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YAMANA GOLD $12.93 (Toronto symbol YRI; SI Rating: Speculative) (416-815-0220; www.yamana.com; Shares outstanding: 733.3 million; Market cap: $9.5 billion; Dividend yield: 0.3%) owns six operating gold mines in Brazil, Chile and Argentina. It also holds interests in five properties that are still under development.
In the three months ended September 30, 2009, Yamana posted revenue of $333.2 million. That’s up 50.3% from $221.6 million a year earlier. (All figures except share price and market cap in U.S. dollars.) Earnings per share (excluding one-time items) tripled, to $0.12 from $0.04. Cash flow per share rose 64.2%, to $0.23 from $0.14.
Record high production and gold prices were the main reasons for the gains. The company produced 314,707 ounces of gold in the latest quarter, up 33.7% from 235,406 a year earlier. The rise is partly because it started production at the Gualcamayo mine in Argentina.
In June, Yamana sold its San Andres mine in Honduras, as well as the Sao Francisco and Sao Vicente mines in Brazil, to Aura Minerals (symbol ORA on Toronto) for a total of $240 million. The sales will let Yamana focus on its most profitable projects. At the same time, it will continue to benefit from the mines’ production through a 16% stake in Aura, which it received as part of the sales. That holding is currently worth $114.4 million (Canadian).
The company holds cash of $130 million. Its $441.6 million of debt is just 4.6% of its market cap.
Yamana expects to produce 1.05 million to 1.1 million ounces of gold this year, or 40% more than it produced in 2008. It aims to increase that to 1.7 million ounces over the next few years through five new projects, which are in the advanced stages of development.
Yamana is still a buy for aggressive investors.
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