* Adj Q2 EPS $0.18 v $0.25 in Q2 2011
* Revenue down 7 percent on lower metal price, sales volumes
* Capital costs stay on track at construction projects
By Julie Gordon
TORONTO, Aug 8 Canada's Yamana Gold Inc
said on Wednesday its second quarter adjusted earnings fell 28
percent on lower metal prices, copper sales volumes and higher
With three mines currently under construction, Yamana also
said its 2012 capital spending remains on track at $665 million.
"We're still on budget," chief executive Peter Marrone told
Reuters. "Some projects may be a little bit more, some projects
may be a little bit less, but cumulatively, we're on track for
that $665 million."
Cost inflation is a major issue in the mining industry with
high labor, fuel and consumable costs leading to ballooning
price tags on projects around the world.
Yamana expects to start up its Ernesto and C1 Santa Cruz
mines in Brazil by the end of 2012, with commercial production
planned for mid-2013. A third Brazilian development, Pilar, is
set to start-up in 2013.
That will help ramp up output to 1.2 million-1.3 million
ounces this year, with 1.5 million-1.7 million ounces in 2013.
The gold miner also said it is moving forward with project
optimization at its Jeronimo joint venture in Chile. The gold
mine is expected to cost some $425 million to build with average
annual production of some 150,000 ounces.
A construction decision is expected this year, pending
discussions with Yamana's partner on the project, Chilean copper
Net earnings fell to $42.9 million, or 6 cents per share,
compared with $194.7 million, or 26 cents per share, in the
Adjusted to remove one-time items, earnings fell to $134.9
million, or 18 cents a share, in the quarter ended June 30. That
compared with $186.2 million, or 25 cents a share, in the second
quarter of 2011.
That was below analyst expectations of 25 cents a share, on
average, according to Thomson Reuters I/B/E/S.
Revenue fell 7 percent to $526 million on lower copper sales
volumes and lower realized metal prices.
Copper sales volumes were 37.4 million pounds in the second
quarter, down from 41.6 million pounds in the year-ago period.
That as the copper price fell 14 percent to $3.60 a pound.
Gold equivalent production rose 4 percent to 288,700 ounces
in the quarter, while gold sales were 2 percent higher at
268,692 ounces. The realized gold price rose 6 percent to $1,605
At the same time, cash costs rose to $536 per gold
equivalent ounce, up from $451 per ounce in the year-earlier
period, on operational issues at the Jacobina mine in Brazil and
the Minera Florida project in Chile.
Yamana said it had an inventory of 32,000 gold equivalent
ounces and 3.9 million pounds of copper, as of June 30.