Shares of Yamana Gold Inc. (AUY, Financial) were 0.46% lower at $2.15 in after-hours trading on Wednesday. The company beat analysts’ expectations on non-GAAP earnings for the first quarter of 2019 by 1 cent, having posted 2 cents per share.
Revenue came in at $407.1 million, down 10.5% from the prior-year quarter and missing consensus estimates by $7.4 million as a result of lower metal prices. The average realized gold price declined 2% to $1,301 per ounce, the average realized silver price fell 8.3% to $15.52 per ounce and the average realized price of copper dropped 7% to $2.91 per pound.
Strong operations boosted the production of gold equivalent to 271,987 ounces, which was up nearly 29% year over year. Production was composed of 235,958 ounces of gold, up 18.2%, and 3.02 million ounces of silver, a 236% increase from the prior-year quarter. Copper production decreased 7.6% to 28.1 million pounds. The red metal contributes about 18 to 19% to total revenue.
Increased production of equivalent gold lowered cash costs by 5.3% to $666 per ounce sold and trimmed the all-in sustaining cost by 6.1% to $930 per ounce.
In addition to lower metal prices, the sharp decline in operating cash flow after changes in non-cash working capital, down 90% year over year, was due to cyclical first-quarter payments.
Yamana said the company's financial situation as of March 31 is strong with $695.4 million in total liquidity, of which 16% is available in cash on hand and securities and 84% in undrawn lines of credit. The net debt is $1.77 billion.
The miner expects to further strength its balance sheet as a result of the sale of its Chapada open-pit, gold-copper mine in Brazil to Lundin Mining Corp. (TSX:LUN). The sale, which is expected to close in the third quarter, was announced on April 15.
Wall Street issued an overweight recommendation rating for shares of Yamana Gold, indicating the stock is projected to outperform the market over the next 52 weeks. The average target price of $3.02 per share was 39.8% higher than Wednesday’s closing price of $2.16.
Yamana's stock has fallen 28% over the past year through May 1 to below the 200-, 100- and 50-day simple moving average lines, underperforming the VanEck Vectors Gold Miners exchange-traded fund (GDX), a benchmark for the gold mining industry, by 19%.
The closing price on Wednesday was 10% above the 52-week low of $2 and 47% below the 52-week high of $3.23.
An uptrending 14-day relative strength index of 31.32 suggests the stock is close to oversold levels.
Disclosure: I have no positions in any securities mentioned.
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