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: 946.5 million; Market cap: $1.9 billion; Dividend yield: 3.7%) 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 June 30, 2015, the company’s gold production rose 7.1%, to 298,818 ounces from 279,118 a year earlier. That was mainly due to its 50% stake in the Canadian Malartic gold mine in Quebec, which it purchased last year; this mine contributed 68,440 ounces to Yamana’s latest quarterly output.

The higher production helped offset a 7.5% decline in gold prices. As a result, Yamana’s cash flow rose slightly, to $149.3 million from $149.0 million. However, cash flow per share fell 15.8%, to $0.16 from $0.19, on more shares outstanding.

Yamana holds cash of $119.1 million, or $0.13 a share. Its $1.8 billion of debt is a high 95% of its currently depressed market cap.

In December 2014, the company formed a new subsidiary called Brio Gold to hold some of its Brazilian mines. It’s now considering a number of options to maximize Brio’s value, including a sale or merger with another producer. It will then likely use the proceeds to pay down debt.

Yamana Gold is a buy.

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