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Yamana Posts Adjusted Profit, Hikes Gold-Output Guidance, Sells Mine

Kitco News

(Kitco News) - Yamana Gold Inc. (TSX: YRI; NYSE: AUY) late Thursday reported a dip in its third-quarter profit but hiked guidance for gold and copper production in full-year 2018.

The company also announced an agreement to sell its interest in the Gualcamayo mine in Argentina to Colombia-based Mineros S.A.

Excluding special items, adjusted earnings were $23.6 million, or 2 cents per share, compared to $29.1 million, or 4 cents, in the same quarter a year ago.

On a net basis, the company listed a loss of $81.3 million, or 9 cents per share, compared to a net profit of $45.7 million, or a nickel, in the same quarter a year ago. Among the special items is a non-cash accounting carrying value reduction totaling $75 million on an after-tax basis ($89 million on a gross basis) relating to the sale of the Gualcamayo mine.

Gold-equivalent production from Yamana Mines for the third quarter was 279,464 ounces, including 246,788 ounces of gold and 2.55 million ounces of silver. Output in the same period a year ago was 223,272 ounces of gold and 1.09 million ounces of silver. Copper production fell to 28.6 million pounds from 37.1 million.

While gold and silver output was up, however, prices were down. The average realized gold price fell to $1,213 an ounce from $1,278, while the average silver price fell to $15.14 from $16.66.

The company upped its full-year guidance for production for Yamana Mines to 920,000 ounces of gold from 900,000 previously, citing strong production through the first nine months of 2018.  In particular, Cerro Moro, which had its first full quarter of commercial production in the third quarter, had run rates already at the levels needed to meet guidance both for 2018 and 2019, Yamana said.

Full-year silver production guidance was trimmed to 7.55 million ounces from original 8.15 million due to lower-than-planned output from El Peñón. Nevertheless, the higher gold production means gold-equivalent output should exceed the initially guided 1.013 million ounces, the company said. Yamana also increased its full-year guidance for copper to approximately 125 million pounds from 120 million.

Yamana maintained a quarterly dividend of $0.005 per share that will be payable on Jan. 11 to shareholders of record as of Dec. 28.

For sale of the Gualcamayo mine to Mineros S.A., Yamana will receive $30 million in cash at closing, another $30 million once commercial production is declared on the Deep Carbonates project, as well as net smelter return royalties on future production. Yamana put the total value of the deal at $85 million, adding that the sale is expected to close in the fourth quarter.

 Yamana also gave Mineros an option to acquire up to a 51% interest in the La Pepa project in Chile, with a call option for the other 49%.

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