In a Jan. 14 research note, BMO Capital Markets analyst Andrew Kaip reported that Yamana Gold Inc.'s (YRI:TSX; AUY:NYSE; YAU:LSE) Q4/18 production for gold, silver and copper exceeded forecasts and costs came in at or below guidance. "The company capped off the year with a strong Q4/18 driven by better-than-expected performance at Chapada and Cerro Moro," he added. Full-year 2018 production of each metal exceeded revised guidance.
The analyst compared Yamana's actual production figures to BMO's projections.
With respect to gold, Yamana produced 292,500 ounces (292.5 Koz) of the metal in Q4/18, beating BMO's forecast of 281 Koz. The strong performing mines were Chapada, which produced 40.8 Koz versus BMO's expected 28.7 Koz, and Cerro Moro, where production was 45.1 Koz, above BMO's projected 40.8 Koz. In contrast, production at Minera Florida was a miss, at 24.5 Koz compared to BMO's projected 29.6 Koz. As for full-year 2018 production, it was 940.6 Koz, above guidance of 920 Koz.
Regarding silver, Yamana's Q4/18 production of it was 3.265 million ounces (3.265 Moz), slightly above BMO's projection of 3.037 Moz, due to solid performance at Cerro Moro. Full-year 2018 silver production came in at 8.023 Moz, also ahead of revised guidance of 7.55 Moz and near original guidance of 8.15 Moz.
In terms of copper, Yamana's production of this base metal in Q4/18 was 39 million pounds (39 Mlb), also above BMO's forecast, of 35.5 Mlb. Full-year 2018 production also was a beat at 129 Mlb compared to revised guidance of 125 Mlb.
Kaip relayed that another company event in Q4/18 was the closing of Yamana's sale of Gualcamayo for about $85 million plus royalties. Finally, last quarter, Yamana adopted the World Gold Council's all-in sustaining cost reporting standards that "should lead to more consistent reporting among member companies," indicated Kaip. Those changes will go into effect for reporting done after Jan. 1, 2019.
BMO has a Market Perform rating and a US$3 per share target price on Yamana Gold, whose current share price is about US$2.31.
[NLINSERT]Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.
Disclosures from BMO Capital Markets, Yamana Gold, January 14, 2019
IMPORTANT DISCLOSURES
Analyst's Certification
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.
Company Specific Disclosures
Disclosure 9B: BMO Capital Markets makes a market in Yamana Gold in United States
Disclosure 16: A research analyst has extensively viewed the material operations of Yamana Gold.
Disclosure 17: Yamana Gold has paid or reimbursed some or all of the research analyst's travel expenses.
For Important Disclosures on the stocks discussed in this report, please click here.
