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Yamana Gold (AUY) Ramps Up Phase 2 Expansion in Jacobina

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Yamana Gold Inc. AUY received the permit to increase its Jacobina mine’s throughput to 10,000 tons per day (tpd), which is expected to reach 8,500 tpd by second-quarter 2022 with the ramp-up of phase 2 expansion of the mine. This will enable Jacobina to increase production through the second half of 2022 with a full-year gold production level of 230,000 ounces per year starting in 2023. This permit also advances the future phase 3 expansion to achieve annual gold production of 270,000 ounces.

Jacobina received the expansion permit owing to its focus on expanding mining and processing capacity in the past six months. Yamana plans to increase throughput over the next six to seven months.

Jacobina has prepared an inventory of lower grade stopes and stockpiled ore on the surface to provide supplementary mill feed during the ramp-up phase. Construction of the phase 2 tailings storage facility was recently completed, which provides tailings storage capacity at 8,500 tpd until the end of 2023.

Yamana’s phase 2 expansion will be completed through incremental debottlenecking of the processing plant and tailings management system. This expansion reduces capital expenditures, increases energy efficiency and lowers the project risk. Capital costs for the expansion are projected at roughly $20 million, with the remaining $15 million to be paid in 2022.

Yamana is witnessing strong operating performance from El Peñón and Cerro Moro mines due to lower costs and increased production from their higher-grade zones. The company expects fourth-quarter 2021 production to exceed 270,000 gold equivalent ounces (GEOs). It expects to surpass the current-year production guidance of 1,000,000 GEOs, given strong momentum at the Canadian Malartic, Jacobina and El Peñón. All-in sustaining costs (AISC) in the fourth quarter are estimated to be $980 per GEO or lower, which is 7% below AISC reported in the previous three quarters.

During third-quarter 2021, Jacobina surpassed its production plan with gold production of 47,373 ounces. Mill throughput for the quarter was nearly 7,500 tpd marking 4% increase from the prior quarter. Mining rates increased by 9% quarter over quarter, with the underground mine on track to sustain 7,500 tpd by the year end.

Price Performance

Shares of Yamana Gold have declined 29.5% in the past year, compared with the 16.6% fall of the industry.

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Zacks Rank & Key Picks

Yamana Gold currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials space are Olin Corporation OLN, Bunge Limited BG and Nucor Corporation NUE. While Olin and Bunge flaunt a Zacks Rank #1 (Strong Buy), Nucor carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olin’s third-quarter 2021 adjusted earnings beat the Zacks Consensus Estimate, while revenues missed the same. It has an expected earnings growth rate of around 740% for the current fiscal year. The Zacks Consensus Estimate for current-year earnings has been revised 20.5% upward in the past 60 days.

Olin’s shares have surged 229% in the past year. The company has a long-term earnings growth of 56%.

Bunge’s third-quarter 2021 earnings and sales beat the respective Zacks Consensus Estimate. It has a trailing four-quarter earnings surprise of 105.7%, on average. The company has an estimated earnings growth rate of around 45% for the current year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 36%.

Bunge’s shares have appreciated 60% in the past year. It has a long-term earnings growth of 6.7%.

Nucor’s third-quarter adjusted earnings missed the Zacks Consensus Estimate, while sales beat the same. It has a trailing four-quarter earnings surprise of 2.74%, on average.

Nucor has a projected earnings growth rate of around 583% for 2021. The Zacks Consensus Estimate for current-year earnings has been revised upward by 18.1% in the past 60 days. The company’s shares have soared 128% in a year.


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