Yamana Gold Reports Second Quarter 2022 Results With Standout Production and Low-Cost Performance Driving Strong Cash Flow Generation
JUL 28, 2022
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TORONTO, July 28, 2022 (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 second quarter of 2022. Production totalled 260,960 gold equivalent ounces ("GEO")(2) at total cost of sales, cash costs(1) and all-in sustaining costs ("AISC")(1) of $1,168, $734 and $1,084 per GEO(2) sold respectively. The standout production results, combined with the low-cost performance, delivered strong cash flow generation, including $187.8 million in cash flows from operating activities and $195.9 million in cash flows from operating activities before net change in working capital. With solid results across its operations, the Company is well positioned to achieve its guidance for the year in both production and AISC(1).
SECOND QUARTER HIGHLIGHTS
Financial Results - Strong Earnings and Cash Flow Generation Strengthening Balance Sheet
Second quarter net earnings(3) of $72.1 million or $0.07 per share basic and diluted. Adjusted net earnings(1)(3) of $85.8 million or $0.09 per share basic and diluted.
Cash flows from operating activities of $187.8 million and cash flows from operating activities before net change in working capital of $195.9 million, representing sharp increases from the prior year comparative quarter of 22.3% and 16.7%, respectively.
Net free cash flow(1) and free cash flow before dividends and debt repayments(1) of $136.6 million and $53.0 million, respectively.
Cash and cash equivalents totalled $545.1 million(6). The Company has $750.0 million in available credit.
Production Results - Exceptional Performance Across Entire Portfolio
Production of 260,960 GEO(2) was in line with plan, despite the gold to silver ratio being near an all-time high and significantly above that anticipated in the plan and guidance. Assuming the budget gold equivalent ratio, GEO(2) production would have exceeded plan. Quarterly GEO(2) production increased year-over-year, underpinned by strong gold production and an exceptional performance from Cerro Moro which produced 51,906 GEO(2), an increase of 105% year over year.
Gold production of 232,542 ounces exceeded plan and the prior year comparative quarter, following standout performances from Jacobina with 49,662 ounces, El Peñón with 46,627 ounces and Cerro Moro with 30,929 ounces.
Silver production of 2,356,853 ounces was in line with plan, following an exceptional performance from Cerro Moro.
Cost Results - Maintaining Solid Margins Against Inflationary Backdrop
Second quarter total cost of sales, cash costs(1) and AISC(1) of $1,168, $734, and $1,084 per GEO(2), respectively, were in line with plan and substantially unchanged versus the prior year comparative period. Productivity gains along with stable and, in some cases, better than expected costs, offset inflationary impacts on certain consumables, notably diesel. By the end of the quarter, the costs of several commodity-based consumables appeared to have peaked with prices meaningfully below recent levels. Strong cash flows, free cash flows and increasing cash balances in the following quarters will support the modest planned increases to capital spending.
Capital Allocation and Free Cash Flow
The Company employs a balanced approach to capital allocation, which is expected to generate significant and growing cash balances during the guidance period. The cash balances are expected to be more than sufficient to finance and support the Company's planned growth opportunities, while maintaining financial strength, and strengthening and increasing returns of capital to shareholders. To achieve this, the Company employs a disciplined capital spend framework during the guidance period with a target of $150 per GEO(2) of sustaining capital and net expansionary capital to not exceed $175.0 million per year on average.
Free cash flow is expected to steadily increase quarter-over-quarter, with the strongest free cash flow generation expected in the second half of the year, and in particular during the fourth quarter. The Company expects cash balances to increase steadily throughout the year with the strongest contribution in the latter half of the year, also aided by the fact that higher income tax installments have been paid, as customary, in the first half of the year.
Health, Safety and Sustainable Development
The Company's Total Recordable Injury Rate ("TRIR") for the first six months of 2022 was 0.81(4). We have modified our TRIR reporting to align with our financial reporting standards which include our wholly-owned operations, exploration projects, development projects (Wasamac and MARA), proportional consolidation of Canadian Malartic (50%), and closed projects. For comparison, the corresponding full-year 2021 result was 1.11(4).
As of July 5, 2022 more than 98%(5) of the Company's employees and contractors at its wholly-owned operations and exploration projects have received at least one dose of a COVID-19 vaccine, more than 96%(5) have received two doses and more than 84%(5) have received a third dose booster shot. Approximately 32%(5) of workers have received a fourth dose booster shot.
The Company continued the implementation of its Climate Action Strategy during the quarter, including advancing analysis of converting approximately 50% of Cerro Moro's electricity requirements from diesel to wind power to meet the greenhouse gas (“GHG”) emission reductions required between now and 2030 to achieve the Company's 1.5ºC science-based target, reduce operating costs, expand mineral reserves and mine life. Work also continued to progress on other climate action objectives, including advancing the evaluation of other operational projects to reduce GHG emissions and estimation of our Scope 3 emissions.
Yamana was named as one of Canada’s Best 50 Corporate Citizens by Corporate Knights Magazine for the second consecutive year, based on the assessment of a range of ESG criteria. The Company’s ranking improved one position to 30th overall and the Company remained the top-ranked mining company on the list. The Company is proud of this exceptional recognition, achieved by the dedication and hard work of all employees and business partners.
On July 26, 2022, the Company's ESG rating, as determined by MSCI, was upgraded to "A", further demonstrating the Company's deep commitment to ESG excellence.
OPERATING RESULTS SUMMARY
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