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Yamana advances project as standout quarter provides solid foundation for progress

29th April 2021

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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Canadian miner Yamana Gold produced 231 988 gold-equivalent ounces (GEO) in the first quarter, including gold production of 201 117 oz and silver production of 2.1-million ounces, both in line with the company’s trend of delivering stronger production, with quarterly sequential increases in production.

The quarter saw the company’s Canadian Malartic and Minera Florida projects have standout quarters, producing 89 550 oz and 20 818 oz of gold, respectively, both above plan.

At Jacobina, production reached an all-time monthly high in March, with total production in line with the plan for the quarter.

Silver production of more than 1.3-million ounces at Cerro Moro exceeded with mine sequencing during the quarter favouring mining of higher silver grade zones, the company said on April 29.

FINANCIAL RESULTS

Strong earnings and cash flows further strengthened Yamana’s cash balances and balance sheet, with net earnings of $54.7-million, or $0.06 a share basic and diluted, comparing well to net earnings of $45-million, or $0.05 a share, reported for the first quarter of 2020.

Cash flow from operating activities was $160.2-million and net free cash flow was $123.5-million, in line or above the averages of the preceding three quarters, further demonstrating the strength and resilience of the cash flow generation capacity of the company, the company said.

Cash flow from operating activities before net change in working capital was $183.4-million, and free cash flow before dividends and debt repayments was $76-million.

As at March 31, 2021, Yamana had cash and cash equivalents of $678.1-million, and available credit of $750-million, for total available liquidity of about $1.4-billion.

Cash balances include $222.8-million available for use by the Mara project, with the remainder of cash and cash equivalents of $455.3-million, along with further liquidity and incoming cash flows, considered to be “more than sufficient” to fully manage Yamana's business and available for the company's capital allocation objectives.

Cash costs and all-in sustaining costs (AISC), meanwhile, were $698 and $1 045 per GEO, respectively, which on a consolidated basis were in line or better than plan, and consistent with the comparative period, Yamana noted.

Mine operating earnings of $149.5-million increased by $50.2-million, or 51%, in relation to the comparative prior year quarter. The increase is related to the strong precious metals price environment and strong operational performances from the mines resulting in higher gold production at comparable costs, the company explained.

PROJECT UPDATE

Yamana has further also identified opportunities to further optimise the results and recoveries achieved in the Phase 1 optimisation with a modest investment. As part of this initiative, the Falcon concentrator and cyclones were installed during the first quarter and the Knelson concentrator is scheduled to be installed in the second quarter, with the objective to optimise gold recovery at the higher throughput rate.

The company is advancing the Phase 2 expansion at Jacobina, for an increase in throughput to 8 500 t/d, and Yamana expects to provide an update regarding capital expenditure and development schedule in mid-2021 once studies are finalised to facilitate permitting.

The company has also begun a conceptual study on a Phase 3 expansion, which would increase throughput to 10 000 t/d at modest further capital requirements.

Yamana has also adopted a comprehensive Jacobina life-of-mine tailings management strategy that reduces surface disposition of tailings, with underground tailings disposal as backfill.

The company has initiated several studies to ensure long-term sustainability and reduce the environmental footprint of the operation. Work conducted in 2020 confirmed that both paste backfill and hydraulic backfill are technically feasible options for disposal of tailings into underground voids, thereby minimising the quantity of tailings stored on surface, it elaborated.

In March, a feasibility study was completed at Jacobina for the installation of a hydraulic backfill plant. The initial capital cost for establishing the backfill system is estimated at $8-million.  

Plans are in place to move forward with the hydraulic backfill plant project, which is in the permitting phase.

A conceptual study is under way to evaluate further opportunities for a dry stack tailings facility and/or a paste backfill plant in parallel to the hydraulic backfill plant, which could provide opportunities in the future for additional storage of tailings to support future mineral reserve development.

Existing surface tailings capacity and backfill will be sufficient for life-of-mine production at Jacobina at the planned increased processing rates.

Meanwhile, “impressive” technical study results were obtained at Malartic in early February and the company and its partner made a positive construction decision of the Odyssey project at Canadian Malartic.

A National Instrument 43-101 technical report for the Canadian Malartic operation was completed in March, which includes a full summary of the Odyssey underground project.

The project demonstrates robust economics, a significant increase in mineral resources and a mine life extension to at least 2039, Yamana said.

Whereas the company had originally considered a production platform conservatively in the range of 450 000 oz/y, the mine now supports an expected increased yearly gold production of between 500 000 oz and 600 000 oz on a 100% basis.

Exploration drilling conducted on the Rand property in the first quarter targeted the projected down plunge extension of the East Gouldie zone, with the first hole testing an area located greater than 1 km to the east of and down plunge of the current East Gouldie inferred mineral resource.

Drill hole RD21-4680A, intersected 2.7 g/t of gold over an estimated true width of 10.9 m at 1 995 m depth, including 3.1 g/t over 7.2 m, indicating “excellent down plunge growth potential”.

However, as Canadian Malartic transitions from openpit to underground mining, underground production will offset a significant portion of the corresponding decline in openpit production.

Production from openpit mining from 2021 through 2028 is expected to be about 3.9-million ounces, with yearly production to trend lower to about 123 000 oz by 2028.

Underground production will start in 2023 and increase yearly, adding about 932 000 oz during the 2023 to 2028 construction period at cash costs of about $800/oz, including about 385 000 oz by 2028.

Net proceeds from the sale of the 932 000 oz of underground production would significantly reduce the external cash requirements for the construction of the Odyssey project which, assuming the gold price used in the financial analysis for the project of $1 550/oz, would cut the projected capital requirements in half, Yamana said.

The Mara project, meanwhile, advances following the signing of the integration agreement on December 17, 2020, with the Mara joint venture held by Yamana (56.25%), Glencore International (25%) and Newmont Corporation (18.75%), and which continues to engage with local communities and stakeholders and advance the feasibility study and project’s permitting process.

After obtaining all required permits from the respective authorities and conducting citizen participation and social consultation seminars, the Mara project started exploration activities at the site.

The primary field activities being performed include additional rock sampling and studies to update the environmental baseline for the environmental- and social-impact assessment (Esia) and a drilling campaign to collect data for geotechnical and metallurgical studies that will be incorporated into the updated feasibility study.

A technical committee comprising members of the company, Glencore International and Newmont Corporation continues to provide oversight of the feasibility study, which Yamana said would provide updated mineral reserves, production and project cost estimates for the project.

The Mara project will rely on processing ore from the Agua Rica mine at the Alumbrera plant in the Catamarca province of Argentina. The new project design minimises the environmental footprint of the project in consideration of the input of the local stakeholders and creates one of the lowest capital intensity projects in the copper industry.

Key technical results related to the feasibility study are expected during 2021. While the company continues to advance the feasibility study, it notes that a “considerable amount” of information in the prefeasibility study is already at feasibility study level mostly as a result of the integration transaction.

The updated feasibility study and Esia are expected to be completed in 2022.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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