The strong results and strategic advances delivered during the year, and most recently the fourth quarter, further enhance the Company's long-term resilience and growth prospects. Following this announcement, the Company will be providing its production guidance for 2021 through 2023 along with a 10-year production overview and strategic plan, which should be read in conjunction with this announcement.
'Two thousand twenty will be remembered as a year that challenged every dimension of our lives. We are focused on keeping our people and communities safe, sustaining our operations, and improving and growing our portfolio to further enhance the robustness and resilience of our business. We have benefitted from being a high cash generative business starting 2021 in a strong financial position, with cash balances at year end of
We had a very strong year for cash flow with a particularly strong cash flow finish in the fourth quarter, with cash flow in the fourth quarter exceeding the cash flow of the preceding quarter and the average of the three preceding quarters.
Despite the challenging global operational environment, production outperformed expectations over the course of the year in almost all cases, with Jacobina, Canadian Malartic,
While full year production of 901,155 gold equivalent ounces ('GEO') was within our guidance tolerances, we had hoped to reach a higher level of production. COVID-19 related restrictions imposed in
We remain committed to our strategy of managing and growing a diversified portfolio in rules based and politically safe jurisdictions in the
PRODUCTION HIGHLIGHTS
Fourth quarter gold equivalent ounce ('GEO') production of 255,361 GEO(1), including 221,659 ounces of gold and 2.59 million ounces of silver, with production during the quarter exceeding sales by over 7,000 ounces of gold due to timing of sales which is expected to normalize during 2021.
Full year production of 901,155 GEO(1), including 779,810 ounces of gold and 10.37 million ounces of silver, which exceeds original guidance for the year for 890,000 GEO(1), and which, while below the set point of revised guidance of 915,000 GEO(1), was well within the plus or minus three per cent guidance range(2) set by the Company to account for COVID-19 related uncertainties (with all of the difference attributable to further changes to COVID-19 restrictions imposed in
GEO(1) production for the year at Jacobina,
At Jacobina, production reached an all-time high and increased for the seventh consecutive year, and annual production at Minera Florida reached its highest level since 2010 and the second highest total since the mine entered production in 1986.(3)
As stated in Yamana's
Excluding gold production from the reclamation of historic tailings.
FINANCIAL HIGHLIGHTS
The Company continued to generate strong cash flows during the quarter, further strengthening its cash balances and balance sheet.
Operating cash flow before net change in working capital for the quarter is expected to be the highest level by quarter for the year, exceeding operating cash flow before net change in working capital for the prior quarter of
Net debt declined further, by approximately
Cash balances at year end were approximately
CORPORATE HIGHLIGHTS
A successful listing on the
Acquired the Wasamac project and Camflo property from
Completed the integration of the Agua Rica project with the Minera Alumbrera plant and infrastructure, which together are now known as the MARA project.
The Company completed its exploration program ahead of schedule, notwithstanding delays caused by COVID-19, positioning Yamana well for continued growth over the medium to long-term.
While the Company will update mineral reserves and mineral resources when it publishes its year-end results on
Exploration at El Penon and Jacobina are expected to fully replace depletion for the third year in a row, while continuing to demonstrate growth potential with new mineral resources.
A second year of strong mineral resource growth at the Canadian Malartic underground project is also expected, demonstrating excellent long-term production potential.
OPERATIONAL HIGHLIGHTS
Jacobina produced 44,165 ounces of gold during the fourth quarter and an all-time high 177,830 ounces for the full year. It was the seventh consecutive year of increasing production, a trend that is expected to continue in the coming years. Successful infill and exploration drilling in the Canavieiras and
Canadian Malartic produced 86,371 ounces of gold (50% basis) during the quarter and 284,317 ounces (50% basis) for the year, the latter of which is nearly 10,000 ounces higher than original guidance provided in April. The operation processed a record 62,000 tonnes per day during the fourth quarter. Mining is transitioning from the Canadian Malartic pit to the Barnat pit, which is now in commercial production, and 70% of the total tonnes mined in 2021 are expected to come from Barnat.
Costs for the second half of the year are expected to be above the guided range of
ADDITIONAL FINANCIAL CONSIDERATIONS - POTENTIAL IMPAIRMENT AT CERRO MORO AND POTENTIAL IMPAIRMENT REVERSAL AT EL PENON
As required by International Financial Reporting Standards ('IFRS'), an assessment is made at each reporting date if indicators of impairment or impairment reversal are present for the Company's assets, defined as cash generating units ('CGU'). In the event indicators are present, the carrying book value of these long-lived assets are compared to their estimated recoverable amounts.
Recoverable amounts for operating mines are based on the estimated discounted future cash flow projections of that CGU, along with any value related to exploration potential of the mine and exploration land concession value. Any book value in excess of the recoverable amount in that comparison is impaired and reflected as a non-cash adjustment in the income statement in the period it is identified. Conversely, when an impairment has been previously taken on a CGU, and impairment reversal indicators are present, the same test is performed. If the recoverable value exceeds its current book value, a reversal of a previously taken impairment would be recognized. This was the case with the Jacobina mine. While the mine was impaired in 2014, in 2018, subsequent to improvements related to increased mineral reserves and mineral resources, meaningful operational enhancements, reduction in costs, and an increase in operating flexibility, the impairment was reversed.
IFRS does not allow the write-up of assets unless it is a reversal of a prior impairment, however the reversal cannot exceed original book value, adjusted for depreciation that would have otherwise been taken had the impairment not occurred. As such, there may be assets whose recoverable amounts are well in excess of their respective carrying values; however IFRS does not allow for the recognition of this intrinsic value. The Company also references external consensus views of net asset values to assess the reasonableness of carrying values.
For the fourth quarter of 2020, the Company believes there are indicators of impairment for
Country-specific matters such as the announcement on
Expected lower annual production in comparison with prior year guidance and expectations, particularly in 2021. A higher cost structure than previously anticipated and consistent with current costs being observed in the operation, which have exceeded those in the Company's budget and guidance due to general cost pressures and inefficiencies.
General operational challenges in relation to COVID-19.
Delays in reaching previously targeted exploration results and mineral reserve and mineral resource additions. Despite promising recent results in core areas of the mine and newly discovered areas, the Company has been delayed in its goal of increasing mineral reserves and mineral resources in the operation.
In contrast, the Company believes there are indicators of impairment reversal for
Implemented operational improvements that have led to sustained cost reductions.
Had significant exploration successes throughout the year.
Impairment and impairment reversal testing for the period has not yet been concluded, and final results will be addressed in the Company's year-end financial statements.
However, the Company currently anticipates that it will record a net pre-tax impairment reversal with the reversal amount at El Penon exceeding the impairment amount at Cerro Moro.
CORPORATE UPDATE CALL AND WEBCAST
The Company will provide a corporate update webcast on
About Yamana
Contact:
Tel: +1 416-815-0220
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This news release contains or incorporates by reference 'forward-looking statements' and 'forward-looking information' under applicable Canadian securities legislation and within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information includes, but is not limited to information with respect to the Company's strategy, plans or future financial or operating performance, changes to its dividend policy and dividend reporting, the implementation of a cash reserve fund in order to sustain dividend level independent of gold prices, the Company's expectation that it will continue to generate cash flow and execute on monetization initiatives, some of which will support the cash reserve fund, or updates regarding mineral reserves and mineral resources. 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 unforeseen impacts on cash flow, monetization initiatives, and available residual cash, an inability to maintain a cash reserve fund balance that can support current or future dividend increases, the outcome of various planned technical studies, production and exploration, development, optimizations and expansion plans at the Company's projects, changes in national and local government legislation, taxation, controls or regulations and/or change in the administration of laws, policies and practices, and 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, silver and zinc), currency exchange rates (such as the Brazilian Real, the Chilean Peso and the Argentine Peso versus the United States Dollar), the impact of inflation, possible variations in ore grade or recovery rates, changes in the Company's hedging program, changes in accounting policies, changes in mineral resources and mineral reserves, risks related to asset dispositions, risks related to metal purchase agreements, risks related to acquisitions, changes in project parameters as plans continue to be refined, changes in project development, 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 timelines, government regulation and the risk of government expropriation or nationalization of mining operations, risks related to relying on local advisors and consultants in foreign jurisdictions, environmental risks, unanticipated reclamation expenses, risks relating to joint venture or jointly owned operations, title disputes or claims, limitations on insurance coverage, timing and possible outcome of pending and outstanding litigation and labour disputes, risks related to enforcing legal rights in foreign jurisdictions, as well as those risk factors discussed or referred to herein and in the Company's Annual Information Form filed with the securities regulatory authorities in all provinces of
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