YAMANA GOLD $2.13 - Toronto symbol YRI

YAMANA GOLD $2.13 (Toronto symbol YRI; TSINetwork Rating: Speculative) (416-815-0220; www. yamana.com; Shares outstanding: 946.6 million; Market cap: $1.9 billion; Dividend yield: 1.0%) owns eight operating gold mines in Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/gold mine in Argentina and has a number of other properties in advanced stages of development. In the three months ended September 30, 2015, the company’s gold production fell 1.9%, to 325,897 ounces from 332,344 a year earlier. The decline mainly resulted from lower ore grades at two of its mines. Gold prices fell 12.1% in the latest quarter. That, plus the lower production, cut Yamana’s cash flow by 25.9%, to $133.9 million from $180.7 million. Cash flow per share declined 39.1%, to $0.14 from $0.23, on more shares outstanding. Yamana holds cash of $137.8 million, or $0.15 a share. Its $1.9 billion U.S. of debt is a high 122% of its currently depressed market cap. To conserve cash, the company has cut its dividend by 66.7%, to $0.02 per year from $0.06. The stock now yields 1.0%. Like most gold firms, Yamana’s shares will be heavily influenced by the direction of gold prices. But it does have speculative appeal thanks to its positive cash flow and new production as its advanced-stage development projects start up. Yamana Gold is a buy.

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