TORONTO, Feb. 15, 2018 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX:YRI) (NYSE:AUY) (“Yamana” or “the Company”) is herein reporting its financial and operational results for the fourth quarter and full year 2017, and its Mineral Reserve and Mineral Resource estimates as at December 31, 2017.
FOURTH QUARTER HIGHLIGHTS
Total production for the fourth quarter was 259,606 ounces of gold from Yamana's six producing mines (282,041 ounces of gold including attributable production (1) from Brio Gold Inc. ("Brio Gold")). The Company also produced 1.17 million ounces of silver and 34.7 million pounds of copper. Full year production from Yamana’s mines exceeded guidance for all metals at 977,316 ounces of gold, 5.0 million ounces of silver, and 127.3 million pounds of copper.
Fourth quarter total cost of sales applicable to gold of $966 per ounce ($980 per ounce, including Brio Gold); cash costs on a co-product basis (2) of $660 per ounce ($672 per ounce, including Brio Gold); cash costs on a by-product basis (2) of $548 per ounce; all-in sustaining costs (“AISC”) (2) on a co-product basis of $899 per ounce ($925 per ounce, including Brio Gold); and AISC on a by-product basis (2) of $829 per ounce. For the year, co-product and AISC were either in line with or below guidance levels.
Net loss from continuing operations for the three months ended December 31, 2017, was $199.7 million, with $191.0 million or $(0.20) per share basic and diluted attributable to Yamana equityholders. A summary of certain non-cash and other items is included in the table on page two of this press release, the most notable of which is a non-cash impairment recognized on the re-measurement of Gualcamayo and related Argentinian exploration properties in association with their reclassification as assets held for sale.
Cash flows from operating activities for the fourth quarter were $158.5 million and cash flows from operating activities before income taxes paid, including $46.6 million in payments relating to Brazilian tax matters, and net change in working capital (2) were $170.3 million.
The balance sheet as at December 31, 2017, includes cash and cash equivalents of $148.9 million. Yamana’s cash and cash equivalents , and available credit (excluding Brio Gold), are $129.6 million and $970.0 million, respectively, for total liquidity to the Company of $1.1 billion.
Peter Marrone, Yamana’s Chairman and Chief Executive Officer, commented as follows: “In 2017 we exceeded our production guidance for all metals and did so at costs in line with expectations. We continued to demonstrate the ability of our operations to generate cash flow while focusing our efforts on rightsizing the portfolio with an eye on longer term cash flow growth, which we expect to see with the addition of the low cost, high margin production from Cerro Moro. Throughout 2017 and into 2018 we advanced various initiatives to complement cash flow from operations, including the sale of certain exploration assets, refinancing a portion of our debt to extend the tenor of our fixed term debt profile, and initiating a program of strategic evaluation of our portfolio and certain monetization initiatives. We are in a strong financial position and are well positioned to deliver a step change in free cash flow in the second half of 2018 and more significantly into 2019 as Cerro Moro ramps up and we seek to maximize our cash return on invested capital.”
(All amounts are expressed in United States dollars unless otherwise indicated.)
1.Attributable production includes production commensurate to the Company's interest in Brio Gold, which for the fourth quarter and full year of 2017 was a weighted average of 55.1% and 65.5 %, respectively.
2.Refers to a non-GAAP financial measure or an additional line item or subtotal in financial statements. Reconciliations for all non-GAAP financial measures are available at www.yamana.com/Q42017 and in Section 14 of the Company’s fourth quarter 2017 Management’s Discussion & Analysis, which has been filed on SEDAR.
Summary of Certain Non-Cash and Other Items Included in Net Earnings
(In United States Dollars, per share amounts may not add due to rounding, unaudited) Three Months
Ending Dec 31st Twelve Months
Ending Dec 31st
2017 2016 2017 2016
Non-cash unrealized foreign exchange (gains)/losses (1.2 ) 8.8 15.0 33.7
Share-based payments/mark-to-market of deferred share units 3.7 (2.3 ) 12.8 14.2
Mark-to-market on derivative contracts 14.2 - 15.3 -
Mark-to-market on investment and other assets (0.5 ) 4.2 2.5 15.6
Revision in estimates and liabilities including contingencies 1.9 8.2 (26.6 ) 17.3
Impairment of mining and non-operational mineral properties 356.5 615.1 356.5 615.1
Other provisions, write-downs and adjustments 5.9 2.3 33.9 (8.9 )
Non-cash tax unrealized foreign exchange losses/(gains) 11.6 50.8 9.9 (20.0 )
Income tax effect of adjustments (141.3 ) (325.0 ) (143.4 ) (332.9 )
TOTAL ADJUSTMENTS 250.7 362.1 275.9 334.1
Increase/(Decrease) to net loss per share 0.26 0.38 0.29 0.35
Note: For the three months ended December 31, 2017, net earnings from continuing operations, attributable to Yamana Gold Inc. equityholders, would be adjusted by an increase of $244.2 million (2016 - $362.1 million), while an increase of $6.5 million (2016 - $nil) would adjust the earnings attributable to non-controlling interests. For the twelve months ended December 31, 2017, net earnings from continuing operations, attributable to Yamana Gold Inc. equityholders, would be adjusted by an increase of $263.8 million (2016 - $334.1 million), while an increase of $11.9 million (2016 - $nil) would adjust the earnings attributable to non-controlling interests.
CONSTRUCTION AND DEVELOPMENT, STRATEGIC DEVELOPMENTS AND OPTIMIZATIONS
Cerro Moro: The project remains on schedule and on budget for completion at the end of the first quarter of 2018. For the first quarter of 2018, the focus will move from construction to commissioning and operational readiness, with remaining construction works on piping, electrical, instrumentation installation staged to suit the commissioning plan, and the recruitment, onboarding and training of the operational staff aligned to the start of operations in the second quarter of 2018.
Chapada: Opportunities to increase plant throughput are being considered, as is the development of the Sucupira deposit, in parallel to the previously disclosed studies to be undertaken in 2018 to assess a broader Suruca complex. At Sucupira, 46 million tonnes at 0.27 grams per tonne (“g/t”) gold and 0.31% copper were upgraded to Mineral Reserve status, and a new mine plan is being evaluated to accelerate the timeline and bring forward production from the Sucupira deposit.
Agua Rica: Technical work and analysis for project development options continue, as do the review and consideration of various strategic alternatives, all in an effort to maximize value. Based on Yamana’s own evaluation, and feedback from the strategic alternatives process, the Company believes that the previously disclosed underground scenario represents a viable alternative that should be advanced as soon as possible towards a pre-feasibility level, while concurrently pursuing various strategic alternatives. As such, the Company has determined that it will undertake the work required to conduct a preliminary economic assessment during 2018, with a pre-feasibility study to follow in 2019.
Gualcamayo: Alternatives to maximize value are being pursued, including the rationalization of the mine’s production platform and cost structure, the extension of mine life through exploration focused on the oxide mineral resource and the advancement of the Deep Carbonate project. Similar to the strategy leading to the sale of the Mercedes mine in Mexico during 2016, the Company has also considered the continuum of options for value maximization. Such options weigh the prospect for internal advancement and management time and resources required against the opportunity for monetization, which would leave management and resources unencumbered for the pursuit of other internal projects. As the Company has decided to focus its efforts on assets that are better aligned with its strategic objectives, Gualcamayo has been classified as an asset held for sale.
SUBSEQUENT EVENTS
Brio Gold: In January 2018, Leagold Mining Corporation ("Leagold") announced that it intended to make an offer to acquire all of the issued and outstanding shares of Brio Gold (“Brio Shares”) on or before February 28, 2018 (the “Offer”). Based on the share exchange ratio to be provided under the Offer, the Company would receive 58,115,953 shares of Leagold, representing approximately 22% ownership in the combined entity. The Company entered into a support agreement endorsing a transaction with Leagold. Pursuant to the agreement, the Company agreed to tender all of its Brio Shares and to hold the Leagold shares it receives pursuant to the Offer for a minimum period of 12 months, subject to certain exceptions. The Offer provides the Company the opportunity to derive value from Brio Gold and the underlying Brio Gold assets as the combined entity has considerable present value and upside potential.
Refinancing of Debt: During the fourth quarter of 2017, the Company completed an offering of $300 million of 4.625% senior notes due December 2027. With these funds, on January 29, 2018, the Company redeemed $181.5 million of 6.97% senior notes due December 2019 at a price of 108.12. These items have extended the tenor of the Company’s fixed term debt profile at lower average interest rates and improved financial flexibility. During the first and second quarter of 2018, the Company has senior notes maturities of $73.6 million and $35.0 million, respectively, which will be retired as they come due. Following the 2018 maturities, the Company’s next scheduled maturity of fixed rate debt of $84 million is not until March 2020.
Brazilian Tax Matters: In the third quarter of 2017, the Company elected to participate in a program to settle all significant outstanding income tax assessments in Brazil ("Brazilian Tax Matters") and all income tax assessments relating to the Company’s Chapada mine. On October 25, 2017, the program was formally enacted into law and the Company paid $76.7 million in the year ended December 31, 2017. The final program created an option to either pay one lump sum of approximately $68 million in the first quarter of 2018, or a total of approximately $100 million plus interest in installments over twelve years. The Company elected to proceed with the lump sum payment option, and on January 30, 2018 made the payment. The income tax expense associated with the tax matters has been recorded in the Consolidated Statement of Operations for the year ended December 31, 2017.
YEAR END MINERAL RESERVES AND MINERAL RESOURCES SUMMARY
As at December 31, 2017.
Proven and Probable Mineral Reserves
Tonnes (000s) Grade (g/t) Contained oz. (000s)
Gold 838,252 0.48 13,044
Silver 11,433 184.6 67,855
Tonnes (000s) Grade (%) Contained lbs (M)
Copper 632,218 0.26 3,556
Measured and Indicated Mineral Resources
Tonnes (000s) Grade (g/t) Contained oz. (000s)
Gold 654,230 0.83 17,396
Silver 14,346 83.9 38,714
Tonnes (000s) Grade (%) Contained lbs (M)
Copper 277,649 0.22 1,344
Inferred Mineral Resources
Tonnes (000s) Grade (g/t) Contained oz. (000s)
Gold 249,236 1.37 10,956
Silver 30,080 57.0 55,157
Tonnes (000s) Grade (%) Contained lbs (M)
Copper 47,153 0.24 253
Additional details relating to the Company’s Mineral Reserve and Mineral Resource estimates as at December 31, 2017 are presented below. For complete information relating to Yamana’s Mineral Reserve and Mineral Resource estimates as at December 31, 2016, refer to the Company’s press release issued on February 16, 2017.
Chapada, Brazil
As the result of the successful definition and expansion of the Sucupira mineral reserve, immediately adjacent to the main Chapada pit, gold and copper mineral reserves increased by 5% and 7%, respectively, over prior year, representing a significant overall improvement over depletion in 2017. Sucupira mineral reserves are 46 million tonnes grading 0.27 g/t gold and 0.31% copper. Gold measured and indicated mineral resources increased by 48%, while copper increased by 99% compared to the prior year following the drilling for extensions of the mineral envelopes at Suruca, in addition to Sucupira and Baru. Gold and copper inferred mineral resources decreased by 30% and 51%, respectively, as these were converted to indicated mineral resources.
The following chart summarizes the changes in gold mineral reserves at Chapada as at December 31, 2017 compared to the prior period.
http://www.globenewswire.com/NewsRoom/AttachmentNg/ebca65a1-0d32-4a81-b6b2-29ebeacbf778
The following chart summarizes the changes in copper mineral reserves at Chapada as at December 31, 2017 compared to the prior period.
http://www.globenewswire.com/NewsRoom/AttachmentNg/70118cdb-f42c-4975-a473-d040d6d55a67
El Peñón, Chile
Declines in gold and silver mineral reserves reflect production depletion in 2017 as well as adjustments to the mineral resource estimation methodology and updates to the cost structure for local currency appreciation, offset by the additions to mineral reserves via exploration and infill drilling. As part of the new plan for El Peñón that started in 2017, a thorough review of the resource modelling, including estimation techniques and mine design parameters was completed, and validated with actual results during last year of production. The revision better reflects both the geological behaviour of the narrow veins and the Company’s enhanced ability to efficiently mine narrower veins, as evidenced by production results in 2017 that exceeded guidance expectations taking advantage of mineral resources found outside the mineral reserves blocks. The result of this detailed review will be covered by a new technical report that is being prepared for release in 2018. The net additions in mineral resources are sourced from numerous secondary vein structures in the east mine area including El Valle Este, Dorada Sur, Bonanza, Aleste, La Paloma and Discovery Wash in the core mine area. Most of the additions are contiguous to existing mine infrastructure.
The higher proportion of narrower veins, the impetus for the right sizing of El Peñón in 2017, prompted a review of mineral resource estimation and reporting methodologies. The new methodology uses a stope optimizer routine over the entire inventory of mineral resources, using economical parameters and mine design constrains, mainly minimum mining width and dilution. The approach results in an overall smaller inventory, but with a higher prospectivity for transformation into mineral reserves in the future, through infill drilling and design optimizations.
The following chart summarizes the changes in gold mineral reserves at El Peñón as at December 31, 2017 compared to the prior period.
http://www.globenewswire.com/NewsRoom/AttachmentNg/4ed93b7c-dade-4ede-b606-c506fa28c477
The following chart summarizes the changes in silver mineral reserves at El Peñón as at December 31, 2017 compared to the prior period.
http://www.globenewswire.com/NewsRoom/AttachmentNg/5be4e7da-f511-4713-86b4-721afe7a442c
Canadian Malartic including Odyssey, Canada (50%)
Gold mineral reserves reflect depletion associated with 2017 production. Much of the mineral resource accretion in 2017 is associated with the East Malartic underground, which is being reported for the first time, and the South deposit at Odyssey. Additional drilling is required at Odyssey and East Malartic to convert inferred mineral resources to indicated. Conversion drilling for East Malartic and Odyssey South can be undertaken from surface and this work is expected to commence in 2018. However, the Odyssey internal zone is presenting a higher level of complexity and thus requires underground drilling access. Preparation works to establish an exploration from surface is budgeted to commence in 2018.
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Yamana Gold Declares First Quarter Dividend
02/15/2018
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TORONTO, Feb. 15, 2018 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX:YRI) (NYSE:AUY) (“Yamana” or the “Company”) declares a first quarter 2018 dividend of $0.005 per share. Shareholders of record at the close of business on March 29, 2018 will be entitled to receive payment of this dividend on April 13, 2018. The dividend is an “eligible dividend” for Canadian tax purposes.
Yamana Gold Provides 2018-2020 Outlook
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