In a Jan. 14 research note, BMO Capital Markets analyst Andrew Kaip reported that Yamana Gold Inc.'s (YRI:TSX; AUY:NYSE; YAU:LSE) Q4/18 production for gold, silver and copper exceeded forecasts and costs came in at or below guidance. "The company capped off the year with a strong Q4/18 driven by better-than-expected performance at Chapada and Cerro Moro," he added. Full-year 2018 production of each metal exceeded revised guidance.
The analyst compared Yamana's actual production figures to BMO's projections.
With respect to gold, Yamana produced 292,500 ounces (292.5 Koz) of the metal in Q4/18, beating BMO's forecast of 281 Koz. The strong performing mines were Chapada, which produced 40.8 Koz versus BMO's expected 28.7 Koz, and Cerro Moro, where production was 45.1 Koz, above BMO's projected 40.8 Koz. In contrast, production at Minera Florida was a miss, at 24.5 Koz compared to BMO's projected 29.6 Koz. As for full-year 2018 production, it was 940.6 Koz, above guidance of 920 Koz.
Regarding silver, Yamana's Q4/18 production of it was 3.265 million ounces (3.265 Moz), slightly above BMO's projection of 3.037 Moz, due to solid performance at Cerro Moro. Full-year 2018 silver production came in at 8.023 Moz, also ahead of revised guidance of 7.55 Moz and near original guidance of 8.15 Moz.
In terms of copper, Yamana's production of this base metal in Q4/18 was 39 million pounds (39 Mlb), also above BMO's forecast, of 35.5 Mlb. Full-year 2018 production also was a beat at 129 Mlb compared to revised guidance of 125 Mlb.
Kaip relayed that another company event in Q4/18 was the closing of Yamana's sale of Gualcamayo for about $85 million plus royalties. Finally, last quarter, Yamana adopted the World Gold Council's all-in sustaining cost reporting standards that "should lead to more consistent reporting among member companies," indicated Kaip. Those changes will go into effect for reporting done after Jan. 1, 2019.
BMO has a Market Perform rating and a US$3 per share target price on Yamana Gold, whose current share price is about US$2.31.[NLINSERT]
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Disclosures from BMO Capital Markets, Yamana Gold, January 14, 2019
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
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Company Specific Disclosures
Disclosure 9B: BMO Capital Markets makes a market in Yamana Gold in United States
Disclosure 16: A research analyst has extensively viewed the material operations of Yamana Gold.
Disclosure 17: Yamana Gold has paid or reimbursed some or all of the research analyst's travel expenses.
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