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Yamana Gold Provides Update on Q3 Operations & Brazilian Tax

Zacks Equity Research

Yamana Gold Inc. AUY provided preliminary operational results for third-quarter 2017. During the quarter, the company produced 257,000 ounces of gold, 1.43 million ounces of silver and 37.1 million pounds of copper. According to the company, production for the third quarter and first nine months is ahead of budget and guidance.  

The company expects costs to be within the guidance range provided earlier as costs are trending below the top end of the range at present. For the third quarter, Yamana Gold expects all-in sustaining cash costs for gold and silver not to exceed $735 and $12.50 per ounce, respectively. It is also planning to re-introduce a by-product measure for costs, after consultation with market participants.

As disclosed during second-quarter 2017 earnings, Yamana Gold elected the third quarter for participating in a program in Brazil to resolve certain tax contingencies. As the company has begun payments under the program, its cash flows will be affected in the third and fourth quarter.

The company has already paid $30.5 million year to date and allocated $14.8 million for an upcoming payment, which it plans to make in the next few weeks. Thereafter, the company plans to pay $29.3 million by end of the year.

At the end of the third quarter, the company has cash balance of roughly $125 million.

Under the final program, Yamana Goldwill pay $8.6 million per year for roughly 12 years. The Brazilian government has approved the program and the company expects a final approval by the President of Brazil by Oct 31.

Shares of Yamana Gold have declined 30.9% over a year, underperforming the industry’s 3.6% fall.

 

 

Yamana Gold, during second-quarter 2017 earnings call, announced that it expects to produce 940,000 ounces of gold in 2017. The company remains well positioned to achieve the target.

Zacks Rank & Stocks to Consider

Yamana Gold currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Westlake Chemical Corporation WLK, Huntsman Corporation HUN and FMC Corporation FMC. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Westlake Chemical has an expected long-term earnings growth rate of 8.3%.

Huntsman has an expected long-term earnings growth rate of 7%.

FMC has an expected long-term earnings growth rate of 11.3%.

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