TIDMAUY
RNS Number : 9938G
Yamana Gold Inc.
30 July 2021
YAMANA GOLD REPORTS STRONG SECOND QUARTER 2021 PRODUCTION
RESULTS AND CASH FLOWS; JACOBINA AND CANADIAN MALARTIC ACHIEVE
ALL-TIME QUARTERLY HIGH PRODUCTION; MINERA FLORIDA AND EL PEÑÓN
POST STANDOUT QUARTERS
TORONTO, ONTARIO, July 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 second quarter of
2021. Strong cash flow and production during the quarter were
underpinned by all-time quarterly high production at Jacobina and
Canadian Malartic as well as standout quarters from Minera Florida
and El Peñón.
In a separate announcement published today, the Company reported
significant progress on the Phase 2 expansion of Jacobina as well
as strong exploration results that expand the operation's mineral
resource inventory and support the phased expansion, underscoring
Jacobina's exceptional long-term growth potential and ability to
further extend strategic mine life. For additional details, please
see the press release titled: 'Yamana Gold Reports Significant
Progress on Phase 2 Expansion at Jacobina and Strong Exploration
Results for the Operation' available on the Company's website at
www.yamana.com .
SECOND QUARTER HIGHLIGHTS
Financial Results - Strong Cash Flows Further Strengthen Cash
Balances and Balance Sheet Driving Latest Increase in Dividend
-- Adjusted net earnings(2, 4) were $70.7 million or $0.07 per share basic and diluted.
-- Earnings before taxes of $87.3 million increased
significantly in relation to the comparative period earnings before
taxes of $9.7 million.
-- A non-cash accounting deferred income tax expense of $145.3
million, predominantly associated with an increase in income tax
rates in Argentina as applied to certain non-producing assets
(namely Suyai and MARA) reduced earnings for the period as under
accounting principles, the difference between accounting carrying
values and tax basis requires recalculation although not payment of
deferred income taxes. Future cash payments associated with the
deferred income tax liability are not expected. This has resulted
in a net loss (4) for accounting purposes of $43.9 million or $0.05
per share basic and diluted although no cash impact.
-- Strong cash flows from operating activities of $153.5 million
and cash flows from operating activities before net change in
working capital (2) of $167.8 million with free cash flow before
dividends and debt repayments(2) of $51.2 million.
-- With production and costs in line with plan for the first
half of the year, the Company anticipates stronger production,
lower unit costs, and increased cash flow in the third and fourth
quarters.
-- Cash and cash equivalents of $702.0 million, and available
credit of $750.0 million, for total available liquidity of
approximately $1.5 billion. Cash balances include $223.4 million
available for utilization by the MARA Project. The remainder of
cash and cash equivalents of $478.6 million, along with further
liquidity and incoming cash flows is expected to be more than
sufficient to fully fund the Company's business and capital
allocation objectives.
-- As announced today, the Company is raising its annual
dividend to $0.12 per share, representing a nearly 15% increase
from the previous level and a cumulative increase of 500% from the
second quarter of 2019. The dividend increase reflects improved
cash flows and increased cash balances, along with other realized
and anticipated strengthening of the Company's financial
position.
Three months ended
June 30
(In millions of United States Dollars) 2021 2020
---------------------------------------------------- ----------- -----------
Net Free Cash Flow (2) $ 96.3 $ 60.3
Free Cash Flow before Dividends and Debt Repayments
(2) $ 51.2 $ 38.2
Decrease in Net Debt (2) $ 22.8 $ 101.1
---------------------------------------------------- ------- --------
Operating Results - Record Production at Jacobina and Canadian
Malartic, Standout Quarters from Minera Florida and El Peñón
-- G old equivalent ounce ("GEO") (1) production was 241,341,
including gold production of 217,402 ounces, and silver production
of 1.63 million ounces.
-- Jacobina and Canadian Malartic production reached all-time
quarterly highs, with total production of 47,503 and 92,106 ounces
of gold, respectively.
-- Minera Florida also had a standout quarter, producing 23,813 ounces of gold.
-- El Peñón was ahead of plan for the first half of the year and
is well positioned for the third and fourth quarters with
approximately 57% of annual production for the operation expected
in those quarters.
-- Cerro Moro produced 25,313 GEO(1) , a significant increase
versus the comparative prior year period of 15,451 GEO(1) .
-- The Company remains well positioned to achieve guidance for
the year of 1,000,000 GEO (1) , underpinned by strong momentum at
Jacobina, Canadian Malartic and Minera Florida, as well as an
anticipated strong second half of the year at El Peñón and Cerro
Moro, as previously guided.
-- Cash costs(2) and all-in sustaining costs ("AISC")(2) were
$720 and $1,081 per GEO(1) , respectively, which were in line with
plan and as guided.
-- Year-to-date costs are in line with or better than plan, with
minimal impact from inflationary pressures. The Company expects per
GEO(1) costs to improve in the second half of the year as higher
production is expected. Inflationary pressures have been mostly
absent, although more recently the Company has begun observing
inflationary pressures on certain consumables, namely steel which
impacts grinding media costs, higher diesel and other oil-based
derivative prices, as well as higher ammonium nitrate prices which
impact the cost of explosives, among other less significant items.
These higher prices, along with stronger foreign exchange rates
than those realized earlier in the year, are expected to have an
impact on costs and partially offset the per GEO(1) cost decreases
resulting from higher production in the second half of the year,
were they to persist for the balance of 2021. At this point, while
the Company believes it is reasonable to assume that some of these
inflationary pressures will persist for the balance of the year,
their impact on the Company's cost structure is uncertain, although
it is not expected to be significant.
Health Safety and Sustainable Development
-- The Company's Total Recordable Injury Rate was 0.58(5) for the first six months of 2021.
-- Our climate action strategy advanced during the quarter with
work to determine the baseline year and data compilation to develop
abatement scenarios.
-- The Company was ranked 31(st) in Corporate Knights magazine
list of Canada's Best 50 Corporate Citizens and first amongst
Canadian mining companies. The Best 50 rankings are generated based
on an evaluation of 8 environmental metrics, 5 social metrics, 6
governance metrics and 3 economic factors.
-- The Company released its annual Material Issues Report and
Global Reporting Initiative Report in June. These reports cover a
variety of sustainability related topics and provides detailed data
on the Company's strong environmental, social and governance (ESG)
performance.
Summary of Certain Non-Cash and Other Items Included in Net
Loss(4)
Three months ended
June 30
(In millions of United States Dollars, except per
share amounts,
totals may not add due to rounding) 2021 2020
------------- ---------
Realized and unrealized foreign exchange losses(4) $ 9.1 $ 7.0
Share-based payments/mark-to-market of deferred share
units 1.2 23.6
Mark-to-market gains on derivative contracts, investments
and other assets (0.3) (2.3)
Gain on discontinuation of the equity method of accounting (9.2) -
Temporary suspension, standby and other incremental
COVID-19 costs 12.7 19.2
Other provisions, write-downs and adjustments(4) 5.3 5.5
Non-cash tax on unrealized foreign exchange (gains)
losses (13.4) 11.8
Income tax effect of adjustments(4) (1.5) (11.3)
One-time tax adjustments(4) 110.7 9.8
------------- -------
Total adjustments(4) (i) $ 114.6 $ 63.3
--------- ------
Total adjustments - increase to earnings(4) per share $ 0.12 $ 0.07
----------------------------------------------------------- --------- ------
(i) For the three months ended June 30, 2021, net loss (4) would
be adjusted by an increase of $114.6 million (2020 - increase of
$63.3 million).
Earnings before taxes of $87.3 million increased significantly
in relation to the comparative period earnings before taxes of $9.7
million. A non-cash accounting deferred income tax expense of
$145.3 million, predominantly associated with an increase in income
tax rates in Argentina as applied to certain non-producing assets
(namely Suyai and MARA) reduced earnings for the period as under
accounting principles, the difference between accounting carrying
values and tax basis requires recalculation although not payment of
deferred income taxes. Future cash payments associated with the
deferred income tax liability are not expected. The net loss (4) of
$43.9 million or $0.05 per share basic and diluted, compared to nil
or nil per share basic and diluted in the comparative prior year
quarter, was impacted by $110.7 million of non-cash income tax
items attributable to Yamana Gold Inc. equity holders, primarily
driven by the aforementioned tax rate change. Adjusting items of
$114.6 million (4) , that management believes may not be reflective
of current and ongoing operations, and which may be used to adjust
or reconcile input models in consensus estimates, decreased net
loss (4) for the current period.
OPERATIONS UPDATE
Canadian Malartic
Canadian Malartic had an exceptional second quarter, with
production exceeding plan due to higher grade and recoveries from
the ore found deeper in the Malartic pit. Throughout the course of
2021 the mine will continue its transition from the Malartic pit to
the Barnat pit. Canadian Malartic remains on track to complete
topographic drilling and blasting at Barnat by the third quarter of
2021, while overburden removal was completed during the first
quarter as planned. 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 ounces of
gold mineral reserves on a 50% basis.
Jacobina
Jacobina exceeded its production plan, and posted record-setting
quarterly gold production at 47,503 ounces during the second
quarter. Mill throughput for the quarter was well above plan, with
recovery rates and grade as expected. Throughput averaged 7,500
tonnes per day ("tpd") in May and approximately 7,200 tpd over the
full second quarter, a 5% increase compared to the previous
quarter.
During the first quarter, a new Falcon concentrator and cyclone
bank were installed, while an additional Knelson concentrator was
installed on grinding line two in the second quarter. Other
initiatives include an increase in the diameter of the pipeline
feeding the tailings storage facility from 10 to 16 inches to
relieve pipe pressures thereby increasing design limits. Throughput
for the balance of the year is expected to increase to rates above
those experienced in the second quarter to approximately 7,500 tpd
which represents the permitted operational point.
Additionally, the Jacobina processing team continued to
fine-tune the operation of the plant, optimizing the aperture of
the crushers and sizing of the screens to reduce the feed size of
material entering the ball mills, thereby improving milling
performance. Furthermore, a new combination of mill liners and
grinding balls allowed an increase in throughput while maintaining
grinding size.
Cerro Moro
Cerro Moro second quarter GEO (1) production was 25,313, with
gold production of 14,488 ounces and silver production of 736,823
ounces, a significant increase as compared to 15,451 GEO (1) in the
prior year period. During a period of adverse weather conditions
limiting travel to site and impacting shift changes, the Company
made certain health, safety and other site improvements originally
slated for the second half of the year, which will benefit future
quarters. 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. This trend will continue throughout the
second half of 2021, with most of the ore to plant coming from
Escondida Far West, Zoe, Escondida Central and Escondida West.
The Company expects higher gold production in the second half of
the year, with increases in grade. Over the past year, Cerro Moro
has optimized the operation of the processing plant to increase
daily throughput to approximately 1,100 tpd as seen in the first
quarter. The mine saw linear development continue during the
quarter and will continue to improve throughout the year, further
supporting the much higher second half of 2021 production
profile.
The Company is evaluating construction of a heap leach
operation, a lower-cost processing alternative, that would
facilitate the processing of lower-grade mineral reserves,
potentially extending mine life. The evaluation is in the early
stages with a preliminary study completed, and metallurgical lab
testing currently underway. Yamana has submitted 8 samples
consisting of 800 kg each to a prominent laboratory in Canada to
run column tests, to evaluate the potential for heap leach recovery
from near surface vein mineralization. Samples were collected from
prior quarter diameter drill holes and surface trench saw cut
bedrock samples. Preliminary results after 81 days of leaching have
been reported and five of the zones tested returned results
suggesting recoveries of over 70% could be achieved. Studies are
ongoing and full results with reagent consumption and effects of
grain size on recovery will be reported before year end. The
results indicate good potential for leaching of both oxidized near
surface vein material, zones with hypogene oxides (hematite) and
some low sulphide gold bearing veins. Following the positive
preliminary metallurgical results, Yamana has planned a targeted
drilling program with the objective of defining a heap-leachable
inventory of 5 million tonnes by the end of 2022. In the first half
of 2021, Yamana also completed a scoping study for a plant
expansion using a more energy-efficient comminution configuration.
The study indicated that a doubling of plant throughput to
approximately 2,200 tpd could potentially be achieved with modest
capital investment and would significantly reduce processing costs
per tonne. In the second half of the year, Yamana will undertake
metallurgical testing to confirm the assumption of the scoping
study before advancing to the next level of engineering.
El Peñón
El Peñón had a strong second quarter, with GEO (1) production of
52,607, including gold production of 39,492 ounces and silver
production of 891,255 ounces, compared to 47,925 GEO (1) in the
prior year period. 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. The Company
observed strong grades at El Peñón in June, with 4.29 g/t gold and
117.8 g/t silver. These grades were achieved ahead of plan, and
trending towards the higher grades that are anticipated to be
continuously observed in the third and fourth quarters. The Company
expects that a strong second half of 2021 will account for
approximately 57% of gold and silver production at El Peñón. The
first step to unlock the opportunity to leverage 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 strong second quarter, with production
above plan and prior year production. Linear development that is in
line with the mine's strategy of increasing flexibility continues
to advance ahead of plan, and exploration results continued 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, and processing tonnes were
supplemented from lower grade ore and stockpiles. The Company is
now reactivating and optimizing formerly decommissioned ore passes,
with two ore passes already re-established, and an additional ore
pass at Satellite Fantasma-Polvorin scheduled to commence
construction in August. The ore passes are expected to further
reduce haulage distance and increase operational flexibility as a
result of additional haulage routes. Ongoing initiatives to improve
development cycle times have now increased underground development
beyond the previous rates of 1,200-1,300 metres per month,
achieving 1,344 metres in June, 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 environmental and social impact
assessment ("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 Phased Optimization With Lower Capital Requirements
As reported in a separate announcement today, the Company has
made significant progress on the Phase 2 expansion to increase
daily throughput to 8,500 tpd and raise production to 230,000
ounces per year. Today's announcement also includes a highly
positive exploration update for Jacobina that supports the phased
expansion and underscores the operation's exceptional long-term
growth potential and ability to further extend strategic mine
life.
The success reflects a simplified approach to complete the Phase
2 expansion, which will be achieved through incremental
debottlenecking of the processing plant and tailings system
combined with operational improvements, without requiring the
installation of an additional ball mill. This approach, which
follows a similar approach to that which has been the basis for the
quarter-over-quarter success of Jacobina over the past several
years, significantly reduces capital expenditures, improves energy
efficiency, and de-risks the project. Capital expenditures are
expected to be significantly lower than the original planned
capital estimated in the Phase 2 pre-feasibility study, an amount
not exceeding $15 million to $20 million. Subject to successful
completion of required permit modifications, Jacobina would begin
processing at the new Phase 2 rate by the second half of 2023.
As previously presented in the Company's 10-year production
outlook, Yamana is evaluating a further expansion at Jacobina to
increase throughput to 10,000 tpd, referred to as Phase 3. With the
Phase 2 expansion now underway with a simpler process at reduced
capital costs, the Company will now pursue the Phase 3 expansion as
part of a comprehensive plan which aligns the processing plant,
underground mine, tailings strategy, and permitting, while managing
capital expenditure and cash flow.
For additional details, please see the press release titled:
'Yamana Gold Reports Significant Progress on Phase 2 Expansion at
Jacobina and Strong Exploration Results for the Operation'
available on the Company's website at www.yamana.com .
The Wasamac Project Update and Positive Development Decision
On July 19, 2021, the Company announced the results of several
studies on the Company's wholly-owned Wasamac project in the
Abitibi-Témiscamingue Region of Quebec, Canada, intended to
corroborate diligence reviews conducted by the Company on its
purchase of the Wasamac project in early 2021, and update a
historical feasibility study. These studies updated the baseline
technical and financial aspects of the Wasamac project that now
underpin the decision to advance the project to production. The
results from all studies were consistent with the Company's
conclusions in its diligence reviews relating to the purchase of
Wasamac and, in some cases, are better than the conclusions from
those reviews. The Wasamac project further solidifies the Company's
long-term growth profile with a top-tier gold project in Quebec's
Abitibi-Témiscamingue Region, where Yamana has deep operational and
technical expertise and experience.
Yamana expects to receive all permits and certificates of
authorization required for project construction by the third
quarter of 2024. Construction time to processing plant
commissioning is estimated at approximately two-and-a-half years,
with the underground crusher and conveyor system scheduled for
commissioning six months later. First gold production is scheduled
for the fourth quarter of 2026, with commercial production planned
for the fourth quarter of 2027, however, the Company has already
identified opportunities to improve the production ramp-up and
decrease the processing plant construction period, which would
improve significantly over the feasibility study's base case
production profile. To increase the level of confidence in
metallurgical and geomechanical assumptions, Yamana is considering
the recommendation for an underground bulk sample, which could
commence earlier on a separate environmental permit. The bulk
sample would require ramp access to the underground mineralization.
As part of the studies, the following optimization highlights were
provided:
-- Mineral reserves of 1.91 million gold ounces at an unchanged
average gold grade of 2.56 g/t for an initial mine life of 10
years.
-- Rapid production ramp-up in first year followed by sustained
gold production of approximately 200,000 ounces per year for at
least the next four years. Including the ramp-up phase, average
annual production for the first five years of operation is expected
to be 184,000 ounces.
-- Average life of mine ("LOM") gold production of 169,000
ounces per year with average throughput of 7,000 tpd.
-- Optimized mining method and mining sequence, utilizing a
combination of longitudinal and transverse stoping with paste fill,
which resulted in a higher production rate, reduced dilution, and a
26% reduction in LOM development metres.
-- Initial capital cost is expected to be relatively modest for
a 7,000 tpd underground operation, at approximately $416 million.
The Company undertook extensive due diligence relating to the
acquisition of Wasamac and identified several opportunities for
optimizations and improvements; the updated studies confirmed the
opportunities for optimizations.
-- The Company plans to fully fund development with available cash and cash flows.
-- Total LOM sustaining capital estimated at $318 million
primarily for underground mine development and mobile
equipment.
-- LOM cash costs (2) and AISC (2) of $640 per ounce and $828
per ounce, respectively, remaining well below the Company average,
reflecting the application of more conservative cost assumptions to
de-risk the project and align with Yamana's benchmark costs.
-- Robust project economics including net present value ("NPV")
of $254 million with an after-tax internal rate of return ("IRR")
of 16.1% at $1,550 per ounce of gold and NPV of $470 million and
after-tax IRR of 24% at $1,850 per ounce of gold based on mineral
reserves and excluding future upside potential from encouraging
exploration prospects.
-- As of 2028, Yamana's average annual gold production in
Quebec, including production from Wasamac and the Odyssey
underground at Canadian Malartic, is expected to climb to
approximately 450,000-500,000 ounces and remain at this level
through 2035.
-- Wasamac is designed as a modern underground operation with a
small footprint and minimal infrastructure on the south of the
Route 117 highway. Tailings will be deposited underground as paste
fill and in a filtered dry-stack tailings storage facility
approximately six kilometres northwest of the processing plant.
-- Use of an underground conveyor, electric mining equipment and
high-efficiency ventilation fans to minimize carbon emissions, with
further electrification planned as new technology becomes
commercially available between now and project execution.
-- Using a conveyor rather than diesel trucks to transport ore
to surface is expected to reduce CO2 emissions by more than 2,200
tonnes per year, equivalent to taking 500 cars off the road. Over
the LOM, the Company expects to reduce CO2 emissions by more than
20,000 tonnes.
There is excellent potential for significant future exploration
success and mineral resource conversion, with the Wasamac deposit
remaining open at depth and along strike. A planned infill and
exploration drilling campaign to generate additional mineral
reserves has the potential to sustain a 200,000-ounce production
level for an extended period and support a strategic mine life of
more than 15 years. Preliminary plans include 120,000 metres of
drilling in 2021 and 2022 with a budget of $15 million over the
two-year period.
Lastly, there are further optimization and life extension
opportunities for further conversion of mineral resources to
mineral reserves is expected through engineering, especially
surrounding the historic mining zone, the utilization of the full
design capacity of 7,500 tpd that could increase annual gold
production, additional metallurgical drilling and test work to be
carried out to evaluate the potential increase in gold recovery
through the installation of a flotation and concentrate leach
circuit and opportunities to accelerate the project execution plan
to bring forward first gold production. Future infill drilling
programs will include assaying for silver, which has the potential
to improve project economics and reduce AISC.(2)
Acquisition of Francoeur, Arntfield and Lac Fortune
Properties
On June 21, 2021, the Company entered into a Definitive Purchase
Agreement to acquire the Francoeur, Arntfield and Lac Fortune
properties from Globex Mining Enterprises Inc. ("Globex"). The
Francoeur property is located adjacent to Yamana's Wasamac project
and covers the western extension of the Wasa shear zone. This
acquisition adds six kilometers of highly prospective strike length
for exploration efforts to increase overall resources adjacent to a
major asset and to extend the Wasamac mine life.
The property also covers several historical gold producers
located along the shear zone and notwithstanding past production,
exploration will build on a historical drill database of 1,024
drill holes by drilling several high potential targets with
significant gold intercepts located outside of the historically
mined areas as well as extending known mineral resources. Wasamac,
Francoeur and Arntfield have recorded past production of over
720,000 ounces of gold, with Francoeur and Arntfield contributing
ounces at a grade of 6.2 g/t and 4 g/t of gold, respectively.(6)
Further, Francoeur currently has a historic mineral resource of
approximately 66,600 ounces of gold at a grade of 6.5 g/t of gold
in the measured and indicated categories. Mineralization along the
Wasa shear zone has been exposed in trenches recently completed by
Globex and is very similar in character to the Wasamac resource
mineralization indicating the strong exploration potential of the
property. Given the proximity to the Canadian Malartic mine of
another block acquired as part of the transaction, which has
several positive historical drill intercepts, consideration is
being given for a potential transfer into the Canadian Malartic
General Partnership exploration program, which would modestly
decrease the acquisition cost for the Company.
The Odyssey Project Advancing on Schedule
The Company and its partner announced a positive construction
decision for the Odyssey project at Canadian Malartic on February
11, 2021.
The Company and its partner note that several key processes and
activities are progressing as planned:
Overburden excavation and grouting were completed to prepare for
construction of the production shaft and headframe.
Underground ramp development is ahead of schedule with
approximately 764 linear metres of development now completed during
2021 (1,587 linear metres total). Development of the exploration
ramp is anticipated to take approximately two years to complete,
with the first drilling platform established in early July.
Underground ramp development is currently ahead of schedule.
Odyssey human resources ramp-up is progressing on target, with
over 200 employees and contractors hired in a variety of functions
including mine development, surface construction and resource
development.
Permitting is advancing as expected, with the approval of
Provincial Highway 117's left-turn lane construction for 2021
signed by the Minister. Construction is currently underway and is
expected to be completed by the end of the year. Decree amendment
analysis and mining leases are currently under discussion with the
relevant authorities.
During the second quarter, the shaft collar construction was
completed, and engineering progress occurred on the headframe and
hoist rooms, paste plant, power line/substation and surface
workshop/warehouse. The headframe and hoist room construction is
slated to begin in the third quarter of 2021.
Procurement progressed well during the quarter, with the main
highlights being the purchase of the sinking hoist, contract for
the auxiliary hoist being awarded, and tenders sent for the service
hoist, production hoist. Lastly, the first bids for tender for the
mobile underground fleet have been received and are being
analyzed.
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 Continuing Progress
The MARA Joint Venture held by the Company (56.25%), Glencore
International AG (25%) and Newmont Corporation (18.75%) continues
to advance engagement with local communities and stakeholders,
advance the feasibility study and the Project's permitting process.
The feasibility study, which will provide updated mineral reserves,
production and project cost estimates for the Project, is being
overseen by the Technical Committee comprised of members of the
three companies. Key technical results are expected during 2021,
and the Company 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 full
feasibility study report and submission of the ESIA are expected in
late 2022.
After obtaining all required permits from the respective
authorities including citizen participation and social consultation
seminars, the MARA Project began activities at site. Work continued
to progress well during the quarter, including environmental base
line studies and sampling, as well as geotechnical, hydrological
and other field engineering activities. The metallurgical drilling
program at the Agua Rica site is well underway, reaching 1,410
meters in 7 drillholes by the end of the second quarter, with the
remaining drillholes to be completed early in the third quarter.
The drilling activities will continue with the geotechnical program
to support the feasibility study, and the Company is reviewing a
drilling program for resource delineation and resource expansion
drilling for later in the year. Confirmatory metallurgical
test-work for the newly collected samples is being advanced at two
prominent laboratories in British Columbia, Canada.
The MARA Project will rely on processing ore from the Agua Rica
site at the Alumbrera plant in the Catamarca Province of Argentina.
The project design minimizes the environmental footprint of the
project in consideration of the input of the local stakeholders,
and MARA is planned to be a multi-decade, low cost copper-gold
operation with annual production in the first 10 years of 556
million pounds of copper equivalent and a life of mine annual
production of 469 million pounds of copper equivalent on a 100%
basis. MARA will be among the top 25 copper producers in the world
when in production, and poses one of the lowest capital intensity
of the comparable projects globally. The MARA Project represents
both a significant strategic value opportunity and a solid
development and growth project, which the Company intends to
continue to advance through the development and value realization
process, through Yamana's controlling interest in the project.
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. The Company's recent acquisition
of several properties adjacent to the Wasamac project from Globex
Mining is illustrative of this strategy.
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 in the Nomad Royalty Company 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. ("Ascot")
during the quarter, representing 6.4% of the outstanding shares,
for aggregate consideration of $16.5 million is an example of the
latter. In line with its investment strategy, the Company also
holds interests in other exploration stage companies in Canada
including Quebec and British Columbia, amongst other prominent
areas.
GENERATIVE EXPLORATION PROGRAM
During the second quarter, exploration drilling and other field
activities continued to ramp up in most jurisdictions as responses
to COVID-19 restrictions were managed and vaccination campaigns
gained a foothold over the COVID-19 spread. Drilling activities
continued in Brazil at Lavra Velha, Jacobina Norte and at the São
Francisco discovery at Borborema, while initial exploration
drilling was initiated late in the quarter at the Colier property.
Exploration in Chile in the quarter included surface work at early
stage projects near the El Peñón mine and elsewhere in preparation
for RC 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,
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, and drilling was initiated at the
recently acquired advanced Wasamac property, in the Abitibi belt,
Quebec.
KEY STATISTICS
Key operating and financial statistics for the second quarter
2021 are outlined in the following tables.
Financial Summary
Three months ended
June 30
(In millions of United States Dollars, except for
per share and per unit amounts) 2021 2020
------------ ------------
Revenue $ 437.4 $ 303.4
Cost of sales excluding depletion, depreciation and
amortization (173.8) (126.3)
Depletion, depreciation and amortization (108.6) (76.3)
Total cost of sales (282.4) (202.6)
Temporary suspension, standby and other incremental
COVID-19 costs (12.7) (19.2)
Mine operating earnings 142.3 81.6
General and administrative expenses (17.0) (25.4)
Exploration and evaluation expenses (7.8) (2.9)
Net (loss) earnings attributable to Yamana equity
holders (43.9) -
Net (loss) earnings per share - basic and diluted
(i) (0.05) -
Cash flow generated from operations after changes
in non-cash working capital 153.5 92.2
Cash flow from operations before changes in non-cash
working capital(2) 167.8 118.1
Revenue per ounce of gold $ 1,817 $ 1,713
Revenue per ounce of silver $ 25.96 $ 16.83
Average realized gold price per ounce (2) $ 1,817 $ 1,713
Average realized silver price per ounce (2) $ 26.05 $ 16.83
----------------------------------------------------- --- ------- ------
(i) For the three months ended June 30, 2021, the weighted
average number of shares outstanding was 965,595 thousand (basic
and diluted).
Operating Summary
Three months ended June
Costs 30
(In United States Dollars) 2021 2020
--------------------------- -------------- ---------------
Per GEO sold (1)
Total cost of sales $ 1,170 $ 1,146
Cash Costs (2) $ 720 $ 715
AISC (2) $ 1,081 $ 1,125
--------------------------- ---------- ---------
Three months ended June
30
Gold Ounces 2021 2020
---------------------------- ------------ -------------
Canadian Malartic (50%) (3) 92,106 56,785
Jacobina 47,503 45,646
Cerro Moro 14,488 8,175
El Peñón 39,492 35,760
Minera Florida 23,813 17,775
------------ -----------
TOTAL 217,402 164,141
---------------------------- ------------ -----------
Three months ended June
30
Silver Ounces 2021 2020
------------------- ------------ -------------
Cerro Moro 736,823 730,571
El Peñón 891,255 1,277,238
------------ -----------
TOTAL 1,628,078 2,007,809
------------------- ------------ -----------
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
and six months ended June 30, 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 Friday,
July 30, 2021, at 9:00 a.m. ET.
Second Quarter 2021 Conference Call
Toll Free (North America): 1-800-806-5484
Toronto Local and International: 416-340-2217
Toll Free (UK): 00-80042228835
Passcode: 4990591#
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: 1816940#
The conference call replay will be available from 12:00 p.m. ET
on July 30, 2021, until 11:59 p.m. ET on August 30, 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 7931 765 223 / +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 68.01 for the three months ended June 30,
2021, and 105.14 for the three months ended June 30, 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 and Additional Subtotals in
Financial Statements in the Company's MD&A for the three and
six months ended June 30, 2021 and in the 'Non-GAAP Performance
Measures' section below.
(3) Included in the 2020 comparative gold production figure is
2,651 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 (loss) and adjustments to net earnings (loss)
represent amounts attributable to Yamana Gold Inc. equity
holders.
(5) Calculated on 200,000 exposure hours basis including
employees and contractors. This value does not include Canadian
Malartic in which we hold a 50% interest.
(6) Historical production for the Francoeur and Arntfield mines
is from the Francoeur NI 43-101 Technical Report published by
Richmont Mines in August 2012; Historical production for the
Wasamac mine is from the Wasamac NI 43-101 Technical Report
published by Monarch Gold in December 2018. Both NI 43-101
Technical Reports are available on SEDAR at www.sedar.com .
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 and six months
ended June 30, 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 performance 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 performance 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 June 30, 2021 and December 31,
2020 is provided in Section 11 of the Company's MD&A for the
three and six months ended June 30, 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 June
to non-GAAP Measures 30
(In millions of United States Dollars) 2021 2020
------------------------------------------------------- -------------- ---------------
Cash flows from operating activities $ 153.5 $ 92.2
Adjustments to operating cash flows:
Amortization of deferred revenue 4.5 3.9
Temporary suspension, standby and other incremental
COVID-19 costs 12.7 19.2
Non-discretionary items related to the current
period
Sustaining capital expenditures (46.1) (26.5)
Interest paid (21.8) (22.5)
Payment of lease liabilities (4.3) (4.0)
Cash used in other financing activities (2.2) (2.0)
-------------- -------------
Net free cash flow $ 96.3 $ 60.3
Discretionary and other items impacting cash flow
available for dividends and debt repayments
Expansionary and exploration capital expenditures $ (47.4) $ (23.1)
Cash flows used in other investing activities $ 2.0 $ (0.3)
Effect of foreign exchange of non-USD denominated
cash $ 0.3 $ 1.3
------------------------------------------------------- ---------- ---------
Free cash flow before dividends and debt repayments $ 51.2 $ 38.2
======================================================= ========== =========
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 and
six months ended June 30, 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
IR DKCBKNBKBPOB
(END) Dow Jones Newswires
July 30, 2021 02:10 ET (06:10 GMT)
Yamana Gold (LSE:AUY)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Yamana Gold (LSE:AUY)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024