This morning Canaccord Genuity and Stifel GMP released a flash update on Yamana Gold (TSX: YRI). This comes after Yamana released preliminary third quarter operating results. Yamana announced gold equivalent ounce production was 240,000 ounces, up 30% quarter over quarter. This number came in slightly below Stifel’s 245,000 and below Canaccord’s 218,000 estimate. Yamana’s silver production was 3,040,000 ounces, which beat Stifel’s 2,700,000 ounce estimate and Canaccord’s estimate of 2,831,000 ounces.
Canaccord’s analyst Carey MacRury commented, “the lower GEO production versus our forecasts was almost entirely due to Cerro Moro which produced 19koz gold (CG est. 31koz) and 1,679koz silver (CG est. 1,855koz),” and says that management has noted that the operation is now back to their standard output levels.
Alongside the preliminary results, Yamana Gold announced that they are increasing their 2020 production guidance. They have increased their gold equivalent ounce production to 915,000 ounces from 890,000 ounces. MacRury says that production guidance is in line with their forecasts. Comparatively, Ingrid Rico from Stifel GMP says that their estimates already included a possible upward guidance revision and “the new guidance comes broadly within our estimates for gold, but modestly higher on silver.”
Another notable thing that came out of the news release was that Yamana increased its dividend 50% to 10.4 cents a share from 7 cents a share prior. This makes Yanama the second-highest dividend yield company among the senior producers. MacRury says, “We estimate a dividend payout ratio of 30% of sustaining FCF at $1,350/oz, a level that we consider sustainable.”
MacRury says that, “Q3/20 ending cash balance implies improved FCF amid record gold prices.” MacRury is currently forecasting free-cash-flow for the fourth quarter to be $133 million, a record for the company.
Rico says, “We expect the next key catalyst for the company this quarter to be the Malartic UG exploration update (mainly East Gouldie). Malartic UG will likely be getting a bigger spotlight and the upcoming exploration update should be important ahead of an initial PEA planned for 1H 2021.”
Currently, Canaccord Genuity has an C$11 price target and a Buy rating on the company. At the same time, Stifel has a C$9.75 price target and a Buy rating as well.
Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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