TORONTO, Oct. 29, 2020 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX:YRI; NYSE:AUY; LSE:AUY) (“Yamana” or “the Company”) reports its financial and operational results for the third quarter of 2020. The Company posted strong quarterly production and impressive financial performance with increased earnings, EBITDA, cash flow and free cash flow(3) and continuing increases in cash balances.

THIRD QUARTER HIGHLIGHTS
Strong Adjusted Net Earnings (1) and Cash Flows, Further Reduction in Net Debt (3)
•Adjusted net earnings(1) of $92.9 million or $0.10 per share basic and diluted compared to adjusted net earnings of $49.5 million or $0.05 per share basic and diluted a year earlier.
•Net earnings were $55.6 million or $0.06 per share basic and diluted compared to net earnings of $201.3 million or $0.21 per share basic and diluted a year earlier.(1)
•Strong cash flows from operating activities of $215.0 million and cash flow from operating activities before net change in working capital of $199.0 million reflect the impact of strong production, strong precious metals prices and the positive impact of foreign exchange on the costs of the Company.
•If adjusted for margins associated with the sales of Barnat pre-commercial production of approximately $13.5 million which are disclosed as a credit to expansionary capital and investing cash outflows, and for the $8.6 million of costs incurred in association with COVID-19, normalized cash flows from operating activities and normalized cash flows from operating activities before net change in working capital(3) would have been approximately $237.1 million and $221.1 million, respectively.
•Cash flows from operating activities is at multi-year highs which includes periods with considerably more production from mines that have since been divested or discontinued.
•To ensure consistency of and prospects for cash flows, the Company compares cash flows in a particular quarter with the average of cash flows in the preceding three quarters. This measure is looked at on a rolling basis quarter over quarter. Continuing with a recent trend, cash flow from operating activities and net free cash flow(3) for the quarter exceeded the averages of such cash flows for the preceding three quarters by 52% and 103%, respectively, thereby further demonstrating the strength and resilience of the cash flow generation capacity of the Company.
•Net free cash flow(2) of $185.5 million and free cash flow before dividends and debt repayments(2) of $156.8 million, representing increases of 107% and 316% from the comparative prior year quarter.
•Net debt(3) decreased by $148.9 million to $619.1 million, which advances and the Company’s objective of achieving a positive net cash(3) position which is now well ahead of schedule. The Company ended the quarter with a leverage ratio of under 0.8x, ahead of schedule in relation to the Company's previously stated objectives.
•As at September 30, 2020, the Company had cash and cash equivalents of $474.2 million, an increase of $149.4 million from June 30, 2020. The Company has sufficient cash on hand and liquidity through its current balances and incoming cash flows to fully manage its business and fund growth without having to borrow. This includes, but is not limited to obligations related to the Jacobina plant expansions, development of the Odyssey underground project at Canadian Malartic, generative exploration, development of the integrated Agua Rica and Alumbrera project, and further balance sheet improvements, while having excess funds to dedicate to possible other opportunities and dividend increases.
•With its preliminary operating results reported in October, the Company increased its 2020 production guidance to 915,000 gold equivalent ounces ("GEO")(4) from the previous guidance of 890,000 GEO, representing an increase of 3%. Gold production and silver production guidance have increased from previous guidance by approximately 1% and 6%, respectively.

Three months ended September 30
(In millions of United States Dollars) 2020
2019
Net Free Cash Flow(2) $ 185.5 $ 89.5
Free Cash Flow before Dividends and Debt Repayments(2) $ 156.8 $ 37.7
Decrease in Net Debt(3) $ (148.9 ) $ (810.3 )

(All amounts are expressed in United States Dollars unless otherwise indicated)
(See end notes on page 13)

Subsequent Events: Announced Dividend Increase; Completed London Listing; Repaid Credit Facility
•The Company announced it has increased its annual dividend by a further 50% to $0.105 per share, for shareholders of record at the close of business on December 31, 2020. At the new rate, the dividend will be 425% higher than the rate just 18 months ago.
•On October 13, the Company completed its listing and began trading on the Main Market of the London Stock Exchange, adding another senior exchange for trading of the Company's shares and further expanding its public market profile.
•On October 23, the outstanding $100.0 million on the $750.0 million credit facility was repaid. This follows the repayment of the initial $100.0 million in June of the $200.0 million drawn during the first quarter of 2020 as a precaution due to the uncertainty around COVID-19.

Strong quarterly production results
•Above plan gold production of 201,772 ounces was underpinned by standout production from Jacobina, Canadian Malartic, El Peñón, and Minera Florida.
•Above plan silver production of 3,040,341 ounces was underpinned by an exceptionally strong performance from El Peñón, which greatly exceeded plan with mine sequencing favouring mining of higher silver grade zones.
•GEO(4) production of 240,466 ounces exceeded plan as a result of strong gold and silver production.
•All-in sustaining costs ("AISC")(3) for the quarter of $1,096 per GEO, which was well below plan and in line with annual guidance.
•Total cost of sales and cash costs(3) of $1,186 and $723 per GEO, respectively, which were well below plan and in line with annual guidance.
•Cash costs(3) remained consistent with the second quarter, as secondary development ramped up commensurate to the increase in production, therefore maintaining a similar cost per ounce.
•For the fourth quarter, which is expected to be the strongest production quarter of the year, the cost per ounce is expected to decrease.
•With sustaining capital deferrals in the second quarter while certain operations ramped up from temporary suspensions due to COVID-19 restriction, sustaining capital increased in the third quarter as expected and in line with the Company's AISC(3) guidance of $1,020 to $1,060 per GEO for the second half of 2020.

Standout Performances at Jacobina, El Peñón, Minera Florida and Canadian Malartic; Cerro Moro Mine and Plant Operating at Full Capacity; Positive Exploration Results Delivered Across Operations

Canadian Malartic

Canadian Malartic's standout production performance exceeded plan for the third quarter of 2020 due to higher mill throughput and feed grade. The transition to and ramp-up of the Barnat deposit, along with record throughput which resulted in the feed of ore that would have otherwise been stockpiled, caused some feed grade variation and impacted recoveries. Despite such impact, recovery for the quarter was in line with the metallurgical model. The successful ramp-up of the deposit resulted in Barnat declaring commercial production on September 30, 2020. During the quarter, Barnat produced 13,305 ounces of pre-commercial production gold on a 50% basis and meaningful contributions are expected to begin in the fourth quarter. On a 50% basis, a total of $7.2 million of expansionary capital expenditures was spent during the third quarter on the Barnat Extension Project. The remaining extension work in 2020 is focused on overburden stripping and topographic excavation continuing according to plan.

The main focus of exploration during the third quarter was to provide support for an aggressive infill drill program at East Gouldie, where twelve diamond drill rigs completed 38,000 metres. For more information on exploration at Canadian Malartic during the quarter, please see the 'Canadian Malartic Underground' section on page 8 and press release issued October 28, 2020, titled 'Yamana Gold Provides An Update On Exploration Activities At Canadian Malartic'.

Jacobina

Jacobina once again exceeded its production plan and prior year results with gold production of 44,080 ounces for the third quarter of 2020. Recovery rates and grade for the third quarter were both in line with plan, and were higher than the comparative quarter. Higher production resulted from increased throughput compared to plan, with mill processing achieving a higher than planned steady-state 6,800 tonnes per day ("tpd").

Approximately 5,225 metres of drilling were completed in the quarter at Jacobina, including 200 metres of infill drilling to convert inferred mineral resources to indicated mineral resources, and 5,025 metres of exploratory drilling dedicated to defining new inferred mineral resources. Drilling activity focused on the new inferred resources program was completed at Canavieiras Sul and Canavieiras Central connector zone and at João Belo Sul, bringing the year-to-date total drilled to 8,111 metres. Exploration drilling carried out at Canavieiras Sul and Central during the quarter continued to return positive results from Maneira reef, extending mineralization 60 metres southward from the last intersection at Canavieiras Central and 150 metres north from Canavieiras Sul, confirming new potential mineral resource along a 300-metre strike length linking the two areas. In addition, drilling returned positive results from the MU, LVL and LU reefs in the sector, extending good grade mineralization over 150 metres from the current Canavieiras Sul model. The exploration drift linking Canavieiras Sul with Canavieiras Central is now operational and provides access to further drilling setups.

Cerro Moro

The Cerro Moro mine and processing plant were operating at full capacity as of September 30, 2020, after a longer ramp-up of operations following a temporary suspension due to inter-provincial travel restrictions related to COVID-19 which impacted availability of workers travelling from out of province. Cerro Moro's plant has now returned to its optimized 1,000-1,150 tpd throughput, which is expected to be maintained going forward.

Silver dominated the quarter for Cerro Moro resulting from strong, silver feed grades and recoveries. The transition to underground ore at higher grades than the open pit ore continued in the quarter and will continue in the fourth quarter, with most of the ore to plant from the Escondida Far West, Zoe, Escondida Central and Escondida West underground mines. With grade and production anticipated to increase substantially, costs are also expected to decrease, thereby bringing Cerro Moro's cost more in line with the Company's average. With linear development improvements, mine flexibility will also increase and create operational efficiencies.

Exploration drilling in the quarter targeted the Escondida-Zoe structural corridor, with both infill drilling and testing new exploration targets based on new interpretations of the plunge of the mineralized envelope, as well as a number of targets in the core mine and district, including Michelle North, Bella Vista, Angostina, Lucia and the newly discovered Roger zone at Naty. Drilling down plunge at Zoe intersected visually positive results and initial encouraging results at Michelle and Roger indicate potential for additional resources in these sectors. Roger is a recently identified northwest striking splay of the Naty vein with two new positive drill intercepts. Ongoing drilling will test the geometry and strike length of the structure for possible resource addition.

In a further significant exploration achievement, surface work has identified a new target, the Selene vein, in the north with promising surface samples traced for over 11,000 metres on surface. The Selene vein has a significantly longer strike length than any other target identified on the property to date and is more typical of some other veins in the Deseado Massif low sulphidation vein district. Sections of the vein have reported surface assays with between 1.0 g/t and 15.0 g/t of gold from selected grab and chip samples, providing drill ready targets expected to be drilled in the fourth quarter. The exploration drilling program will be expanded during the fourth quarter as infill drilling is completed and a fifth drill rig has since been added.

The metallurgical PQ ore drill program was completed at Michele, Michele Ext, Carlita and Tres Lomas and samples have been sent to Bureau Vertias for column leach tests as part of an ongoing evaluation of near-surface oxide and low-sulfide material potentially suitable for low cost open pit extraction and processing.

El Peñón

El Peñón had a strong third quarter, with strong gold production and silver production greatly exceeding plan, primarily due to processing higher grade silver ore. Higher gold grades are anticipated in the fourth quarter due to increased underground production and lower stockpile reclaim, as well as mining from higher gold grade sectors. Silver grade and production were higher than plan due to processing ore from the Al Este sector in the underground mine, which is a high grade silver area, however this higher silver grade was temporary as a result of mining sequence and is expected to normalize in the fourth quarter.

Exploration drilling of approximately 24,965 metres in 74 drill holes was completed during the third quarter, testing 17 sectors. Positive results from Colorada Sur, Pampa Campamento, and El Valle indicate good potential in these areas, which remain open for discovery of additional resources. Drill highlights from these target areas include: drill hole SNX0973, 14.3 g/t of gold and 502 g/t of silver over a horizontal width of 1.0 metres at Colorada Sur; and hole UIP0009, 24.0 g/t of gold and 234.0 g/t of silver over a horizontal width of 2.80 metres at Pampa Campamento. For detailed drill results, please see the press release issued September 8, 2020, available on the Company's website at http://www.yamana.com. The Colorada Sur discovery, which is the southern extension of the highly productive La Colorada Vein system, one of the principal veins complexes at El Peñón, is expected to be significant. The recently defined mineralization remains open at depth, between ore shoots and towards the south.

District exploration continues to build on previous exploration targets with over 3,000 soil and rock samples collected and approximately 2,843 metres of scout drilling in 11 holes completed. Most drilling results are pending, with encouraging initial results including geochemical anomalies grading up to 80.0 g/t of silver and 0.9 g/t of gold in individual core samples. Surface sampling continues to generate new gold and pathfinder soil and rock anomalies, providing good drill targets for follow-up this year and in 2021.

Minera Florida

Minera Florida had a strong third quarter, with production increasing 30% quarter over quarter. Positive results were primarily due to higher feed grade and increased tonnes processed, largely as a result of continuing improvements in productivity with contributions from the Pataguas and Don Leopoldo mining zones. Recent optimizations made to the processing plant have demonstrated improvements to the recovery rate. Further studies suggest that with additional improvements to the leaching circuit, expected recovery rates could increase and reach up to 94%. Additionally, processing rates continue to benefit from mill optimization initiatives.

Exploration activities continued to ramp up significantly in the third quarter with 14,952 metres of total drilling in 83 drill holes completed, representing approximately 78% of planned full-year infill and new resource drilling. Approximately 7,507 metres of infill drilling was completed at eight targets, including Pedro Valencia, Fantasma, Juan Pablo, Maqui, Polvorín, Tribuna, Don Leopoldo and Patagua Norte, dedicated to converting inferred mineral resources to measured and indicated mineral resources. High-grade new intercepts were encountered at the intersection of the Patagua and Don Leopoldo veins and at the Polvorín vein. Exploration drilling included approximately 7,445 metres, completed in 37 drill holes testing eight targets, including Satélite PVS, Fantasma, Juan Pablo, Maqui, Polvorín, Tribuna, Don Leopoldo and Patagua Norte, dedicated to the discovery of new deposits or definition of new inferred mineral resources. Good results were returned from the La Flor and Polvorín Oeste veins, developing new targets at depth and to the north and south of the known zone, at Patagua, opening up a 250-metre corridor (Queseria block) east of the extent of development, and at the Don Leopoldo Sur vein.

Summary of Certain Non-Cash and Other Items Included in Net Earnings

Net earnings for the three months ended September 30, 2020, were $55.6 million or $0.06 per share basic and diluted. Earnings were negatively impacted by $37.3 million of items 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. Significant and unusual adjusting items in the quarter include:
•A $4.2 million loss on the revaluation of the Company's monetary assets and liabilities, owing to movements in local currencies in multiple jurisdictions where the Company operates;
•A $5.1 million loss on the mark-to-market of the Company's outstanding equity instruments related to share-based payments in association with Performance Share Units and Deferred Share Units, resulting from an increase in share price;
•An $8.6 million expense, representing costs incurred by the Company as a result of COVID-19-related temporary suspensions, standby or reductions at certain operations, and direct incremental costs associated with operating under COVID-19 related restrictions. Costs were incurred predominantly at Cerro Moro due to government imposed restrictions on activity, and also in Chile and Brazil due to health authority regulations for temporary workforce reductions, and/or to promote social distancing;
•$8.7 million of non-cash tax losses on unrealized foreign exchange gains and $12.8 million of tax losses on non-routine transactions and adjustments.

(In millions of United States Dollars, except per share amounts, totals may not add due to rounding, unaudited) Three months ended September 30
2020
2019
Non-cash unrealized foreign exchange losses $ 4.2 $ 17.1
Share-based payments/mark-to-market of deferred share units 5.1 9.0
Mark-to-market (gains) losses on derivative contracts, investments and other assets and liabilities (1.5 ) 1.6
Gain on sale of subsidiaries and other assets (1.8 ) (284.6 )
Share of one-off provision recorded against deferred income tax assets of associate — 13.0
Financing costs paid on early note redemption — 35.0
Temporary suspension and standby costs 2.9 —
Other incremental COVID-19 costs 5.7 —
Other provisions, write-downs and adjustments (i) 6.1 28.8
Non-cash tax on unrealized foreign exchange gains 8.7 36.7
Income tax effect of adjustments (4.9 ) (0.8 )
One-time tax adjustments 12.8 (7.6 )
Total adjustments - increase (decrease) to earnings $ 37.3 $ (151.8 )
Total adjustments - increase (decrease) to earnings per share $ 0.04 $ (0.16 )

(i) This balance includes, among other things, revisions in estimates and write-downs & provisions, or reversals of provisions, for items such as tax credits and legal contingencies.

Covid-19 Related Costs

The Company incurred $8.6 million in COVID-19 related costs during the quarter including $2.9 million in temporary suspension and standby costs. The Company anticipates that suspension and standby costs will be minimized prospectively for the balance of the year as the mines return to full production levels anticipated at the beginning of the year. Further, the Company is assessing if any incremental COVID-19 costs are expected to become normal-course in a COVID-19 world. However, those costs are expected to be at levels lower than those experienced this quarter. The Company also anticipates that some of these increases may be offset by efficiencies gained during the period.

STRATEGIC DEVELOPMENTS, CONSTRUCTION DEVELOPMENTS AND ADVANCED STAGE PROJECTS

Agua Rica Feasibility Study Advancement and Integration Agreement

The Company continued to advance the integration of Agua Rica with Minera Alumbrera Limited ("Alumbrera") pursuant to the 2019 integration agreement entered into by the Company, Glencore International AG and Newmont Corporation (collectively the “Parties”), whereby the Agua Rica project would be developed and operated using the existing infrastructure and facilities of Alumbrera. The integration gives the Company 56.25% ownership in the joint Agua Rica and Alumbrera project ("Integrated Project"), which carries significantly less development risk, as certain infrastructure would not need to be constructed.

The integration is expected to be completed in the fourth quarter, after which, the Integrated Project would be managed as a combined operation. In addition to the considerable infrastructure, tailings system and processing plant available, there is also significant cash in the treasury at Alumbrera.

The Parties established a technical committee which is now advancing a full Feasibility Study of the Integrated Project, with updated mineral reserve, production and project cost estimates. The results of the Feasibility Study are expected during 2021.

The Jacobina Optimization Project

The Phase 1 optimization project, whose objective was to stabilize throughput at a sustainable 6,500 tpd, was completed in June of 2020. The project has exceeded expectations, with an average plant throughput of approximately 6,800 tpd achieved in both the second and third quarters. The Company has identified opportunities to further optimize the results and recoveries achieved in Phase 1 with a modest investment. Consequently, works commenced in the third quarter for the expansion of the gravity concentration circuit, with commissioning scheduled for mid-2021 and with an objective to optimize gold recovery at the higher throughput rate.

In addition to the incremental optimization of Phase 1, the Company is studying the increase in throughput to 8,500 tpd, referred to as the Phase 2 optimization. If implemented, the Phase 2 expansion is expected to increase annual gold production to approximately 230,000 ounces per year, reduce costs, and generate significantly more cash flow and attractive returns. The Company is currently working on the Phase 2 feasibility study, scheduled for completion in mid-2021.

Separately, Jacobina is studying the installation of a backfill plant to allow up to 2,000 tpd of tailings to be deposited in underground voids. Preliminary results indicate that the project has the potential to improve the way in which the Company manages the environment and environmental impact, extend the life of the existing tailings storage facility, and improve mining recovery, resulting in an increased conversion of mineral resources to mineral reserves. The Company is advancing the backfill project to a feasibility study, to be completed in early 2021.

Canadian Malartic (50% interest)
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Yamana Gold Declares Fourth Quarter Dividend; Dividend Reflects New 50% Increase to Annual Dividend.
TORONTO, Oct. 29, 2020 (GLOBE NEWSWIRE) -- YAMANA GOLD INC. (TSX:YRI; NYSE:AUY; LSE:AUY) (“Yamana” or the “Company”) declares a fourth quarter dividend of $0.02625 per share (annual $0.105 per share). Shareholders of record at the close of business on December 31, 2020, will be entitled to receive payment of this dividend on January 14, 2021. The dividend is an “eligible dividend” for Canadian tax purposes.

The dividend reflects the previously announced 50% increase to the Company’s annual dividend. At the new rate of $0.105 per share, the annual dividend will be 425% higher than just 18 months ago.

On a per gold equivalent ounce basis (“GEO”)(1), the dividend rate is $100 per GEO, which is now the new dividend floor. 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 Yamana with the flexibility to pay the dividend at the new floor for an extended period even in a bottom of cycle gold price environment.

While the Company will continue to reflect its dividend both on a per share basis and on a per ounce basis, it will no longer be providing a range for its dividends on a per GEO basis. Any increases above the new dividend floor will be based entirely on cash flows and cash generation capacity of the Company. As cash flows and cash balances increase, the Company’s 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.