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Argentina's Mining Landscape Improving, Cerro Morro A Go – Yamana CEO

By Alex Létourneau, Kitco News
Thursday February 12, 2015 9:47 AM

(Kitco News) - Yamana Gold Inc. (TSX:YRI)(NYSE:AUY) will proceed with the construction of its Cerro Morro project, located in the Santa Cruz province of Argentina, despite reporting a loss in 2014, and the risk involved with mining in Argentina.

The high grade, low cost Cerro Morro project would see life-of-mine annual production of 102,000 ounces of gold and 5 million ounces of silver, with throughput of 1,000 tons per day (tpd). All in sustaining costs (AISC) would range between $547 to $557 per ounce of gold and $7.60 to $7.80 per ounce of silver.

In its first three years of full production, the mine is expected to produce of 135,000 ounces of gold and 6.7 million ounces of silver.

During the company’s fourth-quarter and full-year conference call Thursday morning, Peter Marrone, president and chief executive officer, said during the questions and answer period, that he has belief in Argentina.

“You’ve heard me say before that I think Argentina has an improving socio-economic and geopolitical state, certainly from a mining company’s perspective,” he said.
Marrone noted the work Yamana undertook in coming to a decision regarding Cerro Morro.

“Initially we thought we would be at 700 tons per day in our feasibility study,” he said. “We undertook detailed engineering and further progression of our efforts, and we’ve come to the conclusion that the most optimal point is 1,000 tpd.

“We’re progressing with a single stage plant construction versus the initial plan of a two phased approach,” he continued. “We believe this provides lower risk on execution and for the delivery of ounces – it also provides for higher number of ounces.

“The estimated total capital investment is approximately $398 million, of that $133 million is sustaining capital, and $265 million is the initial capital for startup of operations,” Marrone said.

Yamana’s 4Q, Full-Year Earnings Slump To A Loss

The company reported a net loss in the fourth quarter, totaling $299.5 million, or $0.34 per basic share. Adjusted loss in the quarter was $16.2 million, or 2 cents per share, they said.

Yamana’s full-year loss totaled $1.2 billion, or $1.46 per basic share, much steeper than the $446.2 million, or $0.59 per basic share loss reported in 2013. The loss was primarily made up of impairments on mines and deferred tax liabilities from new Chilean tax changes.

They posted full-year adjusted earnings of $41.5 million, or 5 cents per share, in 2014, down from $274.1 million, or $0.36 cents per share in full-year 2013.

Revenues in 2014 were flat, staying at an identical $1.84 billion, compared to full-year 2013 as lower metal prices offset higher sales volumes.

Production in 2014 rose 17% to a company record 1.4 million gold equivalent ounces, while copper production totaled 133.5 million pounds. The company’s AISC finished the year at $807 per gold equivalent ounce, while cornerstone operations saw an AISC of $747 per gold equivalent ounce.

The company announced a 1.5 cent dividend to shareholders of record, as of March 31, 2015, prior to release of their earnings results.

Argentina's Mining Landscape Improving, Cerro Morro A Go – Yamana CEO

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