Yamana to sell Gualcamayo, posts Q3 loss

Yamana Gold will sell its Gualcamayo mine in northern Argentina to Colombian miner Mineros for US$30mn in cash.

The company also agreed to grant Mineros an option to buy up to 51% interest in La Pepa, in Chile's Maricunga gold belt, over a four-year earn-in period, and the remaining 49% pursuant to a call option.

Yamana said in a press release that the sale is consistent with the company's approach to focus on projects with high certainty on production, costs, mine life and capital requirements.

CEO Daniel Racine said in an earnings call that he expects to close the deal "probably mid-December."

The executive also confirmed that the company is "looking for potential [buyers] at Agua Rica," with some players already having expressed interest.

Results

Net loss from operations for the third quarter was US$81.3m compared to a US$45.7mn profit in the same period last year, considering a non-cash item of US$89mn from the sale of the Gualcamayo mine.

Adjusted earnings for the third quarter were US$23mn, down from US$29.1mn in the same period last year. Revenues fell to around US$417mn from US$493mn in the year-ago period.

Gold production was 268,842oz and copper production was 28.6Mlb.

The company increased its guidance to 920,000oz gold from 900,000oz based on strong production through the first nine months of 2018.

Cerro Moro mine in Argentina produced in its first full quarter of commercial production 38,083oz gold at an average mill feed grade of 16.15g/t, recovery rate of 92.5% and costs below guidance.

Exploration work at the mine focuses on conversion of inferred mineral resources, with the majority of the work completed on the Veronica vein, Escondida Far West, Martina and Nini extension, said the company.

"The production of Cerro Moro is 70-30 open pit-underground...We have the Veronica vein that's going to be put into production probably next year, that will maintain the open pit portion of it," Racine added.