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MeneameToronto-based Yamana Gold (TSX: YRI, NYSE: AUY, LSE: YAU) reported third quarter profits of US$60.8mn, down 59% from US$150mn year-on-year despite a 50% rise in revenue to US$333mn.
Adjusted earnings - accounting for foreign exchange rate losses, unrealized gains on derivatives and other factors - rose to US$88.3mn from US$31.5mn, Yamana said in a statement.
Additional operational revenue of US$32mn was perceived from assets being sold - San Andrés in Honduras, which sold for US$36mn, as well as São Vicente and São Francisco in Brazil, where sale approvals are expected in 1Q10, CEO Peter Marrone said Wednesday during a conference call to discuss the results.
Mine operating earnings rose to US$136mn from US$57.2mn thanks to increased sales and higher gold and silver prices, partially offset by lower copper prices.
Cash costs from continuing operations, excluding Yamana's 12.5% stake in the Alumbrera copper-gold mine in Argentina, came in at US$349/oz gold equivalent, a reduction from US$406/oz.
Yamana churned out 314,707oz of gold equivalent in Q3, up from 235,406oz in the year-ago quarter. Gold equivalent output was comprised of 261,789oz gold and 2.9Moz silver.
Guidance for this year is set at 1.05M-1.1Moz.
BRAZIL
In Brazil, the company's Chapada mine contributed 34,929oz gold equivalent, dipping from 35,876oz due to planned maintenance. An expansion to 20Mt/y throughput was completed during Q3.
"We are confident that our throughput will be more than 20Mt/y in the fourth quarter and into 2010," Marrone said, adding the company is evaluating an in-pit crushing scenario that would help push throughput higher than 20Mt/y.
Chapada is slated to produce 150,000-165,000oz gold this year, the statement said.
Production at the Jacobina mine rose 67% to 30,978oz gold equivalent, while Fazenda Brasileiro saw gold equivalent production slip to 20,464oz from 23,344oz.
CHILE
At Yamana's Chilean operations, the El Peñón mine produced 108,054oz gold equivalent, up from 98,976oz year-over-year. Grades at the mine are expected to improve in Q4 and into 2010 as the company starts mining zones that make up the North Block area, Marrone said.
Minera Florida contributed 25,411oz gold equivalent, up from 17,345oz. Yamana has made a construction decision for an operation to reprocess tailings at Florida, which will add 40,000oz/y gold equivalent starting in early 2012.
In addition, a resource and development update for two new areas at Florida is planned for early or mid-2010, said the CEO. Florida also produced 1,256t of zinc in Q3, up from 802t.
ARGENTINA
Meanwhile, the Gualcamayo mine in Argentina reached commercial production during Q3 and turned out 39,523oz gold equivalent in the period. The mine processed 16,000t/d during the quarter, lower than its capacity rate.
Throughput is due to increase in Q4 and early 2010, while grades fall slightly to become more consistent with feasibility levels, said Marrone.
Previous 2010 guidance of 160,000oz was given for Gualcamayo, said the CEO, adding he is confident that the mine is capable of producing at higher levels.
Yamana is already looking to expand the mine. The newly discovered Salamanca area has only seen preliminary work so far, and the company plans to continue exploration there. "We see potential for roughly 500,000oz... that's our target," Marrone told the call.
Meanwhile an updated feasibility study to add 90,000oz/y from the QDD Lower West zone is expected in 2010.
FUTURE GROWTH
Yamana has recently made construction decisions on two new mines - C1 Santa Luz in Brazil and Mercedes in Mexico - and is due to complete a feasibility study on the Enersto/Pau-a-Pique project in Brazil by year-end. The three projects would respectively add 130,000oz/y gold, 120,000oz/y gold equivalent and 100,000oz/y gold to Yamana's production profile.
A feasibility study is also underway for a more than 100,000oz/y gold mine at Pilar/Caiamar in Brazil.
"We target to grow to 1.7Moz sustainably," said Marrone.
Apart from organic growth, the company will continue to look at asset acquisition opportunities in the Americas, said the CEO, noting that the miner is not likely to go after corporate takeovers.
"Prospective areas continue to be where we [already] are," he said, adding that Yamana will also continue to look for exploration opportunities in Colombia.
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