; the Canadian miner expects a gold production of 960,000 ounces, a silver production of 5 million ounces and a copper production of 125 million pounds.
Concerning expectations on costs for full fiscal 2017, these are unchanged from the previous guidance. Total costs of sales for gold are expected by Yamana “to be above guidance due to higher depletion, depreciation and amortization,” says the company.
A lower precious metal (gold and silver) price per ounce must have impinged on the cash flow from operations that for the quarter that closed Sept. 30 was – before changes in noncash working capital – $135.8 million versus an operating cash flow of $173 million in the prior-year quarter.
As of Sept. 30, Yamana has $125.4 million in cash on hand and securities on a consolidated basis and a line of available credit of $768.2 million.
Yamana has market capitalization of $2.43 billion, a price-book (P/B) ratio of 0.54, a price-sales (P/S) ratio of 1.28 and an EV to EBITDA ratio of -41.20.
Disclosure: I have no positions in Yamana.
