An anonymous director reports
YAMANA GOLD PROVIDES PRELIMINARY 2015 OPERATIONAL RESULTS AND 2016-2018 OUTLOOK
Yamana Gold Inc. has provided full-year preliminary production and cost estimates for 2015, as well as 2016, 2017 and 2018 production, and 2016 cost guidance.
(All amounts are expressed in U.S. dollars unless otherwise indicated.)
Preliminary operational results
for 2015
The attached tables highlight production and cash cost guidance provided by the company in early February, 2015, compared with preliminary operational results for 2015. The attached production guidance for 2015 table shows that consolidated gold production is within the guided range, silver production is slightly below the guided range and copper production is above the guided range.
PRODUCTION GUIDANCE AND PRELIMINARY RESULTS FOR 2015
2015 preliminary
2015 guidance range production estimate
Gold (oz)
Chapada 117,000-123,000 119,000
El Penon 246,000-258,000 227,000
Canadian Malartic (50%) 273,000-287,000 286,000
Gualcamayo 171,000-179,000 181,000
Mercedes 102,000-108,000 84,000
Minera Florida 97,000-103,000 113,000
Jacobina 107,000-113,000 96,000
Alumbrera 25,000 25,000
Brio Gold 130,000 144,000
Pilar 70,000 83,000
Fazenda Brasileiro 60,000 61,000
Total gold production 1,264,000-1,330,00 1,275,000
Silver (oz)
Chapada 297,000-313,000 274,000
El Penon 8,200,000-8,600,000 7,693,000
Mercedes 312,000-328,000 383,000
Minera Florida 561,000-589,000 661,000
Total silver production 9,370,000-9,830,000 9,011,000
Total copper (M lb)
Chapada 120 131
With respect to costs, the company expects consolidated byproduct cash costs and all-in sustaining cash costs (AISC) per ounce of gold for 2015 to be approximately $596 and $844, respectively. At the company's core mines, consolidated byproduct cash cost and AISC per ounce of gold for 2015 are expected to be $567 and $744, respectively.
BYPRODUCT CASH COST GUIDANCE AND PRELIMINARY RESULTS FOR 2015
2015 2015
preliminary preliminary
2015 guidance cash costs 2015 guidance cash costs
cash costs estimate cash costs estimate
per gold oz per gold oz per silver oz per silver oz
Chapada ($595) ($520) ($40.00) ($25.00)
El Penon $530 $621 $7.35 $8.38
Canadian
Malartic (50%) $605 $596 -- --
Gualcamayo $855 $814 -- --
Mercedes $635 $887 $8.85 $7.91
Minera Florida $645 $712 $8.95 $9.46
Jacobina $680 $788 -- --
Alumbrera $975 $1,242 -- --
Brio Gold $730 $706 -- --
Pilar -- 708 -- --
Fazenda
Brasileiro -- 702 -- --
Total $5-5 $596 $6.00 $7.12
Preliminary estimates for byproduct cash costs and AISC for the fourth quarter are approximately $540 and $760 per ounce of gold, respectively.
Expectations
for 2016 to 2018
For 2016, the company expects to deliver gold production of between 1.23 million and 1.31 million ounces of gold. Silver production is projected at between 6.9 million and 7.2 million ounces of silver, and copper production is projected at between 122 million and 125 million pounds. These numbers exclude any share of production from the company's interest in Alumbrera.
The company is targeting continuous production growth and will continue to evaluate opportunities for optimizations and other operational improvements across its portfolio to further increase its production profile.
PRODUCTION GUIDANCE FOR 2016 TO 2018
Estimated production 2016E 2017E 2018E
Gold (oz)
Chapada 116,000-122,000 110,000 90,000
El Penon 235,000-250,000 245,000 245,000
Canadian Malartic (50%) 280,000-290,000 300,000 305,000
Gualcamayo 150,000-165,000 155,000 150,000
Mercedes 85,000-90,000 88,000 82,000
Minera Florida 110,000-115,000 110,000 110,000
Jacobina 110,000-115,000 120,000 130,000
Brio Gold 148,000-158,000 165,000 163,000
Pilar 85,000-90,000 100,000 98,000
Fazenda Brasileiro 63,000-68,000 65,000 65,000
Cerro Moro -- -- 76,000
Total gold production 1,234,000 - 1,305,000 1,293,000 1,351,000
Silver (oz)
Chapada 270,000-278,000 270,000 245,000
El Penon 5,800,000-6,000,000 5,800,000 6,000,000
Mercedes 345,000-365,000 355,000 335,000
Minera Florida 500,000-530,000 515,000 525,000
Cerro Moro -- -- 3,347,000
Total silver production 6,915,000-7,173,000 6,940,000 10,452,000
Total copper (M lb)
Chapada 122-125 122 115
Estimated consolidated co-product and byproduct cash costs for 2016 gold production are forecast to be approximately $605 and $525 per ounce of gold, respectively. Estimated co-product and byproduct cash costs for 2016 silver production are forecast to be approximately $7.25 and $6.20 per ounce of silver, respectively. The attached cash cost guidance for 2016 table provides the mine-by-mine 2016 estimated cash costs per ounce for gold and silver.
CASH COST GUIDANCE FOR 2016
Estimated cash costs
per oz for 2016 Co-product Byproduct
gold silver
Chapada $280 $2.72 ($510) ($25.00)
El Penon $540 $7.20 -- --
Canadian Malartic (50%) $585 -- -- --
Gualcamayo $875 -- -- --
Mercedes $750 $9.75 -- --
Minera Florida $640 $8.50 -- --
Jacobina $620 -- -- --
Brio Gold $581 -- -- --
Pilar $560 -- -- --
Fazenda Brasileiro $610 -- -- --
Total $605 $7.25 $525 $6.20
Copper co-product cash costs at Chapada are forecast to be $1.32 per pound.
Consolidated byproduct all-in sustaining cash costs for 2016 are targeted at below $800 per ounce of gold, and $10.20 per ounce of silver. Estimated co-product all-in sustaining cash costs for 2016 are forecast to be approximately $840 per ounce of gold and $10.75 per ounce of silver.
MINE SITE ALL-IN SUSTAINING CASH COST GUIDANCE AND
SITE SUSTAINING CAPITAL FOR 2016
Sustaining
capital
Estimated AISC per oz (millions)
gold silver
Chapada $350 $3.35 $40
El Penon $730 $10.00 $58
Canadian Malartic (50%) $800 -- $60
Gualcamayo $940 -- $11
Mercedes $935 $12.15 $18
Minera Florida $825 $11.00 $21
Jacobina $915 -- $34
Brio Gold $781 -- $32
Pilar $760 -- $19
Fazenda Brasileiro $810 -- $13
Copper co-product AISC at the Chapada mine is forecast to be $1.60 per pound, excluding any corporate overhead allocation.
For 2016, consolidated sustaining capital is expected to be approximately $275-million or approximately $200 per ounce of gold and $2.75 per ounce of silver when allocating all capital to gold and silver ounces with no consideration for copper. The company treats copper as a byproduct and applies all sustaining capital to gold and silver ounces. The above-noted sustaining capital numbers are included in the calculation of AISC.
Expansionary capital spending for 2016 is expected to be approximately $120-million, and the company remains committed to allocating capital to those opportunities that can most readily contribute to cash flow.
The company expects to spend approximately $82-million on exploration in 2016, and the focus continues to be on near-mine exploration and ounces that can most quickly be brought into production and contribute to cash flow generation. Approximately 70 per cent of exploration expenditures will be capitalized.
Total capital spending is expected to be more heavily weighted to the second half of 2016.
For 2016, depreciation, depletion and amortization (DD&A) are expected to be approximately $570-million or approximately $372 per ounce of gold, $5.22 per ounce of silver and 30 cents per pound of copper.
Total general and administrative (G&A) expenses for 2016 are expected to be approximately $100-million, representing approximately $85-million in cash-based G&A expenses and $15-million in non-cash-based G&A expenses.
Key 2016 commodity and foreign exchange price assumptions are presented in the attached metal and currency assumptions table.
METAL AND CURRENCY ASSUMPTIONS FOR 2016
Gold (U.S.$/oz) $1,100
Silver (U.S.$/oz) $14.75
Copper (U.S.$/lb) $2.25
Cdn$/U.S.$ 1.35
Brazilian real/U.S.$ 4.20
Argentine peso/U.S.$ 15.00
Chilean peso/U.S.$ 725.00
Mexican peso/U.S.$ 17.00
Additional financial considerations
As required by international financial reporting standards, an assessment is made periodically, or when indicators of impairment are present, of the carrying book value of long-lived assets, including exploration assets and mines (known as cash generating units), as compared with their estimated recoverable amount.
Estimated recoverable amount for exploration assets is determined based on observable fair value, and in the case of an operating mine, it is based with reference to the estimated discounted future cash flow projection of that unit, along with any values related to exploration properties and potential of the mine. Any excess amount in that comparison is impaired and reflected as a non-cash adjustment in the income statement in the period it is identified.
In carrying out this assessment, the company is analyzing the carrying value of various exploration concessions and the cash flow projections of its mines in the context of current metal prices while considering the deterioration of metal prices over the last several years. The company also recognizes that capital has been expended, at several mines, during periods when metal prices were significantly in excess of the current levels. Carrying value includes such expended capital, and given the lower metal prices, the portion of the carrying value based on such expenditure may not be supportable at the current lower metal prices.
In respect of its exploration concessions, the company's evaluation of the market values is assessed relative to the implied value of land based on the enterprise value of comparable exploration companies, which has declined significantly over the last few years. Virtually all of the carrying value recorded for exploration properties relates to historical acquisitions.
IFRS requires an impairment of the carrying book value excess and allows a reversal of the impairment when market reference for exploration concessions increase and metal prices are higher. IFRS does not allow a write-up of an asset that is in excess of its original book value unless it is a reversal of a prior impairment. As such, there may be significant assets whose recoverable amount may be in excess of their respective carrying values, and cannot be recognized or offset against any deficiencies.
The company also references external consensus views of net asset values to assess carrying values of possible writedowns. For 2015, the company believes this may be an indicator of a lower recoverable amount for certain of its exploration concessions and lower cash flow projections of certain mines. Impairment testing for year-end 2015 has not yet been concluded and is expected to be addressed in the company's year-end results. Any potential impairment would likely affect exploration concessions and the company's smaller mines.
Dividend policy
As part of a regular evaluation of the company's dividend, the company has decided to revise its policy and approach to dividends. Given the cyclical nature and current volatility of the gold business, and the volatility in markets generally, the company strives to strike a proper balance between the financial discipline of paying a dividend and managing its business. In the context of today's markets, the current dividend level is considered too high.
The company is committed to paying a dividend at a level considered as a baseline, and to periodically evaluate that level and dividend payout, relying in particular, on special dividends and share buybacks, as appropriate, when circumstances suggest more market stability and increasing available cash. The company believes that cash balances will increase through the guidance period and in 2018 particularly, when Cerro Moro is in operation.
The revised baseline level is now two cents per share annually beginning with the declaration and payment of the first quarter 2016 dividend.
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.