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Yamana Q2 production in line with guidance

10 July 2019


The company said it remained on track to meet its full-year guidance and expected to report positive free cash flow in the second quarter, which it believes will increase in the second half of the year as it works to reduce its general and administrative expenses and lower interest expense via anticipated debt reduction. The company will also have less investment in long-term stockpiles following disposal of the Chapada mine.The ramp of Cerro Moro mine in Argentina saw it produce 29,643oz in the quarter compared with 9,644oz a year ago, which more than compensated for an 8% decline in output from the 50%-owned Canadian Malartic mine. Gold production at its other operations (Chapada, El Peñon, Jacobina and Minera Florida) was essentially similar to the 2018 period.Jacobina recorded its eleventh straight quarter at more than 30,000oz and second straight quarter of record production as Yamana plans a phased expansion to increase output to up to 225,000oz per year by 2023. Results of a pre-feasibility study are due in the first quarter of 2020.


Yamana saw a 65.8% jump in its silver production to 2.2Moz from 1.3Moz in the same period of 2018 due to the higher contribution from Cerro Moro.The company continues to focus on improving its financial performance through implementing corporate overhead reductions, streamlining its organisational structure and rationalizing its asset portfolio. These reductions are expected to generate US$15 million in annualised savings.


During the second quarter it announced the sale of Chapada in Brazil to Lundin Mining for an initial upfront cash payment of $800 million, a $100 million cash payment contingent on the development of a pyrite roaster, a 2% net smelter return royalty on the Suruca gold project in the Chapada complex and the right to receive up to $125 million in additional cash consideration based on the price of gold over the five-year period from the date of close. This follows the sale of the Gualcamayo gold mine in Argentina in 2018.As a result of the sale of Chapada, Yamana has adjusted its full-year production guidance to 899,000oz of gold from 940,000oz and total GEOs to 1.01 million from 1.06 million.Shares in Yamana Gold (TSX:YRI) are trading at C$3.33, valuing the company at $3.2 billion. Its share price has increased 1.8% since the start of the year.