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Yamana Gold Increases Production Guidance For Jacobina Mine

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(Kitco News) - Yamana Gold Inc. (TSX: YRI; NYSE: AUY) upped output guidance for the Jacobina mine in Brazil, is exploring for higher grades there and is planning a pre-feasibility study next year for a second phase of expansion aimed at further increasing production, officials said late Thursday.

Guidance for Jacobina was hiked to 152,000 ounces for 2019, up from 145,000 previously. Output in 2018 was 144,695 ounces. The company listed guidance of 160,000 ounces for 2020 and 170,000 for 2021.

Yamana projected the mine’s all-in sustaining costs of $890 per gold-equivalent ounce for this year, compared to an actual cost of $891 last year.

“Jacobina has improved significantly in the last several years across all measures, and it is now one of our higher-quality, high-value operations,” said Daniel Racine, president and chief executive officer. “We believe that it is on the cusp of becoming a world-class mine, particularly once a decision is made to proceed with the Phase 2 expansion, given strong production, production growth, increasing mineral inventory at improving grades, and continuous increases in cash flow.”

The company is in a first phase of plant optimization to increase throughput to 6,500 tonnes per day by mid-2020, Yamana said. This effort is ahead of schedule, with quarter-to-date throughput averaging 6,182 tpd, which enabled the company to increase its guidance. Average daily throughput was 5,580 tpd in 2018.

Once mill optimization is completed, there is potential for a further production increase driven by higher grades, Yamana said. During 2019, exploration has focused on targeting new mineral resources at a grade of 3 grams per tonne or better.

Officials said updated mineral reserve and mineral resource estimates for Jacobina should be ready for release in the third quarter. At the end of last year, proven and probable mineral reserves totaled 2.1 million ounces of gold, contained in 27.9 million tonnes at an average grade of 2.34 g/t.

A second phase of expansion is expected to result in a larger increase in plant capacity to a range of 7,500 tpd to 8,500 tpd, Yamana said. This would gradually increase Jacobina’s gold production to at least 200,000 ounces per year and up to 225,000 ounces per year by 2023, based on current mineral reserve grades, the company said.

Expectations are for a pre-feasibility to be completed in the first quarter of 2020, Yamana said. This effort would identify optimum mining and processing expansion scenarios, evaluate project economics and determine a development schedule. The company currently envisions that investment for the second phase would occur mostly in 2021 and 2022 with the goal of obtaining the higher throughput level at the beginning of 2023.

Yamana said it has already made a series of incremental improvements at the mine during the last four years, driving production to 144,695 ounces last year from around 75,000 in 2014.

Officials also said general and administrative expenses will be lowered to $68 million this year from the prior estimate of $75 million, with the previously announced sale of the Chapada copper mine in Brazil expected to be completed within a few weeks.

Yamana said it expects G&A expenses of $60 million in 2020, resulting in savings of over $15 million annually. The company also said it is streamlining its organizational structure.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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