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Yamana Gold announces 4Q20 and full year results

Published by
Global Mining Review,


Yamana Gold Inc. has announced 4Q20 and FY20 preliminary production, financial, and corporate results.

The strong results and strategic advances delivered during the year, and most recently 4Q20, further enhance the company’s long-term resilience and growth prospects. Following this announcement, the company will be providing its production guidance for 2021 through 2023 along with a 10-year production overview and strategic plan, which should be read in conjunction with this announcement.

Yamana Gold President and Chief Executive, Daniel Racine, commented: “2020 will be remembered as a year that challenged every dimension of our lives. We are focused on keeping our people and communities safe, sustaining our operations, and improving and growing our portfolio to further enhance the robustness and resilience of our business. We have benefitted from being a high cash generative business starting 2021 in a strong financial position, with cash balances at year-end of US$428 million, and net debt well below the level as at the beginning of year, with a reduction of net debt of US$323 million.

“We had a very strong year for cash flow with a particularly strong cash flow finish in the fourth quarter, with cash flow in the fourth quarter exceeding the cash flow of the preceding quarter and the average of the three preceding quarters.

“Despite the challenging global operational environment, production outperformed expectations over the course of the year in almost all cases, with Jacobina, Canadian Malartic, El Peñón, and Minera Florida all producing above plan.

“While full year production of 901 155 gold equivalent oz (GEO) was within our guidance tolerances, we had hoped to reach a higher level of production. COVID-19 related restrictions imposed in Argentina in December meant production at Cerro Moro was below our expectations although operational performance in December still exceeded the monthly average for the year. We remain confident in Cerro Moro as we recognise that it would have met our production goals in the quarter except for the unexpected, although necessary, pandemic related restrictions imposed in December. We note that these restrictions were the result of infections in the broader sense rather than directly affecting our operation. While we anticipate there may be some short-term operational challenges in Argentina over the next few months due to COVID-19, we expect to return to business as usual as the national vaccination program ramps up.

“We remain committed to our strategy of managing and growing a diversified portfolio in rules based and politically safe jurisdictions in the Americas, maximising cash flow and creating financial resilience and maximise cash returns to shareholders by dividends as part of a broader capital allocation approach.”

Production highights

  • 4Q20 production of 255 361 GEO, including 221 659 oz of gold and 2.59 million oz of silver, with production during the quarter exceeding sales by over 7000 oz of gold due to timing of sales which is expected to normalise during 2021.
  • Full year production of 901 155 GEO, including 779 810 oz of gold and 10.37 million oz of silver, which exceeds original guidance for the year for 890 000 GEO, and which, while below the set point of revised guidance of 915 000 GEO, was well within the plus or minus 3% guidance range set by the company to account for COVID-19 related uncertainties (with all of the difference attributable to further changes to COVID-19 restrictions imposed in Argentina near the end of the year which impacted production at Cerro Moro).
  • GEO production for the year at Jacobina, El Peñón, Canadian Malartic, and Minera Florida were all well above plan and, notwithstanding the COVID-19 restrictions imposed near the end of the year in Argentina, GEO production at Cerro Moro in December was strong, exceeding the monthly average for the year.
  • At Jacobina, production reached an all-time high and increased for the seventh consecutive year, and annual production at Minera Florida reached its highest level since 2010 and the second highest total since the mine entered production in 1986.

Financial highlights

  • The company continued to generate strong cash flows during the quarter, further strengthening its cash balances and balance sheet.
  • Operating cash flow before net change in working capital for the quarter is expected to be the highest level by quarter for the year, exceeding operating cash flow before net change in working capital for the prior quarter of US$199 million, and the prior three quarter average of US$160 million, significantly supplementing the accumulated operating cash flow before net change in working capital for the prior three quarters of US$481 million.
  • Net debt declined further, by approximately US$53 million from 3Q20, for a total decrease of US$323 million for the year. Net debt reduction was impacted, as planned, by higher capital expenditures in the quarter than the preceding quarters as the result of timing caused by COVID-19 related delays, interest payments which are customarily paid in the second and fourth quarters, working capital movements associated with timing of collection of recoverable indirect tax credit and payments associated with prepaid expenditures and advances, and the working capital impact of production exceeding sales, which will normalise in 2021.
  • Cash balances at year end were approximately US$428 million after repayment of the drawn, but unused, revolving credit amount of US$100 million (additional cash balances in excess of US$220 million acquired on the integration of the Agua Rica project with the Minera Alumbrera plant and infrastructure, which resulted in the formation of the new MARA project, are not included in the cash balance number above, as they are intended to be used for the MARA project).

Corporate highlights

  • A successful listing on the London Stock Exchange, offering investors a unique opportunity to access exposure to a gold mining company with a differentiated portfolio of high quality assets in the Americas.
  • Acquired the Wasamac project and Camflo property from Monarch Gold.
  • Completed the integration of the Agua Rica project with the Minera Alumbrera plant and infrastructure, which together are now known as the MARA project.
  • The company completed its exploration programme ahead of schedule, notwithstanding delays caused by COVID-19, positioning Yamana well for continued growth over the medium to long-term.
  • While the company will update mineral reserves and mineral resources when it publishes its year-end results on 11 February 2021, overall mineral reserves and mineral resources are expected to be comparable to what was mined in 2020.
  • Exploration at El Peñón and Jacobina are expected to fully replace depletion for the third year in a row, while continuing to demonstrate growth potential with new mineral resources.
  • A second year of strong mineral resource growth at the Canadian Malartic underground project is also expected, demonstrating excellent long-term production potential.
  • Operational highlights

  • Jacobina produced 44 165 oz of gold during the 4Q20 and an all-time high 177 830 oz for the full year. It was the seventh consecutive year of increasing production, a trend that is expected to continue in the coming years. Successful infill and exploration drilling in the Canavieiras and João Belo sectors during 2020 continues to generate significant growth potential.
  • El Peñón produced 55 529 GEO during 4Q20, including 43 512 oz of gold and 922 954 oz of silver. For the year, the operation produced 216 749 GEO, including 160 824 oz of gold and 4.92 million oz of silver. Mine sequencing in 4Q20 resulted in lower gold feed grades but higher silver feed grades. Production is expected to shift back to higher gold grade sectors in 2021. Strong results from infill drilling on several major veins, including La Paloma and Pampa Campamento, are expected to provide new mineral reserves, while the discovery of the Colorada Sur vein provides an excellent base for further resource expansion.
  • Canadian Malartic produced 86 371 oz of gold (50% basis) during the quarter and 284 317 oz (50% basis) for the year, the latter of which is nearly 10 000 oz higher than original guidance provided in April. The operation processed a record 62 000 tpd during 4Q20. Mining is transitioning from the Canadian Malartic pit to the Barnat pit, which is now in commercial production, and 70% of the total tonnes mined in 2021 are expected to come from Barnat.
  • Minera Florida continued to perform exceptionally well, producing 26 352 oz of gold during the quarter and 89 843 oz for the year. Annual production at Minera Florida was the highest since 2010 and the second highest total since the mine entered production in 1986. The operation continued to increase throughput at stable grades in the latest quarter, which reduced costs. Costs are expected to continue declining in 2021.
  • Cerro Moro produced 42 943 GEO during the quarter, including 21 259 oz of gold and 1 663 708 oz of silver. For the year, the operation produced 132 415 GEO, including 66 995 oz of gold and 5 448 561 oz of silver. 4Q20 production was impacted by the high number of COVID-19 cases in Argentina, including an increase in cases in communities near the operation during the quarter. While the mine operated continuously during the quarter, travel protocols were tightened and rosters significantly reduced to protect the health and safety of employees and communities, especially near the end of the year. While production at Cerro Moro was below budget, production in 4Q20 was the highest of the year and production in December was 15 121 GEO, which represents a significant improvement over prior months and quarters. Operational challenges related to COVID-19 are expected to continue in 1H21, but the company expects the situation to normalise as the vaccination program ramps up in Argentina. Positive infill drilling results at Martina and Naty are expected to contribute to new mineral reserves while several high-grade exploration intercepts in the core mine area have provided new discoveries for further exploration and potential growth.

Read the article online at: https://www.globalminingreview.com/finance-business/27012021/yamana-gold-announces-4q20-and-full-year-results/

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