Yamana Gold reports third quarter 2009 results
- Record quarterly production with double digit revenue, cash flow and
margin growth -
TORONTO, Nov. 3 /CNW/ - YAMANA GOLD INC. (TSX:YRI; NYSE:AUY; LSE:YAU)
today announced its financial and operating results for the third quarter
ended September 30, 2009. All dollar amounts are expressed in United States
dollars unless otherwise specified.
THIRD QUARTER HIGHLIGHTS
Financial and Operating Highlights
Highlights for the three- and nine-month periods ended September 30, 2009
include:
- Total production from all mines of 314,707 gold equivalent ounces
(GEO) and 875,763 GEO, respectively;
- Average co-product cash costs(1) from continuing operations excluding
Alumbrera of $349 per GEO and $350 per GEO, respectively. By-product
cash costs from continuing operations excluding Alumbrera of $79 per
GEO and $195 per GEO, respectively;
- Revenues of $332.2 million and $783.5 million, respectively;
- Mine operating earnings of $136.4 million and $283.2 million,
respectively;
- Net earnings of $60.8 million or $0.08 per share (Net earnings and
adjusted earnings(1) were impacted by a deferred tax provision
impacting only the third quarter $0.03 per share that does not impact
operating profit or future periods) and $156.5 million or $0.21 per
share, respectively;
- Adjusted earnings of $88.3 million or $0.12 per share and $248.4
million or $0.34 per share, respectively;
Three months Nine months
ended ended
Sept 30, Sept 30,
(In millions of United States Dollars) 2009 2009
-------------------------------------------------------------------------
Net earnings $ 60.8 $ 156.5
Stock-based compensation 1.8 7.0
Foreign exchange gain including discontinued
operations (6.7) (57.0)
Unrealized loss on derivatives including
discontinued operations 21.0 102.9
Future income tax expense on foreign currency
translation of inter-company debt 18.9 54.0
Non-recurring future income tax adjustment - 20.6
-------------------------------------------------------------------------
Adjusted Earnings before income tax effects 95.8 284.0
Income tax effect of adjustments (7.5) (35.6)
-------------------------------------------------------------------------
Adjusted Earnings $ 88.3 $ 248.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
- Cash flow from continuing operations before changes in non-cash
working capital items(1) of $167.9 million or $0.23 per share (cash
flow from continuing operations after changes in non-cash working
capital items of $144.4 million), and $340.6 million or $0.46 per
share (Cash flow from continuing operations after changes in non-cash
working capital items of $317.0 million), respectively.
Development, Exploration and Corporate Highlights
Highlights for the three-month period ended September 30, 2009 include:
- Completed the 20 million tonnes per year expansion at Chapada with
the new mine fleet expected to commence operation in the fourth
quarter
- Completed first full quarter of commercial production at Gualcamayo
subsequent to declaring commercial production on July 1, 2009 with
production increasing 62 percent from the second quarter at cash
costs well below guidance
- Continued to accelerate development work on new veins and exploration
efforts in the North Block at El Penon with grade and throughput
improvements anticipated
- Accelerated development activities at QDD Lower West with a
conceptual study in progress
- Acquired extensive exploration concession, Caiamar, located in Brazil
- Made construction decisions for the development of C1 Santa Luz,
Mercedes and the tailings reprocessing project at Minera Florida, for
start-up in 2012.
Highlights subsequent to the quarter include:
- Announced positive exploration results at Mercedes in Mexico
- Provided update on Agua Rica in Argentina including optimization
initiatives currently underway, continued focus on updating
components of the original feasibility study, and evaluating
potential strategic partners for development
- Provided exploration update on new area 10 kilometres north of
Gualcamayo, Salamanca, where drilling results support Yamana's view
that the area represents an important source of further gold ounces
for Gualcamayo.
"Yamana again achieved record quarterly production at industry low cash
costs," said Yamana's chairman and chief executive officer, Peter Marrone. "We
focused on our newest mine, Gualcamayo, this quarter, as we continue to put
steps in place to optimize the mine. We declared commercial production on time
and in its first full quarter of commercial production the mine is meeting our
expectations and exceeding guidance. We also focused on our robust development
stage and value enhancing projects this quarter such as Agua Rica as we
continue with optimization studies and evaluating potential strategic
partners."
FINANCIAL AND OPERATING SUMMARY
Revenues for the three-month period ended September 30, 2009 were $333.2
million, representing a 50 percent increase from the comparative quarter last
year, and for the nine-month period ended were $783.5 million. Approximately
10,000 GEO were produced but not sold during the third quarter due to timing
and will be sold during the fourth quarter.
Mine operating earnings for the three-month period ended September 30,
2009 were $136.4 million, representing a 138 percent increase from the
comparative quarter last year, and for the nine-month period ended were $283.2
million.
Net earnings for the three-month period ended September 30, 2009 were
$60.8 million, or $0.08 per share, and for the nine-month period ended were
$156.5 million, or $0.21 per share. Net earnings and adjusted earnings were
impacted by a deferred tax provision impacting only the third quarter of $0.03
per share that does not impact operating profit or future periods. Adjusted
earnings for the three-month period ended September 30, 2009 were $88.3
million, representing a 180 percent increase from the comparative quarter last
year, or $0.12 per share. Adjusted earnings for the nine-month period ended
were $248.4 million, or $0.34 per share.
Cash flow from operations after changes in non-cash working capital items
for the three-month period ended September 30, 2009 was $144.4 million,
representing a 155 percent increase from the comparative period last year, and
for the nine-month period ended was $317.0 million. Cash flow from operations
before changes in non-cash working capital items for the three-month period
ended September 30, 2009 was $167.9 million or $0.23 per share, representing a
67 percent increase from the comparative period last year. Cash flow from
operations before changes in non-cash working capital items for the nine-month
period ended June 30, 2009 was $340.6 million or $0.46 per share.
Cash and cash equivalents for the three-month period ended September 30,
2009 were $97.5 million, representing a five percent increase from the second
quarter of 2009. Consistent with the business plan of the Company and as the
Company had previously indicated, the majority of the build-out would be
capital by mid 2009 with a corresponding use of available cash. Increases in
cash flow would then increase available cash. Current cash and cash
equivalents as at the end of October 31, 2009 is approximately $130 million.
Total production for all mines for the three-month period ended September
30, 2009 was 314,707 GEO (comprised of 261,789 ounces of gold and 2.9 million
ounces of silver) representing a nine percent and 16 percent increase from the
second quarter and first quarter of 2009, respectively. Total production for
the nine-month period ended was 875,763 GEO (comprised of 736,369 ounces of
gold and 7.7 million ounces of silver).
Average co-product cash costs for the three-month period ended September
30, 2009 for continuing operations excluding Alumbrera were $349 per GEO and
for the nine-month period ended were $350 per GEO. By-product cash costs for
continuing operations excluding Alumbrera for the three-month period ended
September 30, 2009 were $79 per GEO and for the nine-month period were $195
per GEO. Co-product cash costs per pound of copper at Chapada for the
three-month period ended September 30, 2009 were $1.07 per pound and for the
nine-month period ended were $0.97 per pound.
Gross margins(1) per GEO sold for the three-month period ended September
30, 2009 were $792 per GEO, representing a 55 percent increase from the
comparative period last year, and for the nine-month period ended were $703
per GEO.
"We continued to focus on cost containment and margin expansion this
quarter, which has been reflected in our double digit revenue, cash flow and
margin growth," said Chuck Main, Yamana's executive vice president finance and
chief financial officer. "We remain focused on building on our strong track
record of growth, sustainability and industry low cash costs."
Chapada, Brazil
The Company anticipated changes in the mill liners and motor replacement
at Chapada during the third quarter of 2009. Production was in line with
expectations given maintenance activities. With the expansion to 20 million
tonnes per year completed in the third quarter, fourth quarter production is
expected to increase.
El Penon, Chile
El Penon production in the third quarter of 2009 increased to 108,054
GEO, representing a 17 percent and 28 percent increase compared to the second
quarter and first quarter of 2009, respectively. Grade at El Penon also
increased in the third quarter by 13 percent and 22 percent compared to the
second and first quarter of 2009, respectively. Co-product cash costs declined
at El Penon by $15 and $42 per GEO, or 4% and 11%, compared to the second
quarter and first quarter of 2009, respectively.
Jacobina, Brazil
Jacobina continued to perform and produce at record levels. Jacobina
production of 30,978 ounces in the third quarter of 2009 increased by 12
percent and 14 percent compared to the second and first quarter of 2009,
respectively.
Gualcamayo, Argentina
Yamana continued to focus on its newest mine, Gualcamayo, to ensure
optimization of the mine. The Company declared commercial production on time
and Gualcamayo is currently meeting expectations and exceeding guidance. Third
quarter production at Gualcamayo increased to 39,523 ounces of gold,
representing a 62 percent and 93 percent increase compared to the second
quarter and first quarter of 2009, respectively. Gualcamayo continues to ramp
up with production in the month of October of approximately 18,900 ounces.
Gualcamayo cash costs for the third quarter were $316 per ounce, which is
below previous guidance of below $350 per ounce.
Minera Florida, Chile
Minera Florida production continued to increase quarter over quarter
subsequent to the completion of the expansion in the first quarter of 2009.
Production of 25,411 GEO in the third quarter of 2009 increased by 11 percent
and 32 percent compared to the second and first quarter of 2009, respectively.
A construction decision for re-treating tailings work at Minera Florida has
been made, which is to add an additional 40,000 GEO per year expected to begin
in early 2012.
Fazenda Brasileiro, Brazil
Third quarter production at Fazenda Brasileiro increased to 20,464 ounces
of gold, representing an 11 percent and two percent increase compared to the
second quarter and first quarter of 2009, respectively.
Overview of Financial Results
The following table presents a summary of financial and operating
information for the three and nine months ended September 30, 2009:
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Overview of Financial Three months Nine months
and Operating Results(i) ended ended
(in thousands of United September September
States Dollars; unaudited) 30, 2009 30, 2009
-------------------------------------------------------------------------
Revenues $ 333,179 $ 783,489
Cost of sales excluding depletion, depreciation
and amortization (131,357) (338,152)
Depletion, depreciation and amortization (64,792) (160,579)
Accretion of asset retirement obligations (611) (1,601)
-------------------------------------------------------------------------
Mine operating earnings 136,419 283,157
Expenses
General and administrative (22,983) (60,885)
Exploration (6,961) (13,959)
Other (2,017) (808)
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Operating earnings 104,458 207,505
Other business (expenses) income 3,015 7,368
Foreign exchange gain (loss) 15,126 87,820
Realized gain (loss) on derivatives (3,562) 27,849
Unrealized (loss) gain on derivatives (16,853) (96,950)
-------------------------------------------------------------------------
Earnings from continuing operation before income
taxes and equity earnings 102,184 233,592
Income tax (expense) recovery (55,799) (94,144)
Equity earnings from Minera Alumbrera 8,061 18,865
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Earnings from continuing operations(i) 54,446 158,313
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Earnings (loss) from discontinued operations 6,377 (1,857)
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Net earnings $ 60,823 $ 156,456
Earnings Adjustments:
Stock-based compensation 1,838 7,019
Foreign exchange gain including discontinued
operations (6,726) (56,986)
Unrealized loss on derivatives including
discontinued operations 21,013 102,853
Future income tax expense (recovery) on foreign
currency translation of inter-corporate debt 18,933 54,020
Non-recurring future income tax adjustment(ii) - 20,592
-------------------------------------------------------------------------
Adjusted Earnings before income tax effects $ 95,881 $ 283,954
Income tax effect of adjustments (7,541) (35,545)
-------------------------------------------------------------------------
Adjusted Earnings $ 88,340 $ 248,409
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Basic earnings per share $ 0.08 $ 0.21
Diluted earnings per share $ 0.08 $ 0.21
Adjusted Earnings per share $ 0.12 $ 0.34
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Cash flow from operations (after changes in
non-cash working capital items) $ 144,939 $ 317,009
Cash flow from operations (before changes in
non-cash working capital items) $ 167,930 $ 340,583
Capital expenditures $ 144,654 $ 359,941
Cash and cash equivalents (end of period) $ 97,498 $ 97,498
Average realized gold price per ounce $ 962 $ 933
Average realized silver price per ounce $ 14.97 $ 13.92
Chapada average realized copper price per pound $ 2.74 $ 2.17
Gold sales (ounces) 248,794 640,733
Silver sales (millions of ounces) 2.8 7.6
Chapada payable copper contained in concentrate
sales (millions of lbs) 36.1 102.7
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(i) Due to the sale agreements of San Andrés, Sao Vicente and Sao
Francisco mines, the results of those mines have been reclassified
as discontinued operations (in accordance with GAAP) with
restatement of prior period comparatives.
(ii) Non-recurring and non-cash tax adjustment on the revaluation of
future income tax liabilities related to the excess purchase price
of the Meridian Gold Inc. acquisition in respect to the mineral
interests in Chile.
Further details of the 2009 third quarter results can be found in the
Company's unaudited Management's Discussion and Analysis and Interim
Consolidated Financial Statements at www.yamana.com, in the "Investors"
section under "Financial and Corporate Reports".
OUTLOOK AND STRATEGY
The Company remains committed to sustainability, growth, focusing on
organic growth, low cash costs and stability of jurisdictions with the
objective of predictable and reliable operations and outlook in respect to
current operations and as it prepares for the next wave of growth. The Company
focused on its core assets, generating cash flow, preserving capital,
maximizing cash balances and maintaining maximum flexibility across its
various interests including its development stage and near development stage
projects. The Company continues to be committed to prudent and disciplined
growth and will continue to improve the value and returns of its various
projects. It will also continue to focus on containing costs and ensuring
effective management of capital expenditures.
The Company's production plan is targeting in the range of 1.05 to 1.1
million GEO in 2009, not including non-core mines under sale, an increase of
close to 40% over 2008. Yamana is committed to the sustainable production of
at least 1.1 million GEO annually and increasing from 2010 onward.
The Company continues to evaluate the further expansion of its mines and
development projects as follows:
Expected
Initial Annual Expected
Status Contribution Start-date
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C1 Santa Construction 130,000 gold ounces Production targeted
Luz((x)) decision made to begin in mid-2012
Mercedes Construction 120,000 GEO Production targeted
decision made to begin in late-2012
Pilar/ Feasibility Over 100,000 gold Pending
Caiamar study underway ounces
Ernesto/ Scoping study 100,000 gold ounces Pending
Pau-a- completed
Pique
Minera Advanced plan 40,000 GEO Production targeted
Florida to process to begin in early
historical 2012
tailings;
construction
decision made
QDD Lower Updated 90,000 gold ounces Pending
West feasibility study
expected in 2010
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((x)) In the first two full years of production at C1 Santa Luz, average
annual production is expected to exceed 130,000 ounces which would
accelerate pay-back. Expected annual production would then average
104,000 ounces of gold per year life of mine.
Agua Rica and other potential development stage projects would provide
further growth for Yamana. The Company continues to focus on increasing the
value of Agua Rica and is working on a number of optimization initiatives that
could have a material positive impact on the project. Agua Rica has received
the environmental license early in 2009 and Yamana is now advancing efforts
relating to sectoral permits which are expected within 18 months. The Company
has also begun a process for evaluating potential strategic partners for the
development of Agua Rica.
The Company continues to focus on exploration to grow the Company to over
1.7 million GEO of sustained production in the long-run by identifying and
acquiring the best exploration properties in the Americas, developing a pool
of talented geoscientists and replacing ounces at current operations.
NON-GAAP MEASURES
The Company believes that in addition to conventional measures prepared
in accordance with Canadian GAAP, the Company and certain investors and
analysts use certain other non-GAAP financial measures to evaluate the
Company's performance including its ability to generate cash flow and profits
from its operations. The Company has included certain non-GAAP measures
including "cash costs per gold equivalent ounce", "cash costs per pound of
copper", "Adjusted Earnings or Loss and Adjusted Earnings or Loss per share"
and "cash flow from operations before changes in non-cash working capital" or
"cash flow from operating activities before changes in non-cash working
capital" to supplement its financial statements, which are presented in
accordance with Canadian GAAP. Non-GAAP measures do not have any standardized
meaning prescribed under Canadian GAAP, and therefore they may not be
comparable to similar measures employed by other companies. The data is
intended to provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared in
accordance with Canadian GAAP.
RECONCILIATION OF NON-GAAP MEASURES
Co-product and By-product Cash Costs
------------------------------------
The Company has included cash costs per GEO and cash costs per pound of
copper information because it understands that certain investors use this
information to determine the Company's ability to generate earnings and cash
flow for use in investing and other activities. The Company believes that
conventional measures of performance prepared in accordance with Canadian GAAP
do not fully illustrate the ability of its operating mines to generate cash
flow. The measures are not necessarily indicative of operating profit or cash
flow from operations as determined under Canadian GAAP. Cash costs per GEO are
determined in accordance with the Gold Institute's Production Cost Standard
and are calculated on a co-product and by-product basis. Cash costs on a
co-product basis are computed by allocating operating cash costs separately to
metals (copper and gold) based on an estimated or assumed ratio. Cash costs on
a by-product basis are computed by deducting copper by product revenues from
the calculation of cash costs of production per GEO.
The following table provides a reconciliation of cost of sales per the
financial statements and co-product cash costs per GEO:
Three months ended Nine months ended
September 30, 2009 September 30, 2009
-----------------------------------------------
In In
thousands United thousands United
of United States of United States
States Dollars States Dollars
Dollars per GEO Dollars per GEO
-------------------------------------------------------------------------
Cost of sales(i) $ 131,357 $ 488 $ 338,152 $ 489
Adjustments:
Copper contained in
concentrate related
cash costs (excluding
related TCRC's) (32,278) (120) (85,029) (123)
Impact of equity interest
in Alumbrera (12.5%) 3,745 14 16,504 24
Chapada gold contained
in concentrate treatment
and refining costs 1,452 5 4,601 7
Inventory movements and
adjustments (528) (1) (9,064) (14)
Commercial selling costs (9,599) (36) (21,033) (30)
-------------------------------------------------------------------------
Total GEO co-product
cash costs(ii) $ 94,149 $ 350 $ 244,131 $ 353
-------------------------------------------------------------------------
(i) Cost of sales includes non-cash items including the impact of the
movement in inventory.
(ii) Amortization and inventory purchase accounting adjustments are
excluded from both total cash costs and cost of sales.
The following table provides a reconciliation of cost of sales per the
financial statements and co-product cash costs per pound of copper:
Three months ended Nine months ended
September 30, 2009 September 30, 2009
-----------------------------------------------
In In
thousands United thousands United
of United States of United States
States Dollars States Dollars
Dollars per pound Dollars per pound
-------------------------------------------------------------------------
Cost of sales(i) $ 131,357 $ 2.99 $ 338,152 $ 2.49
-------------------------------------------------------------------------
Adjustments:
GEO related cash costs
(excluding related TCRC's) (88,952) (2.03) (223,026) (1.65)
Impact of equity interest
in Alumbrera (12.5%) 11,474 0.27 46,062 0.35
Chapada copper contained
in concentrate treatment
and refining costs 6,772 0.15 18,693 0.14
Inventory movements and
adjustments (528) (0.01) (9,064) (0.07)
Commercial selling costs (9,599) (0.22) (21,033) (0.16)
-------------------------------------------------------------------------
Total copper co-product
cash costs(ii) $ 50,524 $ 1.15 $ 149,784 $ 1.10
-------------------------------------------------------------------------
(i) Cost of sales includes non-cash items including the impact of the
movement in inventory.
(ii) Amortization and inventory purchase accounting adjustments are
excluded from both total cash costs and cost of sales.
The following table provides a reconciliation of cost of sales per the
financial statement and by-product cash costs per GEO excluding Alumbrera:
Three months ended Nine months ended
September 30, 2009 September 30, 2009
-----------------------------------------------
In In
thousands United thousands United
of United States of United States
States Dollars States Dollars
Dollars per pound Dollars per pound
-------------------------------------------------------------------------
Cost of sales $ 131,357 506 $ 338,152 520
Adjustments:
Chapada TCRCs for Gold
and Copper 8,224 32 23,294 35
Inventory movement and
other adjustments (528) (2) (9,064) (14)
Commercial Selling Costs (9,599) (37) (21,033) (32)
Chapada Copper Revenue
Including Copper Pricing
Adjustments (109,057) (420) (204,707) (314)
-------------------------------------------------------------------------
Total gold by-product
cash costs (Excluding
Alumbrera) $ 20,397 79 $ 126,642 195
-------------------------------------------------------------------------
Adjusted Earnings or Loss and Adjusted Earnings or Loss per share
-----------------------------------------------------------------
The Company uses the financial measures "Adjusted Earnings or Loss" and
"Adjusted Earnings or Loss per share" to supplement information in its
consolidated financial statements. The Company believes that in addition to
conventional measures prepared in accordance with GAAP, the Company and
certain investors and analysts use this information to evaluate the Company's
performance. The presentation of adjusted measures are not meant to be a
substitute for net earnings or loss or net earnings or loss per share
presented in accordance with GAAP, but rather should be evaluated in
conjunction with such GAAP measures. Adjusted Earnings or Loss and Adjusted
Earnings or Loss per share are calculated as net earnings excluding (a)
stock-based compensation, (b) foreign exchange (gains) losses, (c) unrealized
(gains) losses on commodity derivatives, (d) impairment losses, (e) future
income tax expense (recovery) on the translation of foreign currency
inter-corporate debt, (f) writedown of investments and other assets and any
other non-recurring adjustments. Non-recurring adjustments from unusual events
or circumstances are reviewed from time to time based on materiality and the
nature of the event or circumstance.
The terms "Adjusted Earnings (Loss)" and "Adjusted Earnings (Loss) per
share" do not have a standardized meaning prescribed by Canadian GAAP, and
therefore the Company's definitions are unlikely to be comparable to similar
measures presented by other companies. Management believes that the
presentation of Adjusted Earnings or Loss and Adjusted Earnings or Loss per
share provide useful information to investors because they exclude non-cash
and other charges and are a better indication of the Company's profitability
from operations. The items excluded from the computation of Adjusted Earnings
or Loss and Adjusted Earnings or Loss per share, which are otherwise included
in the determination of net earnings or loss and net earnings or loss per
share prepared in accordance with Canadian GAAP, are items that the Company
does not consider to be meaningful in evaluating the Company's past financial
performance or the future prospects and may hinder a comparison of its
period-to-period profitability. A reconciliation of Adjusted Earnings to net
earnings is provided on page one of this press release.
Cash Flow From Operations Before Changes in Non-Cash Working Capital
--------------------------------------------------------------------
The Company uses the financial measure "cash flow from operations before
changes in non-cash working capital" or "cash flow from operating activities
before changes in non-cash working capital" to supplement its consolidated
financial statements. The presentation of cash flow from operations before
changes in non-cash working capital is not meant to be a substitute for cash
flow from operations or cash flow from operating activities presented in
accordance with Canadian GAAP, but rather should be evaluated in conjunction
with such Canadian GAAP measures. Cash flow from operations before changes in
non-cash working capital excludes the non-cash movement from period-to-period
in working capital items including accounts receivable, advances and deposits,
inventory, accounts payable and accrued liabilities.
The terms "cash flow from operations before changes in non-cash working
capital" or "cash flow from operating activities before changes in non-cash
working capital" do not have a standardized meaning prescribed by Canadian
GAAP, and therefore the Company's definitions are unlikely to be comparable to
similar measures presented by other companies. The Company's management
believes that the presentation of cash flow from operations before changes in
non-cash working capital provides useful information to investors because it
excludes the non-cash movement in working capital items and is a better
indication of the Company's cash flow from operations and considered to be
meaningful in evaluating the Company's past financial performance or the
future prospects. The Company believes that conventional measure of
performance prepared in accordance with Canadian GAAP does not fully
illustrate the ability of its operating mines to generate cash flow.
The following table provides a reconciliation of cash flow from operation
before changes in non-cash working capital:
Three Nine
months months
ended ended
September September
30, 2009 30, 2009
-------------------------------------------------------------------------
Cash flow from operating activities of
continuing operations $ 144,439 $ 317,009
Adjustments:
Net change in non-cash working capital(i) 23,491 23,574
-------------------------------------------------------------------------
Cash flow from operating activities of
continuing operations before changes in
non-cash working capital $ 167,930 $ 340,583
-------------------------------------------------------------------------
(i) See 2009 third quarter Financial Statements note 14(c)
Gross margin
------------
The Company uses the financial measure "gross margins" to supplement its
consolidated financial statements. The presentation of gross margins is not
meant to be a substitute for net earnings presented in accordance with
Canadian GAAP, but rather should be evaluated in conjunction with such
Canadian GAAP measures. Gross margins represent the amount of revenues in
excess of cost of sales. It may be expressed in terms of percentage of
revenues, both in total amount or on a per GEO basis.
The terms "gross margins" does not have a standardized meaning prescribed
by Canadian GAAP, and therefore the Company's definitions are unlikely to be
comparable to similar measures presented by other companies. The Company's
management believes that the presentation of gross margins provides useful
information to investors because it excludes the non-cash operating cost items
such as depreciation, depletion and amortization, accretion for asset
retirement obligations and other common operating expenses, and considers this
non-GAAP measure meaningful in evaluating the Company's past financial
performance or the future prospects. The Company believes that conventional
measure of performance prepared in accordance with Canadian GAAP does not
fully illustrate the ability of its operating mines to generate cash flow.
The following table provides a reconciliation of gross margins:
Three Nine
months months
ended ended
September September
30, 2009 30, 2009
-------------------------------------------------------------------------
Revenues $ 333,179 $ 783,489
Cost of sales excluding depreciation,
depletion and amortization (131,357) (338,152)
-------------------------------------------------------------------------
Gross Margins $ 201,822 $ 445,337
-------------------------------------------------------------------------
Gross Margins as % of Revenues 61% 57%
-------------------------------------------------------------------------
GEO Sold (excluding Alumbrera) 254,853 633,508
-------------------------------------------------------------------------
Gross Margins per GEO Sold $ 792 $ 703
-------------------------------------------------------------------------
THIRD QUARTER CONFERENCE CALL
A conference call and audio webcast is scheduled for November 4, 2009 at
11:00 a.m. E.T. to discuss 2009 third quarter results.
Q3 Conference Call Information:
-------------------------------
Toll Free (North America): 1-800-590-1508
International: 1-416-915-5762
Participant Audio Webcast: www.yamana.com
Q3 Conference Call REPLAY:
--------------------------
Toll Free Replay Call (North America): 877-289-8525, Passcode: 4173041
followed by the number sign
Replay Call: 416-640-1917, Passcode: 4173041
followed by the number sign
The conference call replay will be available from 1:00 p.m. ET on
November 4, 2009 until 11:59 p.m. EST on November 18, 2009.
For further information on the conference call or audio webcast, please
contact the Investor Relations Department or visit our website,
www.yamana.com.
About Yamana
Yamana is a Canadian-based gold producer with significant gold
production, gold development stage properties, exploration properties, and
land positions in Brazil, Argentina, Chile and Mexico. The Company plans to
continue to build on this base through existing operating mine expansions and
throughput increases, the advancement of its exploration properties and by
targeting other gold consolidation opportunities in the Americas.
--------------
(1) Cash costs, adjusted earnings, adjusted earnings per share, cash flow
from operations before changes in non-working capital items and gross
margin are non-GAAP measures. Reconciliation of non-GAAP measures is
located on pages 6 to 10 of this press release.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release
contains or incorporates by reference "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform Act of 1995
and applicable Canadian securities legislation. Except for statements of
historical fact relating to the Company, information contained herein
constitutes forward-looking statements, including any information as to the
Company's strategy, plans or future financial or operating performance.
Forward-looking statements are characterized by words such as "plan,"
"expect", "budget", "target", "project", "intend," "believe", "anticipate",
"estimate" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements are based on the
opinions, assumptions and estimates of management considered reasonable at the
date the statements are made, and are inherently subject to a variety of risks
and uncertainties and other known and unknown factors that could cause actual
events or results to differ materially from those projected in the
forward-looking statements. These factors include the Company's expectations
in connection with the projects and exploration programs discussed herein
being met, the impact of general business and economic conditions, global
liquidity and credit availability on the timing of cash flows and the values
of assets and liabilities based on projected future conditions, fluctuating
metal prices (such as gold, copper, silver and zinc), currency exchange rates
(such as the Brazilian Real, the Chilean Peso and the Argentine Peso versus
the United States Dollar), possible variations in ore grade or recovery rates,
changes in the Company's hedging program, changes in accounting policies,
changes in the Company's corporate resources, risk related to non-core mine
dispositions, changes in project parameters as plans continue to be refined,
changes in project development, construction, production and commissioning
time frames, risk related to joint venture operations, the possibility of
project cost overruns or unanticipated costs and expenses, higher prices for
fuel, steel, power, labour and other consumables contributing to higher costs
and general risks of the mining industry, failure of plant, equipment or
processes to operate as anticipated, unexpected changes in mine life, final
pricing for concentrate sales, unanticipated results of future studies,
seasonality and unanticipated weather changes, costs and timing of the
development of new deposits, success of exploration activities, permitting
time lines, government regulation of mining operations, environmental risks,
unanticipated reclamation expenses, title disputes or claims, limitations on
insurance coverage and timing and possible outcome of pending litigation and
labour disputes, as well as those risk factors discussed or referred to in the
Company's annual Management's Discussion and Analysis and Annual Information
Form for the year ended December 31, 2008 filed with the securities regulatory
authorities in all provinces of Canada and available at www.sedar.com, and the
Company's Annual Report on Form 40-F filed with the United States Securities
and Exchange Commission. Although the Company has attempted to identify
important factors that could cause actual actions, events or results to differ
materially from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements. The Company
undertakes no obligation to update forward-looking statements if circumstances
or management's estimates, assumptions or opinions should change, except as
required by applicable law. The reader is cautioned not to place undue
reliance on forward-looking statements. The forward-looking information
contained herein is presented for the purpose of assisting investors in
understanding the Company's expected financial and operational performance and
results as at and for the periods ended on the dates presented in the
Company's plans and objectives and may not be appropriate for other purposes.
For further information: Letitia Wong, Director, Investor Relations, (416)
815-0220, Email: investor(at)yamana.com, www.yamana.com; MEDIA INQUIRIES:
Mansfield Communications Inc., Hugh Mansfield, (416) 599-0024
(YRI. AUY YAU)
END
