TIDMAUY
RNS Number : 9951W
Yamana Gold Inc.
29 April 2021
YAMANA GOLD REPORTS STRONG FIRST QUARTER 2021 PRODUCTION RESULTS
AND CASH FLOWS; CANADIAN MALARTIC AND MINERA FLORIDA POST STANDOUT
QUARTERS; JACOBINA ACHIEVES ALL-TIME MONTHLY HIGH PRODUCTION IN
MARCH; ADOPTS COMPREHENSIVE TAILINGS MANAGEMENT STRATEGY AT
JACOBINA THAT INCLUDES HYDRAULIC BACKFILL; IDENTIFIES POTENTIALLY
SIGNIFICANT EXTENSION TO EAST GOULDIE ZONE
TORONTO, ONTARIO, April 29, 2021 - YAMANA GOLD INC. (TSX:YRI;
NYSE:AUY; LSE:AUY) ("Yamana" or "the Company") is herein reporting
its financial and operational results for the first quarter of
2021.
FIRST QUARTER HIGHLIGHTS
Financial Results - Strong Earnings and Cash Flows Further
Strengthening Cash Balances and Balance Sheet
-- Net earnings(4) of $54.7 million or $0.06 per share basic and diluted compares well to net
earnings(4) of $45.0 million or $0.05 per share basic and diluted a year earlier.
-- Adjusted net earnings(2, 4) were $67.2 million or $0.07 per share basic and diluted compared
to adjusted net earnings((2, 4) ) of $47.2 million or $0.05 per share basic and diluted a
year earlier.
-- Cash flows from operating activities were $160.2 million and net free cash flow(2) was $123.5
million, in line or above the averages of the preceding three quarters, further demonstrating
the strength and resilience of the cash flow generation capacity of the Company.
-- Cash flows from operating activities before net change in working capital(2) were $183.4 million,
and free cash flow before dividends and debt repayments(2) was $76.0 million.
-- As at March 31, 2021, the Company had cash and cash equivalents of $678.1 million, and available
credit of $750.0 million, for total available liquidity of approximately $1.4 billion. Cash
balances include $222.8 million available for utilization by the MARA Project. The remainder
of cash and cash equivalents of $455.3 million, along with further liquidity and incoming
cash flows, is more than sufficient to fully manage the Company's business and available for
the Company's capital allocation objectives.
-- The Company's quarterly dividend rate of $0.02625 per share (annual $0.105 per share) is 110%
higher than the same quarter in 2020 and 425% than the same quarter in 2019.
Three months ended
March 31
(In millions of United States Dollars) 2021 2020
---------------------------------------------------- ------------- ---------
Net Free Cash Flow (2) $ 123.5 $ 91.1
Free Cash Flow before Dividends and Debt Repayments
(2) $ 76.0 $ 38.9
Decrease in Net Debt (2) $ 26.6 $ 20.0
---------------------------------------------------- --------- ------
Production Results - Standout Quarters from Canadian Malartic
and Minera Florida
-- G old equivalent ounce ("GEO") (1) production was 231,988 GEO(1) , including gold production
of 201,117 ounces and silver production of 2.13 million ounces, both in line with plan.
-- Canadian Malartic and Minera Florida had standout quarters, producing 89,550 ounces and 20,818
ounces of gold, respectively, both above plan.
-- At Jacobina, production reached an all-time monthly high in March, with total production in
line with plan for the quarter.
-- Silver production of 1,309,103 ounces at Cerro Moro exceeded plan with mine sequencing during
the quarter favouring mining of higher silver grade zones.
-- The Company expects to continue its established trend of delivering stronger production in
the second half of the year along with quarterly sequential increases in production.
(All amounts are expressed in United States Dollars unless
otherwise indicated.)
(See end notes on page 19)
Solid Costs and Margins
-- Cash costs(2) and all-in sustaining costs ("AISC")(2) were $698, and $1,045 per GEO(1) , respectively,
which on a consolidated basis were in line or better than plan, and consistent with the comparative
period.
-- Mine operating earnings of $149.5 million increased by $50.2 million or 51% in relation to
the comparative prior year quarter. The increase is related to the strong precious metal price
environment and strong operational performances from the mines resulting in higher gold production
at comparable costs.
Jacobina Optimization Project; Hydraulic Backfill Plant to
Proceed
-- The Company has identified opportunities to further optimize the results and recoveries achieved
in the Phase 1 optimization with a modest investment. As part of this initiative, t he Falcon
concentrator and cyclones were installed during the first quarter, and the Knelson concentrator
is scheduled to be installed in the second quarter of 2021, with an objective to optimize
gold recovery at the higher throughput rate .
-- The Company is advancing the Phase 2 expansion at Jacobina, for an increase in throughput
to 8,500 tonnes per day ("tpd"). The Company expects to provide an update regarding capex
and development schedule in mid-2021 once studies are finalized to facilitate permitting .
-- The Company has also begun a conceptual study on a Phase 3 expansion, which would increase
throughput to 10,000 tpd at modest further capital requirements.
-- The Company has adopted a comprehensive Jacobina life-of-mine tailings management strategy
that reduces surface disposition of tailings, with underground tailings disposal as backfill.
-- The Company has initiated several studies to ensure long-term sustainability and reduce the
environmental footprint of the operation. Work conducted in 2020 confirmed that both paste
backfill and hydraulic backfill are technically feasible options for disposal of tailings
into underground voids, thereby minimizing the quantity of tailings stored on surface.
-- The Company's quarterly dividend rate of $0.02625 per share (annual $0.105 per share) is 110%
higher than the same quarter in 2020 and 425% than the same quarter in 2019.
-- The Company has decided to move forward with the hydraulic backfill plant project and is in
the permitting phase.
-- A conceptual study is underway to evaluate further opportunities for a dry stack tailings
facility and/or a paste backfill plant in parallel to the hydraulic backfill plant, which
could provide opportunities in the future for additional storage of tailings to support future
mineral reserve development.
-- Existing surface tailings capacity and backfill will be sufficient for life of mine production
at Jacobina at the planned increased processing rates.
Canadian Malartic Underground Construction Decision; Drilling
Identifies Potentially Significant Extension to East Gouldie
Zone
-- Impressive technical study results were obtained in early February of 2021, and the Company
and its partner made a positive construction decision of the Odyssey project at Canadian Malartic.
An NI 43-101 technical report for the Canadian Malartic operation was completed in March 2021,
which includes a full summary of the Odyssey underground project. .
-- The project demonstrates robust economics, a significant increase in mineral resources, and
a mine life extension to at least 2039.
-- Whereas the Company had originally considered a production platform conservatively in the
range of 450,000 ounces per year, the mine now supports an expected increased annual gold
production of 500,000 to 600,000 ounces on a 100% basis.
-- Exploration drilling conducted on the Rand property in the first quarter targeted the projected
down plunge extension of the East Gouldie zone, with the first hole testing an area located
greater than one kilometre to the east of and down plunge of the current East Gouldie inferred
mineral resource.
-- Drill hole RD21-4680A, intersected 2.7 grams per tonne ("g/t") of gold over an estimated true
width of 10.9 metres at 1,995 metres depth, including 3.1 g/t over 7.2 metres, indicating
excellent down plunge growth potential.
-- As Canadian Malartic transitions from open pit to underground mining, underground production
will offset a significant portion of the corresponding decline in open pit production. Production
from open pit mining from 2021 through 2028 is expected to be approximately 3.9 million ounces
(100% basis) with annual production trending lower on a yearly basis to approximately 123,000
ounces (100% basis) by 2028. Underground production will start in 2023 and increase yearly,
adding approximately 932,000 ounces (100% basis) during the 2023-2028 construction period-at
cash costs(2) of $800 per ounce-including approximately 385,000 ounces (100% basis) by 2028.
-- Net proceeds from the sale of the 932,000 ounces (100% basis) of underground production would
significantly reduce the external cash requirements for the construction of the Odyssey project
which, assuming the gold price used in the financial analysis for the project of $1,550 per
ounce, would reduce the projected capital requirements in half.
MARA Project Advances
-- Subsequent to the signing of the integration agreement on December 17, 2020, the MARA Joint
Venture held by the Company (56.25%), Glencore International AG (25%) and Newmont Corporation
(18.75%) continues to engage with local communities and stakeholders, advance the Feasibility
Study and project's permitting process.
-- After obtaining all required permits from the respective authorities and conducting citizen
participation and social consultation seminars, the MARA Project started exploration activities
at the site. The primary field activities being performed include additional rock sampling
and studies to update the environmental baseline for the Environmental and Social Impact Assessment
("ESIA") and a drilling campaign to collect data for geotechnical and metallurgical studies
that will be incorporated into the updated Feasibility Study.
-- A Technical Committee comprised of members of the Company, Glencore International AG and Newmont
Corporation continues to provide oversight of the Feasibility Study, which will provide updated
mineral reserves, production and project cost estimates for the project.
-- The MARA Project will rely on processing ore from the Agua Rica mine at the Alumbrera plant
in the Catamarca Province of Argentina. The new project design minimizes the environmental
footprint of the project in consideration of the input of the local stakeholders and creates
one of the lowest capital intensity projects in the copper industry.
-- Key technical results related to the Feasibility Study are expected during 2021. While the
Company continues to advance the Feasibility Study, it notes that a considerable amount of
information in the Pre-Feasibility Study is already at Feasibility Study level mostly as a
result of the Integration Transaction. The updated Feasibility Study and ESIA are expected
to be completed in 2022.
CLIMATE CHANGE ACTION
As a continuation of Yamana's commitment to a low-carbon future,
the Company announced during the quarter that it has formally
adopted a board-approved climate action strategy. The strategy is
underpinned by adoption of two high-level targets: a science-based
2degC scenario compared to pre-industrial level and an aspirational
net-zero 2050 target. The targets will be supported by the
foundational work being performed throughout 2021 by the newly
established multi-disciplinary Climate Working Group, to determine
our emissions baseline, develop the Greenhouse Gas ("GHG")
abatement pathways required to achieve the science-based 2degC
scenario and establish preliminary, operations-specific roadmaps
that describe abatement projects, estimated costs and schedules.
These actions will help ensure that our long-range GHG reduction
efforts are supported by practical and operationally focused short,
medium and long-term actions to achieve the targets
Summary of Certain Non-Cash and Other Items Included in Net
Earnings(4)
Three months ended
March 31
(In millions of United States Dollars, except per share
amounts,
totals may not add due to rounding) 2021 2020
---------- ------------
Non-cash unrealized foreign exchange losses (gains) $ 3.6 $ (11.5)
Share-based payments/mark-to-market of deferred share
units (3.2) (0.5)
Mark-to-market (gains) losses on derivative contracts,
investments and other assets (0.6) 2.7
Gain on discontinuation of the equity method of accounting (1.1) (21.3)
Temporary suspension, standby and other incremental
COVID-19 costs 8.2 3.5
Other provisions, write-downs and adjustments 0.7 2.6
Non-cash tax on unrealized foreign exchange losses 6.5 30.6
Income tax effect of adjustments - (1.1)
One-time tax adjustments (1.6) (4.4)
---------- ----------
Total adjustments (i) $ 12.5 $ 0.6
------ ---------
Total adjustments - increase to earnings(4) per share $ 0.01 $ -
----------------------------------------------------------- ------ ---------
(i) For the three months ended March 31, 2021, net earnings (4) would be adjusted by an increase
of $12.5 million (2020 - increase of $0.6 million).
OPERATIONS UPDATE
Canadian Malartic
Canadian Malartic had an exceptional first quarter, producing
89,550 ounces of gold, which exceeded plan and greatly exceeded the
comparative period in 2020, due to higher grades and recoveries
from the ore found deeper in the Malartic pit. Additionally, during
the month of January, the mine achieved record tonnes mined in a
month. Canadian Malartic completed the overburden removal at Barnat
during the first quarter as planned, with topographic drilling and
blasting on track to be completed by the third quarter of 2021 as
planned. Throughout the course of 2021 the mine will continue its
transition from the Malartic pit to the Barnat pit. The Company
expects higher stripping than previous years in association with
Barnat, and this increased stripping is expected to normalize over
the following years. Additionally, the Company is undertaking the
required pit pushback to obtain the optimized ounces as per the
revised open pit design, which resulted in an increase of
approximately 150,000 of gold mineral reserves on a 50% basis, as
announced during the fourth quarter.
Jacobina
Production of 43,102 ounces of gold during the first quarter was
in line with plan and comparable to the same period in 2020, with
the operation achieving a record monthly production during March of
16,348 ounces. Mill throughput for the quarter was above plan, with
recovery rates and grade as expected. Given the success of the
Phase 1 optimization, the Company has begun to further optimize
Phase 1 with the goal of optimizing gold recovery at 96% to 97%
while maintaining the higher throughput rate. During the first
quarter, the tailings disposal pipeline was optimized to allow for
additional throughput. In addition, the Falcon gravimetric
concentrator and cyclones were installed and commissioned, while
the Knelson gravimetric concentrator is on schedule to be
commissioned in the second quarter, both of these improvements are
expected to increase the recovery of gold in the gravity
circuit.
Cerro Moro
Production of 16,210 ounces of gold and 1.31 million ounces of
silver was in line with plan for the first quarter, as the mine
returned to a more normalized activity following COVID-19
challenges in the prior year. Silver once again dominated the
quarter for Cerro Moro, resulting from strong silver feed grades,
fully offsetting the reduction in gold production, ultimately
resulting in GEO achieving plan. The mine and processing plant are
currently running at full capacity, however, COVID-19 continues to
present a risk of further disruptions, particularly during the
first half of the year. The opening of more mining faces and
transition to more mill feed coming from underground ore, at higher
grades than the open pit ore, continued in the quarter with Zoe
contributions becoming more prevalent in the second half of March.
This trend will continue throughout 2021, with most of the ore to
plant coming from Escondida Far West, Zoe, Escondida Central and
Escondida West.
The availability of personnel is anticipated to improve as we
move through 2021 and the transition to the underground ore will
increase mining flexibility, particularly in the second half of
2021. This is expected to account for higher gold production than
the first half with the ore milled returning to reserve grade. Over
the past year, Cerro Moro has optimized the operation of the
processing plant to increase daily throughput to approximately
1,100 tpd. The mine saw improved linear development performance
during the quarter and will continue to improve throughout the
year, further supporting the much higher second half of 2021
production profile.
El Peñón
El Peñón produced 31,437 ounces of gold and 816,144 ounces of
silver in the first quarter. The higher grade La Paloma, Quebrada
Colorada Sur and Pampa Campamento Deep sectors zones will come into
production in the second half of the year, contributing to higher
planned production in the third and fourth quarters. Consequently,
the Company expects that the second half of 2021 will account for
60% of gold and silver production at El Peñón, as considered in the
2021 budget and the guidance provided in the fourth quarter of
2020. The first step to unlock the opportunity to leverage on the
existing processing capacity at the mine and increase production is
to establish additional mining sectors for increased mine
production. The development of La Paloma, Quebrada Colorada Sur and
Pampa Campamento Deeps is an important component of that strategy,
and accessing those new areas will provide increased mining
flexibility.
Minera Florida
Minera Florida had a standout first quarter, with production
above plan, particularly in the month of March, linear development
advancing well, and ahead of plan, and exploration results
continuing to demonstrate extensions of identified areas of
mineralization and new discoveries. The positive results were
primarily due to increased tonnes processed, largely as a result of
continuing improvements in productivity with contributions from the
Pataguas and Don Leopoldo mining zones. Mine management has
recently taken actions to improve mechanical availability, and the
Company is now reactivating and optimizing formerly decommissioned
ore passes, with two out of three now re-established. The final ore
pass at Marisol is now scheduled for completion by the mid-2021,
and is expected to further reduce haulage distance and increase
operational flexibility as a result of additional haulage routes.
Ongoing initiatives to improve development cycle times has the
potential to increase underground development beyond the current
rate of 1,200-1,300 metres per month at a lower unit cost, bringing
forward access to new production levels and unlocking additional
mining sectors. Internalization of mining activities, ongoing
optimization of the haulage network, and increasing disposal of
development waste into underground voids will further improve mine
productivity going forward. A review of the processing plant in the
first quarter has identified several opportunities for increased
recovery and reduced operating costs. Management is currently in
the process of prioritizing these opportunities, focusing on the
initiatives that can be implemented quickly with minimal
investment.
In line with the 10-year outlook, the plant de-bottlenecking
study and preparation of the ESIA are advancing on schedule, with
the objective to increase throughput from 74,500 to 100,000 tonnes
per month, which would increase annual gold production to
approximately 120,000 ounces. Preliminary studies indicate that the
capacity of the processing plant can be increased to approximately
90,000 tonnes per month through incremental adjustments. An upgrade
of the crushing circuit would be required to achieve 100,000 tonnes
per month.
CONSTRUCTION, DEVELOPMENT AND ADVANCED STAGE PROJECTS
Jacobina, Brazil - Phased Expansion Advancing; Hydraulic
Backfill Plant to Proceed
The Phase 1 optimization project was completed in mid-2020. The
project has exceeded expectations, with a higher than planned
steady state of approximately 6,800 tpd achieved in the second and
third quarters of 2020, as well as the first quarter of 2021. The
Company has identified opportunities to further optimize the
results and recoveries achieved in Phase 1 with a modest
investment. Consequently, works commenced in the third quarter of
2020 for the expansion of the gravity concentration circuit, with
commissioning scheduled and on-track, with the Falcon concentrator
and cyclones already installed, and the Knelson concentrator
scheduled to be installed in the second quarter of 2021, with an
objective to optimize gold recovery at the higher throughput rate
.
In addition to the incremental optimization of Phase 1, the
Company is advancing the Phase 2 expansion at Jacobina, for an
increase in throughput to 8,500 tpd. The Company is currently in
the engineering phase, with permitting underway. The throughput
increase will be achieved through the installation of an additional
grinding line and incremental upgrades to the crushing and gravity
circuits. The Phase 2 expansion is expected to increase annual gold
production to approximately 230,000 ounces per year, representing a
28% increase from current levels, reduce costs, and generate
significantly more cash flow and attractive returns. The Company
expects to provide an update regarding capex and development
schedule in mid-2021 once studies are finalized to facilitate
permitting .
The Company has also begun a conceptual study on a Phase 3
expansion, which would increase throughput to 10,000 tpd, utilize
the existing grinding line, while expanding crushing and leaching
circuits and adding additional mining equipment and infrastructure.
Additional concept studies are ongoing to further optimize tailings
management to ensure sufficient tailings capacity, either on
surface or underground, for decades of production and to
accommodate the strategic throughput target of 10,000 tpd after
completion of Phase 3.
The Company has adopted a comprehensive Jacobina life-of-mine
tailings management strategy that reduces surface disposition of
tailings, with underground tailings disposal as backfill. The
Company has initiated several studies to ensure long-term
sustainability and reduce the environmental footprint of the
operation. Test work conducted in 2020 confirmed that both paste
backfill and hydraulic backfill are technically feasible options
for disposal of tailings into underground voids, thereby minimizing
the quantity of tailings stored on surface. Additionally, use of
backfill is expected to improve underground stope stability and
minimize the requirements to leave behind pillars in ore, resulting
in increased mining recovery and reduced dilution.
As a first step, a hydraulic backfill plant provides a
relatively simple and low capital cost solution for underground
deposition of 2,000 tonnes of dry tailings per day, with the extra
advantage that hydraulic backfill can be placed into historic voids
with minimal cement content, significantly reducing the operating
cost. Utilization of historic voids for backfilling will also allow
Jacobina to gradually introduce backfill into the mining sequence
without impacting the production rate of the mine. In March 2021,
Jacobina completed a feasibility study for the installation of a
hydraulic backfill plant. A tailings classification plant will be
installed at the existing processing plant, at which 3,000 to 3,500
tpd of tailings will be classified using cyclones to produce 2,000
tpd of hydraulic backfill material with less than 10% passing 10 u
m (micrometres). After filtering, the tailings will be stockpiled
and fed to the Morro do Vento backfill plant or trucked using
existing mining trucks to backfill preparation plant at João Belo
mine. From the two backfill preparation plants, hydraulic backfill
will be distributed to the underground stopes mostly under gravity.
Minimal pumping will be required. Backfill will be placed either in
existing undergrounds voids from historical production or in new
voids as part of the mining sequence. The total volume of existing
voids with the Morro do Vento and João Belo mines is estimated at
approximately 7.7 million cubic metres, of which approximately 1.9
million cubic metres is readily accessible. Minimal binder will be
required for filling the existing voids, whereas 3-5% binder
content will be required for stopes to be vertically exposed within
the future mining sequence. The total backfill cycle is expected to
take 42 days including barricade construction, filling, drainage,
and curing. Approximately 1 tonne of dry tailings is required to
fill 2 tonnes of in-situ mined ore. The initial capital cost for
establishing the backfill system is estimated at $8 million. The
project will extend the life of the existing tailings storage
facility by approximately two-and-a-half years at a processing rate
of 8,500 tpd. The Company has decided to move forward with the
hydraulic backfill plant and is in the permitting phase. The permit
required for the backfill project is separate from the one required
for the Phase 2 expansion, although both are being pursued
simultaneously.
Additionally, a conceptual study is underway to evaluate further
opportunities for a dry stack tailings facility and/or a paste
backfill plant in parallel to the hydraulic backfill plant, which
could provide opportunities in the future for additional storage of
tailings to support future mineral reserve development.
Existing surface tailings capacity and backfill will be
sufficient for life of mine production at Jacobina at the planned
increased processing rates.
Canadian Malartic (50% interest), Canada - Odyssey Project
Approved; Drilling Identifies Potentially Significant Extension to
East Gouldie Zone
Impressive technical study results were obtained in early
February of 2021, and the Company and its partner made a positive
construction decision of the Odyssey project at Canadian Malartic,
with first production from the Odyssey South deposit expected in
2023. An NI 43-101 technical report for the Canadian Malartic
operation was completed in March 2021, which includes a full
summary of the Odyssey underground project. The project
demonstrates robust economics, a significant increase in mineral
resources, and a mine life extension to at least 2039. As Canadian
Malartic transitions from open pit to underground mining,
underground production will offset a significant portion of the
corresponding decline in open pit production. On a 100% basis,
production from open pit mining from 2021 through 2028 is expected
to be approximately 3.9 million ounces with annual production
trending lower on a yearly basis to approximately 123,000 ounces by
2028. Underground production will start in 2023 and increase
yearly, adding approximately 932,000 ounces (100% basis) during the
2023-2028 construction period-at cash costs(2) of $800 per
ounce-including approximately 385,000 ounces (100% basis) by
2028.
Whereas the Company had originally considered a production
platform conservatively in the range of 450,000 ounces per year,
the mine plan now supports annual gold production of 500,000 to
600,000 ounces on a 100% basis when fully ramped. Further extension
of the mine life beyond 2039 provides additional upside, with
several opportunities under evaluation. The project mine plan
currently only includes 0.4 million ounces of the project's 0.8
million ounces of Indicated Mineral Resources and 6.9 million
ounces of the project's 13.5 million ounces of Inferred Mineral
Resources. The upside is expected to be realized through infill
drilling to improve geological confidence, exploration drilling to
extend known deposits and make new discoveries and engineering,
especially close to historical underground excavations and at depth
at East Malartic.
Construction of surface infrastructure and the portal in
preparation for development of the ramp started in August 2020. The
Company and its partner completed the construction of the mine
office and surface facilities in the fourth quarter of 2020, to
support the development, and further advanced the development of
the exploration ramp into Odyssey and East Malartic. The
exploration ramp is designed to mine their respective upper zones
and provide further exploration access to allow tighter drill
spacing to further define the mineral resource base. These
activities are coincident with headframe construction and shaft
sinking. The new ramp will also provide the ability to carry out
bulk sampling of 40,000 tonnes of mineralization. The budget for
the ramp on a 50% (and 100%) basis is $11.7 million ($23.4 million)
for 2021. Ramp development work advanced according to plan during
the first quarter of 2021. Development of the exploration ramp is
anticipated to take approximately two years to complete, with the
first drilling platform to be established in the third quarter of
2021. Additionally, the production shaft location has been prepared
to facilitate initiation of shaft collar construction.
A 2.3 kilometre geotechnical hole in the shaft area has been
completed, and detailed engineering has begun in relation to the
shaft and headframe. The shaft is envisioned to have a 6.4-metre
diameter and be 1.8 kilometres deep, with a hoisting capacity of
approximately 20,000 tpd. As noted, the Company's current
expectation is that production from Odyssey South will begin in
2023 from the ramp, while the Company sinks the shaft to East
Gouldie, with a goal to start production from East Gouldie in 2027.
The Odyssey project will utilize a transverse long hole stoping
mining method with primary and secondary stopes and paste backfill
to fill the voids, a proven mining method in the region. On a 100%
basis, average annual payable gold production is expected to be
approximately 545,400 ounces from 2029 to 2039 with total cash
costs per ounce of approximately $630 per ounce. Sustaining capital
from 2029 to 2039 is expected on a 50% (and 100%) basis to average
approximately $27.9 million ($55.8 million) per year.
The project requires modest capital in any given year which is
manageable and fully funded using Canadian Malartic's cash on hand
and free cash flow generation, and no external funding is required.
Initial capital expenditures and other growth capital expenditures,
on a 50% (and 100%) basis, are as follows in millions of dollars:
$56.9 ($113.8), $102.0 ($204.0) and $68.4 ($136.8) for 2021 through
2023 respectively, an average of $81.9 ($163.8) per year from 2024
through 2026, and $104.5 ($209.0) and $90.2 ($180.3) during 2027
and 2028, respectively. Furthermore, gold production during the
2021 to 2028 construction period is expected to start in 2023 and
total on a 50% (and 100%) basis 466,000 (932,000) ounces at cash
costs of approximately $800 per ounce. Although the aforementioned
costs do not include any offsetting net proceeds from
pre-commercial production due to upcoming amendments to the
relevant accounting standard(i) , which represents a practical
consequence of IFRS application, net proceeds from the sale of
these ounces would significantly reduce the cash requirements for
the construction of the project which, assuming the gold price used
in the financial analysis for the project of $1,550 per ounce,
would reduce the projected capital requirements in half.
The main focus of exploration during the first quarter was to
provide support for an aggressive infill drill program at East
Gouldie, where ten diamond drill rigs completed 23,400 metres of a
141,400 metres planned 2021 program. The main objective of the 2021
drilling program is to infill the core area of the inferred
resource to 75 metre drill spacing from the current 150 metres
spacing, as well as to provide further step out and exploration
drilling. Exploration also continued on Rand and East Amphi with
7,500 metres drilled in the quarter.
East Gouldie, discovered in late 2018 at underground depths
approximately 1.5 kilometres east of the Canadian Malartic/Barnat
open pit and south of the underground East Malartic and Odyssey
zones, has a strike length of approximately 1,400 metres in an
east-west direction and dips 60 degrees to the north, extending
from 700 metres to 1,900 metres depth below surface. Mineralization
remains open to depth and to the east. The zone dips toward the
East Malartic zone, and may converge with East Malartic at depth.
As of December 31, 2020, East Gouldie was estimated to contain
inferred mineral resources of 6.4 million ounces of gold, with
Yamana's 50% interest representing 3.2 million ounces of gold
contained in 31.5 million tonnes grading 3.17 g/t gold.
Significant new drill intercepts from the East Gouldie zone are
set out in the table below and the drill hole pierce points shown
on the corresponding longitudinal section in Figure 1. Download a
PDF of detailed drill hole results for Canadian Malartic presented
in this press release.
The infill program continues to generate excellent results
demonstrating consistent grades and widths throughout the
mineralized zone, further demonstrating the high quality nature of
the reported inferred resource. Notable infill results reported as
uncapped gold grades over estimated true widths, include drill hole
MEX19-153W, 58.6 metres grading 3.7 g/t of gold, including 11.2
metres grading 7.0 g/t of gold; hole MEX20-166A, reporting 22.6
metres grading 6.4 g/t of gold, including 6.8 metres grading 8.7
g/t of gold; and drill hole MEX20-191W, 13.7 metres grading 11.2
g/t of gold, including a 7.1 metres interval grading 17.7 g/t of
gold.
Drilling beyond the inferred resource to the east has also
produced excellent results, notably in drill hole MEX20-193 which
intersected two closely spaced estimated true width intervals of
4.3 g/t of gold over 8.7 metres and 6.7 g/t of gold over 6.3 metres
(uncapped), demonstrating the potential for further resource growth
east of the current resources.
Table 1 : 2020-Q4 through 2021-Q1 infill drilling highlights,
East Gouldie zone, selected for estimated true width intervals
greater than 25.0 gram*metres (gold g/t (uncapped) multiplied by
estimated true width in metres).
Hole Including From To Estimated Gold Uncapped Gold Capped*
(m) (m) True Width (g/t) (g/t)
(m)
MEX19-153W 1777 1851 58.6 3.7 3.7
----- ----- ------------ -------------- -------------
incl. 1806 1820 11.2 7.0 7.0
------------------------- ----- ----- ------------ -------------- -------------
MEX20-166A 1717 1743 22.6 6.4 6.3
----- ----- ------------ -------------- -------------
incl. 1721 1725 3.2 13.1 13.0
------------------------- ----- ----- ------------ -------------- -------------
incl. 1733 1741 6.8 8.7 8.5
------------------------- ----- ----- ------------ -------------- -------------
MEX20-177W 1384 1402 16.6 3.4 3.4
----- ----- ------------ -------------- -------------
MEX20-182W 1659 1671 10.6 3.3 3.2
----- ----- ------------ -------------- -------------
MEX20-185W 1815 1827 9.6 3.7 3.7
----- ----- ------------ -------------- -------------
MEX20-191W 1543 1557 13.7 11.2 8.6
----- ----- ------------ -------------- -------------
incl. 1547 1554 7.1 17.7 12.7
------------------------- ----- ----- ------------ -------------- -------------
MEX20-192W 1751 1761 8.4 8.4 5.9
----- ----- ------------ -------------- -------------
1771 1782 9.4 4.8 4.6
------------------------- ----- ----- ------------ -------------- -------------
MEX20-193 1794 1804 8.7 4.3 4.3
----- ----- ------------ -------------- -------------
1815 1822 6.3 6.7 6.2
------------------------- ----- ----- ------------ -------------- -------------
MEX20-193WA 1744 1759 13.3 3.8 3.8
----- ----- ------------ -------------- -------------
* capped
@ 15 g/t
----- ----- ------------ -------------- -------------
Exploration drilling conducted on the Rand property in the first
quarter targeted the projected down plunge extension of the East
Gouldie zone, with the first hole testing an area located greater
than one kilometre to the east of and down plunge of the current
East Gouldie inferred mineral resource. Drill hole RD21-4680A, the
initial hole into this target, generated excellent results,
intersecting 2.7 g/t gold over an estimated true width of 10.9
metres at 1,995 metres depth, including 3.1 g/t over 7.2 metres at
1,993 metres depth. This mineralized interval is located on the
projection of the East Gouldie plane and exhibits a similar
mineralization style to East Gouldie, with disseminated pyrite
associated with sheared and altered metasedimentary rock. This new
intercept is located 970 metres east of the easternmost drill hole
completed to date into the East Gouldie mineralized envelope and
1,150 metres from the current eastern limit of the East Gouldie
mineral resources reported at year-end 2020. The Company considers
this result significant as it opens the possibility for significant
expansion of the East Gouldie zone to the east.
The above intercept in hole RD21-4680A is within the Canadian
Malartic property and only 120 metres west of the boundary with the
contiguous Rand Malartic property. Exploration will continue with
wide step out drilling planned on both the Rand Malartic and
Canadian Malartic properties to define the extent of the new
mineralized zone in this area.
Figure 1 : Canadian Malartic long section looking north,
highlighting 2020/2021 drilling results for the East Gouldie zone
listed in Table I and discussed in text.
https://www.globenewswire.com/NewsRoom/AttachmentNg/31e1c51c-f0ea-448f-9792-4f183ae6d975
The Partnership acquired a 100% interest in the 262-hectare Rand
Malartic property in March 2019 from NSR Resources for $5 million,
with NSR Resources retaining a 2% net smelter return royalty that
can be bought back in its entirety by the Partnership for $7
million prior to March 26, 2022.
In 2021, the Company expects to spend $11.9 million (50% basis)
for 141,400 metres (100% basis) of exploration and conversion
drilling on the Odyssey underground project to improve confidence
in the mineral resource and to refine the geological model. The
Company expects to spend a further $3.2 million (50% basis) on
32,000 metres (100% basis) of exploration drilling in 2021 to test
other regional targets at Canadian Malartic, including the Rand
Malartic and East Amphi properties.
(i) The amendment to IAS 16: Property, Plant and Equipment: Proceeds before Intended Use, effective
from 2022, prohibits entities from deducting amounts received from selling items produced
from the cost of property, plant and equipment while the Company is preparing the asset for
its intended use.
MARA Project (Agua Rica and Alumbrera Integration),
Argentina
On December 17, 2020, the Company completed the integration with
Glencore and Newmont and a new joint venture, the MARA Joint
Venture, was formed to manage, develop and operate the project.
Yamana holds a controlling ownership interest in the MARA Project
at 56.25%. Glencore holds a 25.00% interest and Newmont holds an
18.75% interest. Yamana has been appointed manager of the MARA
Joint Venture and will continue to lead the engagement with local,
provincial, and national stakeholders, and completion of the
Feasibility Study and ESIA for the MARA Project. A MARA Project
Joint Venture Technical Committee ("Technical Committee") has been
formed, comprised of representatives of the three shareholder
companies.
The integration creates significant synergies by combining
existing substantive infrastructure which was formerly used to
process ore from the Alumbrera mine during its mine life, including
processing facilities, a fully permitted tailings storage facility,
pipeline, logistical installations, ancillary buildings, and other
infrastructure, with the future open pit Agua Rica mine. The result
is a de-risked project with a smaller environmental footprint and
improved efficiencies, creating one of the lowest capital intensity
projects in the world as measured by pound of copper produced and
in-situ copper mineral reserves, and creating significant benefits
for the local communities, the province of Catamarca and
Argentina.
On July 19, 2019, the Company announced the positive results of
a Pre-Feasibility Study ("PFS(A)"), underscoring that the MARA
Project is a long life and low-cost asset with robust economics and
opportunities to realize further value, including converting
economic-grade inferred mineral resources and expanding throughput
scenarios aimed to increase metal production and returns, among
other opportunities.
The PFS(A) for the MARA Project considers the Agua Rica deposit
will be mined using a conventional high tonnage truck and shovel
open pit operation. Average life of mine material moved is expected
to be approximately 108 million tonnes per year, with ore feed of
40 million tonnes per year and average life of mine strip ratio of
1.66.
Ore extracted from the Agua Rica mine will be transported from
the open pit by truck to the primary crusher area and then
transported via a conventional conveyor to the existing Alumbrera
processing plant. To route the overland conveyor system,
approximately 5.2 kilometres of tunnel development will be required
over the total 35 kilometre conveyor right-of-ways to the Alumbrera
processing plant, where it will feed the existing stacker conveyor
via a new transfer station.
Relatively modest modifications to the circuit are needed to
process the Agua Rica ore to produce copper and by-products
concentrate, which will then be transported to the port for
commercialization. An in-situ blending strategy has been defined to
manage the concentrate quality over certain years of the mine life,
which will allow the project to achieve the desired targets.
Further optimizations to this strategy will be studied in the next
design phase.
The PFS(A) provides the framework for the preparation and
submission of a new ESIA to the authorities of the Catamarca
Province and for the continued engagement with local stakeholders
and communities. The shareholders of the MARA Joint Venture began
the ESIA process in 2019, given the level of significant detail in
the PFS(A).
The Joint Venture Technical Committee advanced optimization
studies in late 2019 and early 2020, the results of which were
compiled as Pre-Feasibility Study B ("PSF(B)"), and is now
advancing a full Feasibility Study on the MARA Project, with
updated Mineral Reserve, production and project cost estimates.
The PFS(B) highlights include:
-- Annual ore feed increased to 42 million tonnes per year.
-- Annual production for the first 10 full years increased to 556 million pounds of copper equivalent(i)
production.
-- Cash costs(2) of $1.32 per pound and AISC(2) of $1.44 per pound for the first 10 years of
production.
-- Initial capital of $2.78 billion. Initial capital reduced to $2.39 billion if first year of
owner mine fleet purchases are reclassified as sustaining capital, as was assumed for PFS(A).
Total LOM capital spending the same under both PFS(A) and PFS(B).
-- NPV of $1.906 billion and an increased IRR of 21.2%.(ii)
-- PFS(B) reflects the inclusion of a progressive Argentina export tax with a long-term assumption
of 4.3%.
(i) Copper equivalent metal includes copper with gold, molybdenum, and silver converted to copper-equivalent
metal based on the following metal price assumptions: $6,614 per tonne of copper, $1,250 per
ounce for gold, $24,250 per tonne for molybdenum, and $18.00 per ounce for silver.
(ii) Assuming metal prices of $3.00 per pound of copper, $1,300 per ounce of gold price, $18.00
per ounce of silver, $11.00 per pound of molybdenum and using an 8% discount rate.
The most recent technical studies indicate that the processing
facility at Alumbrera is capable of processing up to 44.0 million
tonnes per year, with minor additional capital expenditures, which
represents a significant upside to the PFS results. Further tests
and studies are planned for the Feasibility Study stage to confirm
and optimize these results. In addition, opportunities have already
been identified in optimizing the mine pioneering, stripping,
sequence and blending, which are expected to provide further value
improvements for the integrated project.
MARA obtained all the permits for advanced exploration works
from the local authorities including programs of community
participation and social consultation, to conduct field work for
the Feasibility Study and collect additional information for the
ESIA. Work in the field has commenced, with baseline and
environmental studies activities progressing during the quarter and
drilling contractor mobilization completed in March. The drilling
campaign aimed to collect samples for geotechnical and
metallurgical studies is currently progressing as planned. Other
Feasibility Study work is ongoing and key technical results are
expected during 2021. While the Company continues to advance the
Feasibility Study, it notes that a considerable amount of
information in the PFS is already at Feasibility Study level mostly
as a result of the integration transaction. The full Feasibility
Study and ESIA completion are expected in 2022.
The estimated expenses for the Company to advance the project
through the Feasibility Study and ESIA are in the range of $20.0
million to $25.0 million for the next three years (Yamana's 56.25%
interest), representing a manageable and modest investment in
relation to the value creation of advancing the MARA Project to the
next phases of development.
Acquisition of Wasamac Property and Camflo Property and Mill
(Monarch Gold Acquisition) Completed
On January 21, 2021, the Company completed its acquisition of
the Wasamac property and the Camflo property and mill.
The addition of the Wasamac project to Yamana's portfolio
further solidifies the Company's long-term growth profile with a
top-tier gold project in Quebec's Abitibi District, a prolific
mining district where Yamana has deep operational and technical
expertise and experience. The deposit has existing proven and
probable mineral reserves of 21.45 million tonnes at 2.56 g/t, for
total proven and probable mineral reserves of 1.8 million ounces of
gold supported by a Feasibility Study previously completed by
Monarch Gold in 2018. The Feasibility Study outlined a 6,000 tpd
operation with average gold production of 160,000 ounces per
year.
Building off the work completed to date, Yamana has commenced an
exploration and infill drilling campaign to refine and expand upon
the potential of Wasamac and its development alternatives.
Following an in-depth review of the 2018 Feasibility Study,
Yamana has identified opportunities to optimize the processing
plant design, incorporate increased levels of automation in the
underground mine, and optimize the materials handling system to
sustain a throughput rate of 7,000 tpd. These opportunities support
Yamana's vision of Wasamac as a low cost operation with minimal
impact on the environment and neighboring communities and will be
reflected in an update of the Feasibility Study, scheduled for
completion in the third quarter of 2021. Further opportunities to
increase metallurgical recoveries require additional metallurgical
drilling and test work, and will continue to be assessed as the
project advances.
The Company is in the process of opening a regional office in
the Abitibi region, and is hiring personnel to manage the
permitting process and related studies to update the feasibility
study.
The Company has also developed an exploration program for the
Camflo property which, given the proximity of Camflo to the
Canadian Malartic mine, is being considered for inclusion in the
Canadian Malartic General Partnership exploration program. Camflo
is located adjacent to and north of the Malartic and Rand
properties that host the Malartic deposit and the recent Odyssey
underground discovery. A recent high resolution airborne magnetic
survey of the property has identified three high priority drill
targets with magnetic signatures similar to the historic Camflo
mine. Data compilation has also defined the presence of a
porphyritic stock similar to that which hosted 90% of the historic
ore located 800 metres to east of the mine as an additional
priority exploration target. Camflo was a producing underground
gold mine for 27 years, closing in 1992. It produced 1.65 million
ounces of gold from 8,862,240 tonnes of ore grading at 5.78 g/t and
was exploited to a depth of 1,000 metres below surface.
OTHER INITIATIVES - STRATEGIC, OPTIMIZATION AND MONETIZATION
As a complement to the advancement of the internal exploration
opportunities, the Company will consider the acquisition of earlier
stage development assets or companies that align with Yamana's
objectives for capital allocation and financial results,
jurisdiction, geology and operational expertise. Such opportunities
will typically be funded through internal resources, meet minimum
return levels that far exceed cost of capital and would meet the
Company's minimum requirements to achieve mineral reserve and
mineral resource inventories, mine life and per year production
rate. Furthermore, preference would be given to geological and
operational characteristics where the Company has an identified
expertise and excellent opportunities for value enhancement. Such
opportunities would also extend an existing regional presence or
lead to that longer-term objective. Although the Company has an
established portfolio of early-to-later-stage organic growth
projects, the Company also considers it prudent to consider
opportunities to extend regional presences in quality jurisdictions
that offer geological and operational synergies and similarities to
its current portfolio of assets.
From time to time, the Company's strategy includes holding
investments in prospective companies. This may be for several
reasons such as the disposition of certain assets for shares or in
other cases, resulting from an investment for portfolio purposes.
The ownership of shares of Nomad is an example of the former. An
investment may also give the Company an opportunity to further
evaluate related opportunities. Normally, these investments are
held through a cycle, although are otherwise treated as any other
portfolio investments. The acquisition by the Company of 24 million
shares of Ascot Resources Ltd. subsequent to quarter end,
representing 6.4% of the outstanding shares, for aggregate
consideration of $16.5 million is an example of the latter.
GENERATIVE EXPLORATION PROGRAM
During the first quarter, exploration drilling and other field
activities continued to ramp up in most jurisdictions as responses
to COVID-19 restrictions were managed and exploration programs
adjusted to best address the restrictions. Drilling activities
continued in Brazil at Lavra Velha, Jacobina Norte and at the São
Francisco discovery at Borborema, extending copper-(gold)
mineralization along strike. Exploration in Chile in the first
quarter included surface work at early-stage projects near the El
Peñón mine and elsewhere in preparation for a reverse circulation
scout drilling programs later in the year. In Argentina, surface
work was completed on the Company's Las Flechas property, where
drilling in 2021 is planned to test breccia-related
high-sulphidation epithermal gold
targets. At Monument Bay in Manitoba, deep drilling continued
during the quarter designed to test the down plunge projections of
modeled, plunging high-grade zones at the Twin Lakes target.
KEY STATISTICS
Key operating and financial statistics for the first quarter
2021 are outlined in the following tables.
Three months ended
March 31
Financial Summary
(In millions of United States
Dollars, except for
per share and per unit amounts) 2021 2020
------------------------------------------------- ------------------------
Revenue $ 422.0 $ 356.5
Cost of sales excluding depletion,
depreciation and
amortization (163.9) (154.3)
Depletion, depreciation and
amortization (100.4) (99.4)
Total cost of sales (264.3) (253.7)
Temporary suspension, standby and
other incremental
COVID-19 costs (8.2) (3.5)
Mine operating earnings 149.5 99.3
General and administrative expenses (18.3) (15.8)
Exploration and evaluation expenses (6.1) (2.6)
Net earnings attributable to Yamana
equity holders 54.7 45.0
Net earnings per share - basic and
diluted (i) 0.06 0.05
Cash flow generated from operations
after changes
in non-cash working capital 160.2 129.4
Cash flow from operations before
changes in non-cash
working capital (ii) 183.4 164.6
Revenue per ounce of gold $ 1,793 $ 1,589
Revenue per ounce of silver $ 26.78 $ 18.16
Average realized gold price per
ounce (2) $ 1,793 $ 1,589
Average realized silver price per
ounce (2) $ 25.66 $ 17.47
----------------------------------- --------------- -------------------------------- --------------- -----
(i) For the three months ended March 31, 2021, the weighted average
number of shares outstanding
was 962,071 thousand (basic) and 963,021 thousand (diluted).
(ii) Refers to a non-GAAP financial measure or an additional line item
or subtotal in financial
statements. Please see the discussion included at the end of this
press release under the
heading "Non-GAAP Financial Measures and Additional Line Items
and Subtotals in Financial
Statements". Reconciliations for all non-GAAP financial measures
are available at www.yamana.com/Q12021
and in Section 11 of the Company's Management's Discussion &
Analysis for the three months
ended March 31, 2021, which is available on the Company's website
and on SEDAR.
Production, Financial and Operating Summary
Three months ended March
Costs 31
(In United States Dollars) 2021 2020
--------------------------- -------------- ----------------
Per GEO sold (1)
Total cost of sales $ 1,126 $ 1,141
Cash Costs (2) $ 698 $ 694
AISC (2) $ 1,045 $ 1,032
--------------------------- ---------- ----------
Three months ended March
31
Gold Ounces 2021 2020
---------------------------- ---------------------- ---------------------------
Canadian Malartic (50%) (3) 89,550 64,763
Jacobina 43,102 43,938
Cerro Moro 16,210 18,743
El Peñón 31,437 42,230
Minera Florida 20,818 22,563
---------------------- -------------------------
TOTAL 201,117 192,238
---------------------------- ---------------------- -------------------------
Three months ended March
31
Silver Ounces 2021 2020
------------------- ------------ --------------
Cerro Moro 1,309,103 1,374,941
El Peñón 816,144 1,355,910
------------ ------------
TOTAL 2,125,247 2,730,851
------------------- ------------ ------------
For a full discussion of Yamana's operational and financial
results and mineral reserve and mineral resource estimates, please
refer to the Company's Management's Discussion & Analysis and
Condensed Consolidated Interim Financial Statements for the three
months ended March 31, 2021, which are available on the Company's
website at www.yamana.com, on SEDAR at www.sedar.com and on EDGAR
at www.sec.gov.
The Company will host a conference call and webcast on Thursday,
April 29, 2021, at 8:30 a.m. EDT (12:30 pm GMT).
First Quarter 2021 Conference Call
Toll Free (North America): 1-800-898-3989
Toronto Local and International: 416-406-0743
Toll Free (UK): 00-80042228835
Passcode: 1738987#
Webcast: www.yamana.com
Conference Call Replay
Toll Free (North America): 1-800-408-3053
Toronto Local and International: 905-694-9451
Toll Free (UK): 00-80033663052
Passcode: 6103145#
The conference call replay will be available from 12:00 p.m. EDT
on April 29, 2021, until 11:59 p.m. EDT (3:59 am GMT) on May 29,
2021.
Qualified Persons
Scientific and technical information contained in this news
release has been reviewed and approved by Sébastien Bernier (P. Geo
and Senior Director, Geology and Mineral Resources). Sébastien
Bernier is an employee of Yamana Gold Inc. and a "Qualified Person"
as defined by Canadian Securities Administrators' National
Instrument 43-101 - Standards of Disclosure for Mineral
Projects.
About Yamana
Yamana is a Canadian-based precious metals producer with
significant gold and silver production, development stage
properties, exploration properties, and land positions throughout
the Americas, including Canada, Brazil, Chile and Argentina. Yamana
plans to continue to build on this base through expansion and
optimization initiatives at existing operating mines, development
of new mines, the advancement of its exploration properties and, at
times, by targeting other consolidation opportunities with a
primary focus in the Americas.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Investor Relations and Corporate Communications
416-815-0220
1-888-809-0925
Email: investor@yamana.com
FTI Consulting (UK Public Relations)
Sara Powell / Ben Brewerton
+44 7974 201 715 / +44 203 727 1000
Email: Yamana.gold@fticonsulting.com
Credit Suisse (Joint UK Corporate Broker)
Ben Lawrence / David Nangle
Telephone: +44 (0) 20 7888 8888
Joh. Berenberg Gossler & Co. KG (Joint UK Corporate
Broker)
Matthew Armitt / Jennifer Wyllie / Detlir Elezi
Telephone: +44 (0) 20 3207 7800
Peel Hunt LLP (Joint UK Corporate Broker)
Ross Allister / David McKeown / Alexander Allen
Telephone: +44 (0) 20 7418 8900
NOTES
(1) GEO assumes gold ounces plus the gold equivalent of silver
ounces using a ratio of 68.84 for the three months ended March 31,
2021, and 94.23 for the three months ended March 31, 2020.
(2) A cautionary note regarding non-GAAP performance measures
and their respective reconciliations, as well as additional line
items or subtotals in financial statements is included in Section
11: Non-GAAP Performance Measures in the Company's MD&A for the
three months ended March 31, 2021 and in the 'Non-GAAP Performance
Measures' section below.
(3) Included in the 2020 comparative gold production figure is
2,974 of pre-commercial production ounces related to the Company's
50% interest in the Canadian Malartic mine's Barnat pit, which
achieved commercial production on September 30, 2020.
Pre-commercial production ounces are excluded from sales figures,
although pre-commercial production ounces that were sold during
their respective period of production had their corresponding
revenues and costs of sales capitalized to mineral properties,
captured as expansionary capital expenditures.
(4) Net earnings and adjusted net earnings represent amounts
attributable to Yamana Gold Inc. equity holders.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news
release contains or incorporates by reference "forward-looking
statements" and "forward-looking information" under applicable
Canadian securities legislation and within the meaning of the
United States Private Securities Litigation Reform Act of 1995.
Forward-looking information includes, but is not limited to
information with respect to the Company's strategy, plans or future
financial or operating performance, results of feasibility studies,
repayment of debt or updates regarding mineral reserves and mineral
resources. Forward-looking statements are characterized by words
such as "plan", "expect", "budget", "target", "project", "intend",
"believe", "anticipate", "estimate" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions, assumptions
and estimates of management considered reasonable at the date the
statements are made, and are inherently subject to a variety of
risks and uncertainties and other known and unknown factors that
could cause actual events or results to differ materially from
those projected in the forward-looking statements. These factors
include the Company's expectations in connection with the
production and exploration, development and expansion plans at the
Company's projects discussed herein being met, the impact of
proposed optimizations at the Company's projects, changes in
national and local government legislation, taxation, controls or
regulations and/or change in the administration of laws, policies
and practices, and the impact of general business and economic
conditions, global liquidity and credit availability on the timing
of cash flows and the values of assets and liabilities based on
projected future conditions, fluctuating metal prices (such as
gold, silver, copper and zinc), currency exchange rates (such as
the Canadian Dollar, the Brazilian Real, the Chilean Peso and the
Argentine Peso versus the United States Dollar), the impact of
inflation, possible variations in ore grade or recovery rates,
changes in the Company's hedging program, changes in accounting
policies, changes in mineral resources and mineral reserves, risks
related to asset dispositions, risks related to metal purchase
agreements, risks related to acquisitions, changes in project
parameters as plans continue to be refined, changes in project
development, construction, production and commissioning time
frames, risks associated with infectious diseases, including
COVID-19, unanticipated costs and expenses, higher prices for fuel,
steel, power, labour and other consumables contributing to higher
costs and general risks of the mining industry, failure of plant,
equipment or processes to operate as anticipated, unexpected
changes in mine life, final pricing for concentrate sales,
unanticipated results of future studies, seasonality and
unanticipated weather changes, costs and timing of the development
of new deposits, success of exploration activities, permitting
timelines, government regulation and the risk of government
expropriation or nationalization of mining operations, risks
related to relying on local advisors and consultants in foreign
jurisdictions, environmental risks, unanticipated reclamation
expenses, risks relating to joint venture operations, title
disputes or claims, limitations on insurance coverage, timing and
possible outcome of pending and outstanding litigation and labour
disputes, risks related to enforcing legal rights in foreign
jurisdictions, as well as those risk factors discussed or referred
to herein and in the Company's Annual Information Form filed with
the securities regulatory authorities in all provinces of Canada
and available at www.sedar.com, and the Company's Annual Report on
Form 40-F filed with the United States Securities and Exchange
Commission. Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to
be anticipated, estimated or intended. There can be no assurance
that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. The Company undertakes no
obligation to update forward-looking statements if circumstances or
management's estimates, assumptions or opinions should change,
except as required by applicable law. The reader is cautioned not
to place undue reliance on forward-looking statements. The
forward-looking information contained herein is presented for the
purpose of assisting investors in understanding the Company's
expected financial and operational performance and results as at
and for the periods ended on the dates presented in the Company's
plans and objectives and may not be appropriate for other
purposes.
CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATES
OF MEASURED, INDICATED AND INFERRED MINERAL RESOURCES
This news release has been prepared in accordance with the
requirements of the securities laws in effect in Canada, which
differ in certain material respects from the disclosure
requirements of United States securities laws contained in Industry
Guide 7. The terms "mineral reserve", "proven mineral reserve" and
"probable mineral reserve" are Canadian mining terms as defined in
accordance with Canadian National Instrument 43-101 Standards of
Disclosure for Mineral Projects ("NI 43-101") and the Canadian
Institute of Mining, Metallurgy and Petroleum (the "CIM") - CIM
Definition Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council, as amended. These definitions differ
from the definitions in the disclosure requirements promulgated by
the Securities and Exchange Commission (the "Commission") contained
in Industry Guide 7. Under Industry Guide 7 standards, a "final" or
"bankable" feasibility study is required to report mineral
reserves, the three-year historical average price is used in any
mineral reserve or cash flow analysis to designate mineral reserves
and the primary environmental analysis or report must be filed with
the appropriate governmental authority.
In addition, the terms "mineral resource", "measured mineral
resource", "indicated mineral resource" and "inferred mineral
resource" are defined in and required to be disclosed by NI 43-101.
However, these terms are not defined terms under Industry Guide 7.
Investors are cautioned not to assume that any part or all of the
mineral deposits in these categories will ever be converted into
mineral reserves. "Inferred mineral resources" have a great amount
of uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility. It cannot be assumed that all
or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that all or any part of an inferred mineral
resource exists or is economically or legally mineable. Disclosure
of "contained ounces" in a mineral resource is permitted disclosure
under Canadian regulations. In contrast, issuers reporting pursuant
to Industry Guide 7 report mineralization that does not constitute
"mineral reserves" by Commission standards as in place tonnage and
grade without reference to unit measures.
Accordingly, information contained in this news release may not
be comparable to similar information made public by U.S. companies
reporting pursuant to Industry Guide 7.
NON-GAAP PERFORMANCE MEASURES
The Company has included certain non-GAAP performance measures
to supplement its Consolidated Financial Statements, which are
presented in accordance with IFRS, including the following:
-- Cash Costs per GEO sold;
-- All-in Sustaining Costs per GEO sold;
-- Net Debt;
-- Net Free Cash Flow and Free Cash Flow Before Dividends and Debt Repayment
-- Average Realized Price per ounce of gold/silver sold; and
-- Adjusted Earnings
The Company believes that these measures, together with measures
determined in accordance with IFRS, provide investors with an
improved ability to evaluate the underlying performance of the
Company. Non-GAAP financial measures do not have any standardized
meaning prescribed under IFRS, and therefore they may not be
comparable to similar measures employed by other companies. The
data is intended to provide additional information and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. Management's
determination of the components of non-GAAP and additional measures
are evaluated on a periodic basis influenced by new items and
transactions, a review of investor uses and new regulations as
applicable. Any changes to the measures are duly noted and
retrospectively applied as applicable.
For definitions and descriptions of the non-GAAP measures, other
than those noted and reconciled below and additional subtotals in
financial statements, refer to Section 11: Non-GAAP Financial
Measures and Additional Line Items or Subtotals in Financial
Statements of the Company's MD&A for the three months ended
March 31, 2021.
GEO PRODUCTION AND SALES
Production and sales of silver are treated as a gold equivalent
in determining a combined precious metal production or sales unit,
commonly referred to as gold equivalent ounces ("GEO").
Specifically, guidance GEO produced are calculated by converting
silver production to its gold equivalent using relative gold/silver
metal prices at an assumed ratio and adding the converted silver
production expressed in gold ounces to the ounces of gold
production. Actual GEO production and sales calculations are based
on an average realized gold to silver price ratio for the relevant
period.
CASH COSTS AND ALL-IN SUSTAINING COSTS
The Company discloses "Cash Costs" because it understands that
certain investors use this information to determine the Company's
ability to generate earnings and cash flows for use in investing
and other activities. The Company believes that conventional
measures of performance prepared in accordance with IFRS do not
fully illustrate the ability of its operating mines to generate
cash flows. The measures, as determined under IFRS, are not
necessarily indicative of operating profit or cash flows from
operating activities.
The measure of Cash Costs and All-in Sustaining Costs (AISC),
along with revenue from sales, is considered to be a key indicator
of a company's ability to generate operating earnings and cash
flows from its mining operations. This data is furnished to provide
additional information and is a non-GAAP financial measure. The
terms Cash Costs per GEO sold and AISC per GEO sold do not have any
standardized meaning prescribed under IFRS, and therefore they may
not be comparable to similar measures employed by other companies.
Non-GAAP financial measures should not be considered in isolation
as a substitute for measures of performance prepared in accordance
with IFRS and are not necessarily indicative of operating costs,
operating profit or cash flows presented under IFRS.
Cash Costs include mine site operating costs such as mining,
processing, administration, production taxes and royalties which
are not based on sales or taxable income calculations, but are
exclusive of amortization, reclamation, capital, development and
exploration costs. The Company believes that such measure provides
useful information about its underlying Cash Costs of operations.
Cash Costs are computed on a weighted average basis as follows:
-- Cash Costs per GEO sold - The total costs used as the numerator of the unitary calculation
represent Cost of Sales excluding DDA, net of treatment and refining charges. These costs
are then divided by GEO sold. Non-attributable costs will be allocated based on the relative
value of revenues for each metal, which will be determined annually at the beginning of each
year.
AISC figures are calculated in accordance with a standard
developed by the World Gold Council ("WGC") (a non-regulatory,
market development organization for the gold industry). Adoption of
the standard is voluntary and the cost measures presented herein
may not be comparable to other similarly titled measures of other
companies.
AISC per sold seeks to represent total sustaining expenditures
of producing and selling GEO from current operations. The total
costs used as the numerator of the unitary calculation represent
Cash Costs (defined above) and includes cost components of mine
sustaining capital expenditures including stripping and underground
mine development, corporate and mine-site general and
administrative expense, sustaining mine-site exploration and
evaluation expensed and capitalized and accretion and amortization
of reclamation and remediation. AISC do not include capital
expenditures attributable to projects or mine expansions,
exploration and evaluation costs attributable to growth projects,
income tax payments, borrowing costs and dividend payments.
Consequently, this measure is not representative of all of the
Company's cash expenditures. In addition, the calculation of AISC
does not include depletion, depreciation and amortization expense
as it does not reflect the impact of expenditures incurred in prior
periods.
-- AISC per GEO sold - reflect allocations of the aforementioned cost components on the basis
that is consistent with the nature of each of the cost component to the GEO production and
sales activities.
NET DEBT
The Company uses the financial measure "net debt ", which is a
non-GAAP financial measure, to supplement information in its
consolidated financial statements. The Company believes that in
addition to conventional measures prepared in accordance with IFRS,
the Company and certain investors and analysts use this information
to evaluate the Company's performance. The non-GAAP financial
measure of net debt does not have any standardized meaning
prescribed under IFRS, and therefore it may not be comparable to
similar measures employed by other companies. The data is intended
to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS.
Net debt is calculated as the sum of the current and non-current
portions of long-term debt net of the cash and cash equivalent
balance as at the balance sheet date. Cash related to the MARA
Project is added back to the net debt calculation on the basis that
the cash is specific to the MARA Project, and not available to the
Company for the purposes of debt reduction.
When the cash and cash equivalent balance exceeds the total
debt, the Company is in a "net cash" position.
A reconciliation of Net Debt at March 31, 2021 and December 31,
2020 is provided in Section 11 of the Company's MD&A for the
three months ended March 31, 2021, which is available on the
Company's website and on SEDAR.
NET FREE CASH FLOW AND FREE CASH FLOW BEFORE DIVIDS AND DEBT
REPAYMENTS
The Company uses the financial measure "Net Free Cash Flow" and
"Free Cash Flow Before Dividends and Debt Repayment", which are
non-GAAP financial measures, to supplement information in its
Consolidated Financial Statements. Net Free Cash Flow and Free Cash
Flow do not have any standardized meaning prescribed under IFRS,
and therefore may not be comparable to similar measures employed by
other companies. The Company believes that in addition to
conventional measures prepared in accordance with IFRS, the Company
and certain investors and analysts use this information to evaluate
the Company's performance with respect to its operating cash flow
capacity to meet non-discretionary outflows of cash or to meet
dividends and debt repayments. The presentation of Net Free Cash
Flow and Free Cash Flow are not meant to be substitutes for the
cash flow information presented in accordance with IFRS, but rather
should be evaluated in conjunction with such IFRS measures. Net
Free Cash Flow is calculated as cash flows from operating
activities adjusted for advance payments received pursuant to metal
purchase agreements, non-discretionary expenditures from sustaining
capital expenditures and interest paid related to the current
period. Free Cash Flow further deducts remaining capital
expenditures and payments for lease obligations. Reconciliations of
Net Free Cash Flow and Free Cash Flow are provided below.
Reconciliation of Cash Flows from Operating Activities Three months ended March
to non-GAAP Measures 31
(In millions of United States Dollars) 2021 2020
------------------------------------------------------- --------------- -------------
Cash flows from operating activities $ 160.2 $ 129.4
Adjustments to operating cash flows:
Amortization of deferred revenue 7.5 6.1
Temporary suspension, standby and other incremental
COVID-19 costs 8.2 3.5
Non-discretionary items related to the current
period
Sustaining capital expenditures (42.3) (36.9)
Interest paid (5.1) (5.4)
Payment of lease liabilities (3.5) (4.4)
Cash used in other financing activities (1.5) (1.2)
--------------- -----------
Net free cash flow $ 123.5 $ 91.1
Discretionary and other items impacting cash flow
available for dividends and debt repayments
Expansionary and exploration capital expenditures $ (37.9) $ (30.1)
Cash flows used in other investing activities $ (9.3) $ (19.6)
Effect of foreign exchange of non-USD denominated
cash $ (0.3) $ (2.5)
------------------------------------------------------- ----------- ----------
Free cash flow before dividends and debt repayments $ 76.0 $ 38.9
======================================================= =========== ==========
AVERAGE REALIZED METAL PRICES
The Company uses the financial measures "average realized gold
price" and "average realized silver price", which are non-GAAP
financial measures, to supplement in its Consolidated Financial
Statements. Average realized price does not have any standardized
meaning prescribed under IFRS, and therefore may not be comparable
to similar measures employed by other companies. The Company
believes that in addition to conventional measures prepared in
accordance with IFRS, the Company and certain investors and
analysts use this information to evaluate the Company's performance
vis-à-vis average market prices of metals for the period. The
presentation of average realized metal prices is not meant to be a
substitute for the revenue information presented in accordance with
IFRS, but rather should be evaluated in conjunction with such IFRS
measure.
Average realized metal price represents the sale price of the
underlying metal before deducting treatment and refining charges,
and other quotational and pricing adjustments. Average realized
prices are calculated as the revenue related to each of the metals
sold, i.e. gold and silver, divided by the quantity of the
respective units of metals sold, i.e. gold ounce and silver ounce.
Reconciliations of average realized metal prices to revenue are
provided in Section 11 of the Company's MD&A for the three
months ended March 31, 2021, which is available on the Company's
website and on SEDAR.
ADJUSTED EARNINGS OR LOSS AND ADJUSTED EARNINGS OR LOSS PER
SHARE
The Company uses the financial measures "Adjusted Earnings or
Loss" and "Adjusted Earnings or Loss per share" to supplement
information in its Consolidated Annual Financial Statements. The
Company believes that in addition to conventional measures prepared
in accordance with IFRS, the Company and certain investors and
analysts use this information to evaluate the Company's
performance. The presentation of adjusted measures are not meant to
be a substitute for Net Earnings or Loss or Net Earnings or Loss
per share presented in accordance with IFRS, but rather should be
evaluated in conjunction with such IFRS measures. Adjusted Earnings
or Loss and Adjusted Earnings or Loss per share are calculated as
net earnings excluding non-recurring items, items not related to or
having a disproportionate effect on results for a particular
periods and/or not directly related to the core mining business
such as (a) share-based payments and other compensation, (b)
unrealized foreign exchange (gains) losses related to revaluation
of deferred income tax asset and liability on non-monetary items,
(c) unrealized foreign exchange (gains) losses related to other
items, (d) unrealized (gains) losses on derivatives, (e) impairment
losses and reversals on mineral interests and other assets, (f)
deferred income tax expense (recovery) on the translation of
foreign currency inter-corporate debt, (g) mark-to-market (gains)
losses on other assets, (h) one-time tax adjustments to historical
deferred income tax balances relating to changes in enacted tax
rates, (i) reorganization costs, (j) non-recurring provisions, (k)
(gains) losses on sale of assets, (l) any other non-recurring
adjustments and the tax impact of any of these adjustments
calculated at the statutory effective rate for the same
jurisdiction as the adjustment. Non-recurring adjustments from
unusual events or circumstances are reviewed from time to time
based on materiality and the nature of the event or circumstance.
Earnings adjustments for the comparative period reflect both
continuing and discontinued operations.
The terms "Adjusted Earnings or Loss" and "Adjusted Earnings or
Loss per share" do not have a standardized meaning prescribed by
IFRS, and therefore the Company's definitions are unlikely to be
comparable to similar measures presented by other companies.
Management uses these measures for internal valuation of the core
mining performance for the period and to assist with planning and
forecasting of future operations. Management believes that the
presentation of Adjusted Earnings or Loss and Adjusted Earnings or
Loss per share provide useful information to investors because they
exclude non-recurring items, items not related to or not indicative
of current or future period's results and/or not directly related
to the core mining business and are a better indication of the
Company's profitability from operations as evaluated by internal
management and the board of directors. The items excluded from the
computation of Adjusted Earnings or Loss and Adjusted Earnings or
Loss per share, which are otherwise included in the determination
of Net Earnings or Loss and Net Earnings or Loss per share prepared
in accordance with IFRS, are items that the Company does not
consider to be meaningful in evaluating the Company's past
financial performance or the future prospects and may hinder a
comparison of its period-to-period profitability.
ADDITIONAL LINE ITEMS OR SUBTOTALS IN FINANCIAL STATEMENTS
The Company uses the following additional line items and
subtotals in the Consolidated Financial Statements as contemplated
in IAS 1: Presentation of Financial Statements:
-- Gross margin excluding depletion, depreciation and amortization - represents the amount of
revenue in excess of cost of sales excluding depletion, depreciation and amortization. This
additional measure represents the cash contribution from the sales of metals before all other
operating expenses and DDA, in the reporting period.
-- Mine operating earnings/loss - represents the amount of revenue in excess of cost of sales
excluding depletion, depreciation and amortization, depletion, depreciation and amortization,
t emporary suspension, standby and other incremental COVID-19 costs, and net impairment write-downs/reversals
-- Operating earnings/loss - represents the amount of earnings/loss before net finance costs,
other income/costs and income tax expense/recovery. This measure represents the amount of
financial contribution, net of all expenses directly attributable to mining operations and
overheads. Finance costs and other income/costs are not classified as expenses directly attributable
to mining operations.
-- Cash flows from operating activities before income taxes paid and net change in working capital
- excludes the payments made during the period related to income taxes and tax related payments
and the movement from period-to-period in working capital items including trade and other
receivables, other assets, inventories, trade and other payables. Working capital and income
taxes can be volatile due to numerous factors, such as the timing of payment and receipt.
As the Company uses the indirect method prescribed by IFRS in preparing its statement of cash
flows, this additional measure represents the cash flows generated by the mining business
to complement the GAAP measure of cash flows from operating activities, which is adjusted
for income taxes paid and tax related payments and the working capital change during the reporting
period.
-- Cash flows from operating activities before net change in working capital - excludes the
movement from period-to-period in working capital items including trade and other receivables,
other assets, inventories, trade and other payables. Working capital can be volatile due to
numerous factors, such as the timing of payment and receipt. As the Company uses the indirect
method prescribed by IFRS in preparing its statement of cash flows, this additional measure
represents the cash flows generated by the mining business to complement the GAAP measure
of cash flows from operating activities, which is adjusted for the working capital change
during the reporting period.
The Company's management believes that this presentation
provides useful information to investors because gross margin
excluding depletion, depreciation and amortization excludes the
non-cash operating cost item (i.e. depreciation, depletion and
amortization), cash flows from operating activities before net
change in working capital excludes the movement in working capital
items, mine operating earnings excludes expenses not directly
associated with commercial production and operating earnings
excludes finance and tax related expenses and income/recoveries.
These, in management's view, provide useful information of the
Company's cash flows from operating activities and are considered
to be meaningful in evaluating the Company's past financial
performance or the future prospects.
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END
QRFZZGZDFRLGMZZ
(END) Dow Jones Newswires
April 29, 2021 02:00 ET (06:00 GMT)
Yamana Gold (LSE:AUY)
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Yamana Gold (LSE:AUY)
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