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Yamana Gold released its FY2021 Reserve & Resource statement last week, reporting another year of reserve growth, and ending the year with ~13.7 million ounces of gold reserves.
Notably, this replacement of depletion was achieved without adjusting the company’s gold price assumptions, with Yamana’s gold price used to calculate reserves remaining well below spot prices at $1,250/oz.
In addition to reserve growth, Yamana also saw resource growth at Canadian Malartic (50%) and Jacobina, the company’s two primary assets.
Based on what I believe to a fair value of more than $7.00 per share, I continue to see Yamana Gold as reasonably valued, and I would view sharp pullbacks as buying opportunities.
The Q4 Earnings Season for the Gold Miners Index ( GDX ) has finally begun, which means that producers are busy reporting their updated reserve and resource estimates. One of the first companies to update its inventory was Yamana Gold ( AUY ). The company reported solid reserve replacement, ending the year with ~9.6 million ounces of gold reserves, or ~13.7 million ounces including MARA. Notably, this replacement of depletion was achieved without adjusting its gold price assumptions as some miners have since 2020. Given Yamana’s solid development pipeline and continued operational excellence, I would view sharp pullbacks as buying opportunities. Nordroden/iStock via Getty Images Canadian Malartic Mine (Company Presentation) Earlier this month, Yamana Gold released its FY2021 Reserve & Resource statement, reporting total mineral reserves of ~6.5 million ounces at operating assets, with an additional 7+ million ounces of reserves at development projects (Jeronimo, MARA, Wasamac). This translated to a marginal decline on a year-over-year (~13.7 million ounces vs. ~13.8 million ounces), with the reason for the decline being Canadian Malartic. On top of this gold reserve base, Yamana has an additional ~54 million ounces of silver reserves at operating assets, down slightly from ~56.1 million ounces in FY2020. Let’s take a closer look below: Yamana Reserve & Resource Growth & Depletion – 2017 Through 2021 (Company Presentation) As shown in the chart above, Yamana Gold had another successful year of growing mineral resources, with measured & indicated [M&I] resources up 13% to ~7.8 million ounces of gold, and inferred resources up 1% to ~11.1 million ounces of gold. This has increased the company’s total gold inventory to ~28.1 million ounces of gold when including existing operations and Wasamac (goal to begin production in 2026), up from ~27.2 million ounces in the year-ago period and just ~19.4 million ounces in FY2017, representing a ~9.7% compound annual reserve growth rate. While this was not wholly organic due to the Monarch Gold acquisition, it was achieved with limited share dilution. Yamana Gold – Mineral Reserves (Company Filings, Author’s Chart) Looming across the portfolio at the year-by-year progression, we can see that every operation saw an increase in reserves relative to 2020 levels except for Canadian Malartic. At Cerro Moro, gold reserves increased to ~460,000 ounces, with the expansion of high-grade ore bodies at Zoe, Martina, and Naty. Assuming an 80,000-ounce annual gold production rate (FY2021: ~80,000 ounces), this supports a ~6-year mine life. In the measured & indicated category, resources grew more than 10% at Cerro Moro at slightly higher grades, to 117,000 ounces at 3.89 grams per tonne gold.
Moving to Yamana’s other small operation, Minera Florida, reserves also grew marginally year-over-year, increasing by less than 1% to 430,000 ounces. While this appears to be a very small reserve base, similar to Cerro Moro, this supports more than five years of mine life based on an ~80,000-ounce per annum production rate. It’s also important to note that this reserve base is backed up by significant M&I resources, with ~960,000 ounces at 4.79 grams per tonne gold (FY2020: ~1.06 million ounces at 4.36 grams per tonne gold). Assuming even a 50% conversion rate would support another six years of incremental mine life on top of the reserve base. Jacobina
When it comes to Yamana’s 2nd largest contributor, Jacobina, the asset continues to deliver and now has a total resource base of ~8.6 million ounces, a more than 60% increase from 2017 levels even after depletion. In 2021, Yamana added 324,000 ounces before depletion, with reserves increasing to 2.94 million ounces at 2.18 grams per tonne gold, up from 2.81 million ounces at 2.18 grams per tonne gold in 2020. This is great news for Yamana, given that Jacobina is the backbone of its growth going forward, with the mine expected to deliver meaningful production growth in the […]
source Yamana Gold: Still Trading At A Discount To Fair Value
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