Yamana Gold Announces Strong Third Quarter Preliminary Operating Results and Increases 2020 Production Guidance; Raises Annual Dividend by a Further 5

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Algemeen advies 08/10/2020 05:53
TORONTO, Oct. 07, 2020 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX:YRI; NYSE:AUY, LSE:AUY) (“Yamana” or the “Company”) today announces strong preliminary third quarter results, with gold production of 201,772 ounces and silver production of 3.04 million ounces. Total gold equivalent production (“GEO”) was 240,466 ounces. Jacobina, El Peñón, Minera Florida, and Canadian Malartic all enjoyed standout quarters. With overall production, and production at most of the Company’s mines, currently tracking ahead of plan, and in some cases well ahead of plan, the Company increases its 2020 production guidance from the previous guidance of 890,000 GEO to 915,000 GEO, representing an increase of 3%. Gold production and silver production guidance have increased from previous guidance by approximately 1% and 6%, respectively. More specific mine-by-mine and metal-by-metal information will be provided with the Company’s financial results at the end of the month. The Company continued to generate strong cash flows in the quarter which strengthened its cash balances and balance sheet. Cash balances at quarter end increased by a further $145 million from $325 million at the end of the second quarter to approximately $470 million.

The strong results position the Company well for an even stronger fourth quarter and continued production growth over the next several years. Furthermore, the Company has low capital commitments over the near-to-medium term, which together with Yamana’s rising production profile, cash flows, and cash balances, provide significant financial flexibility to pursue all of its capital allocation objectives, including further dividend increases.

As a result, the Company is pleased to announce that it is raising its annual dividend by a further 50% to $0.105 per share, effective for the fourth quarter of 2020. At the new rate, the dividend will be 425% higher than the dividend level just 18 months ago. Furthermore, as the Company has established a policy of representing the dividend on a per GEO basis, with the objective of maintaining the dividend at between $50 to $100 per GEO, this increase positions the dividend at the high end of the range at $100 per ounce.

DIVIDEND INCREASE HIGHLIGHTS

The Company is increasing its annual dividend by a further 50% to $0.105 per share, effective for the fourth quarter of 2020.
On a per GEO basis, the dividend is at the top of the Company’s target range of $50-$100 per GEO, with $100 per GEO now the new dividend floor.
At the new rate, the dividend will be 425% higher than the dividend level just 18 months ago.
Based on Yamana’s share price at yesterday’s close, the Company’s dividend yield at the new rate would be 1.9%, which on an absolute and risk-adjusted basis is amongst the highest of its North American peers. The Company endeavours to balance cash returns with overall returns and notes that while its dividend yield to share price has improved significantly relative to peers, its significant increase in share price since last year has the effect of reducing cash return yields although at the expense of significant overall returns which include share price. Since the start of 2019, overall returns for the Company’s shares are 143% as of yesterday’s close.
Consistent with its dividend policy and sustainability objectives, the Company has sufficient cash reserves on hand to support payment of the dividend at the increased level for three years. The cash reserve fund provides the Company with the flexibility to pay the dividend at the new floor for an extended period even in a bottom of cycle gold price environment.
The Company will no longer provide a range for its dividends on a per GEO basis although, as a policy, it has now set a floor for its dividend and any increases above the new floor will be based entirely on cash flows and cash generation capacity of the Company. The Company notes that as its cash flows and cash balances increase, its dividend will rise correspondingly as a percentage of cash flows and commensurate with increasing cash balances from cash flows and sources that supplement cash flows. The Company will continue to reflect its dividend both on a per share basis and on a per ounce basis.
Yamana endeavours to create an optimal balance between the amount of the dividend that it pays and the sustainability of that dividend.
The Company recognizes that it could pay a substantially higher dividend by immediately utilizing its cash reserves, but believes that at the new dividend floor and with its cash reserve fund it has the proper balance between the amount payable and dividend sustainability for now. Moreover, the Company is confident that its cash flows and other cash generation efforts will support further dividend increases in due course.
The Company will continue to engage regularly with investors to ensure it is maintaining an optimal balance between the amount payable and dividend sustainability.
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https://yamana.com/English/Home/default.aspx



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