TORONTO, April 28, 2021 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX:YRI; NYSE:AUY; LSE:AUY) (“Yamana” or “the Company”) is herein reporting its financial and operational results for the first quarter of 2021.
FIRST QUARTER HIGHLIGHTS
Financial Results - Strong Earnings and Cash Flows Further Strengthening Cash Balances and Balance Sheet
Net earnings(4) of $54.7 million or $0.06 per share basic and diluted compares well to net earnings(4) of $45.0 million or $0.05 per share basic and diluted a year earlier.
Adjusted net earnings(2, 4) were $67.2 million or $0.07 per share basic and diluted compared to adjusted net earnings(2, 4) of $47.2 million or $0.05 per share basic and diluted a year earlier.
Cash flows from operating activities were $160.2 million and net free cash flow(2) was $123.5 million, in line or above the averages of the preceding three quarters, further demonstrating the strength and resilience of the cash flow generation capacity of the Company.
Cash flows from operating activities before net change in working capital(2) were $183.4 million, and free cash flow before dividends and debt repayments(2) was $76.0 million.
As at March 31, 2021, the Company had cash and cash equivalents of $678.1 million, and available credit of $750.0 million, for total available liquidity of approximately $1.4 billion. Cash balances include $222.8 million available for utilization by the MARA Project. The remainder of cash and cash equivalents of $455.3 million, along with further liquidity and incoming cash flows, is more than sufficient to fully manage the Company's business and available for the Company's capital allocation objectives.
The Company's quarterly dividend rate of $0.02625 per share (annual $0.105 per share) is 110% higher than the same quarter in 2020 and 425% than the same quarter in 2019.
Three months ended March 31
(In millions of United States Dollars) 2021 2020
Net Free Cash Flow (2) $ 123.5 $ 91.1
Free Cash Flow before Dividends and Debt Repayments (2) $ 76.0 $ 38.9
Decrease in Net Debt (2) $ 26.6 $ 20.0
(See end notes at end of press release)
Production Results - Standout Quarters from Canadian Malartic and Minera Florida
Gold equivalent ounce ("GEO")(1) production was 231,988 GEO(1), including gold production of 201,117 ounces and silver production of 2.13 million ounces, both in line with plan.
Canadian Malartic and Minera Florida had standout quarters, producing 89,550 ounces and 20,818 ounces of gold, respectively, both above plan.
At Jacobina, production reached an all-time monthly high in March, with total production in line with plan for the quarter.
Silver production of 1,309,103 ounces at Cerro Moro exceeded plan with mine sequencing during the quarter favouring mining of higher silver grade zones.
The Company expects to continue its established trend of delivering stronger production in the second half of the year along with quarterly sequential increases in production.
Solid Costs and Margins
Cash costs(2) and all-in sustaining costs ("AISC")(2) were $698, and $1,045 per GEO(1), respectively, which on a consolidated basis were in line or better than plan, and consistent with the comparative period.
Mine operating earnings of $149.5 million increased by $50.2 million or 51% in relation to the comparative prior year quarter. The increase is related to the strong precious metal price environment and strong operational performances from the mines resulting in higher gold production at comparable costs.
Jacobina Optimization Project; Hydraulic Backfill Plant to Proceed
The Company has identified opportunities to further optimize the results and recoveries achieved in the Phase 1 optimization with a modest investment. As part of this initiative, the Falcon concentrator and cyclones were installed during the first quarter, and the Knelson concentrator is scheduled to be installed in the second quarter of 2021, with an objective to optimize gold recovery at the higher throughput rate.
The Company is advancing the Phase 2 expansion at Jacobina, for an increase in throughput to 8,500 tonnes per day ("tpd"). The Company expects to provide an update regarding capex and development schedule in mid-2021 once studies are finalized to facilitate permitting.
The Company has also begun a conceptual study on a Phase 3 expansion, which would increase throughput to 10,000 tpd at modest further capital requirements.
The Company has adopted a comprehensive Jacobina life-of-mine tailings management strategy that reduces surface disposition of tailings, with underground tailings disposal as backfill.
The Company has initiated several studies to ensure long-term sustainability and reduce the environmental footprint of the operation. Work conducted in 2020 confirmed that both paste backfill and hydraulic backfill are technically feasible options for disposal of tailings into underground voids, thereby minimizing the quantity of tailings stored on surface.
In March 2021, Jacobina completed a feasibility study for the installation of a hydraulic backfill plant. The initial capital cost for establishing the backfill system is estimated at $8 million.
The Company has decided to move forward with the hydraulic backfill plant project and is in the permitting phase.
A conceptual study is underway to evaluate further opportunities for a dry stack tailings facility and/or a paste backfill plant in parallel to the hydraulic backfill plant, which could provide opportunities in the future for additional storage of tailings to support future mineral reserve development.
Existing surface tailings capacity and backfill will be sufficient for life of mine production at Jacobina at the planned increased processing rates.
Canadian Malartic Underground Construction Decision; Drilling Identifies Potentially Significant Extension to East Gouldie Zone
Impressive technical study results were obtained in early February of 2021, and the Company and its partner made a positive construction decision of the Odyssey project at Canadian Malartic. An NI 43-101 technical report for the Canadian Malartic operation was completed in March 2021, which includes a full summary of the Odyssey underground project.
The project demonstrates robust economics, a significant increase in mineral resources, and a mine life extension to at least 2039.
Whereas the Company had originally considered a production platform conservatively in the range of 450,000 ounces per year, the mine now supports an expected increased annual gold production of 500,000 to 600,000 ounces on a 100% basis.
Exploration drilling conducted on the Rand property in the first quarter targeted the projected down plunge extension of the East Gouldie zone, with the first hole testing an area located greater than one kilometre to the east of and down plunge of the current East Gouldie inferred mineral resource.
Drill hole RD21-4680A, intersected 2.7 grams per tonne (“g/t”) of gold over an estimated true width of 10.9 metres at 1,995 metres depth, including 3.1 g/t over 7.2 metres, indicating excellent down plunge growth potential.
As Canadian Malartic transitions from open pit to underground mining, underground production will offset a significant portion of the corresponding decline in open pit production. Production from open pit mining from 2021 through 2028 is expected to be approximately 3.9 million ounces (100% basis) with annual production trending lower on a yearly basis to approximately 123,000 ounces (100% basis) by 2028. Underground production will start in 2023 and increase yearly, adding approximately 932,000 ounces (100% basis) during the 2023-2028 construction period—at cash costs(2) of $800 per ounce—including approximately 385,000 ounces (100% basis) by 2028.
Net proceeds from the sale of the 932,000 ounces (100% basis) of underground production would significantly reduce the external cash requirements for the construction of the Odyssey project which, assuming the gold price used in the financial analysis for the project of $1,550 per ounce, would reduce the projected capital requirements in half.
MARA Project Advances
Subsequent to the signing of the integration agreement on December 17, 2020, the MARA Joint Venture held by the Company (56.25%), Glencore International AG (25%) and Newmont Corporation (18.75%) continues to engage with local communities and stakeholders, advance the Feasibility Study and project’s permitting process.
After obtaining all required permits from the respective authorities and conducting citizen participation and social consultation seminars, the MARA Project started exploration activities at the site. The primary field activities being performed include additional rock sampling and studies to update the environmental baseline for the Environmental and Social Impact Assessment (“ESIA”) and a drilling campaign to collect data for geotechnical and metallurgical studies that will be incorporated into the updated Feasibility Study.
A Technical Committee comprised of members of the Company, Glencore International AG and Newmont Corporation continues to provide oversight of the Feasibility Study, which will provide updated mineral reserves, production and project cost estimates for the project.
The MARA Project will rely on processing ore from the Agua Rica mine at the Alumbrera plant in the Catamarca Province of Argentina. The new project design minimizes the environmental footprint of the project in consideration of the input of the local stakeholders and creates one of the lowest capital intensity projects in the copper industry.
Key technical results related to the Feasibility Study are expected during 2021. While the Company continues to advance the Feasibility Study, it notes that a considerable amount of information in the Pre-Feasibility Study is already at Feasibility Study level mostly as a result of the Integration Transaction. The updated Feasibility Study and ESIA are expected to be completed in 2022.
CLIMATE CHANGE ACTION
As a continuation of Yamana’s commitment to a low-carbon future, the Company announced during the quarter that it has formally adopted a board-approved climate action strategy. The strategy is underpinned by adoption of two high-level targets: a science-based 2°C scenario compared to pre-industrial level and an aspirational net-zero 2050 target. The targets will be supported by the foundational work being performed throughout 2021 by the newly established multi-disciplinary Climate Working Group, to determine our emissions baseline, develop the Greenhouse Gas (“GHG”) abatement pathways required to achieve the science-based 2°C scenario and establish preliminary, operations-specific roadmaps that describe abatement projects, estimated costs and schedules. These actions will help ensure that our long-range GHG reduction efforts are supported by practical and operationally focused short, medium and long-term actions to achieve the targets.
Summary of Certain Non-Cash and Other Items Included in Net Earnings (4)
(In millions of United States Dollars, except per share amounts,
totals may not add due to rounding)
Three months ended March 31
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