Canada-based Yamana Gold (NYSE: AUY) reported preliminary fourth-quarter 2021 and full-year 2021 production results on January 13, 2022.
1 – 4Q21 and full-year production snapshot
Yamana Gold posted a solid gold equivalent production of 281,388 GEOs in 4Q21 or 1,011,180 GEOs for the full-year 2021. Full-year production was comprised of 884,793 Au ounces, exceeding guidance.
Below shown is the production per mine.
Note: 2021 guidance was one million gold equivalent ounces, including 862,000 ounces of gold and 10 million ounces of silver, is at an all-in sustaining cost between $980 and $1,020 per GEO.
Comparative details per mine are shown below:
2 – Investment thesis
The investment thesis for AUY is clear and has not changed since my preceding article. With solid production exceeding guidance and excellent financials, I consider AUY part of the long-term precious metals group that I recommend accumulating on weakness.
The gold price is supportive, now above $1,800 per ounce due to Fed’s uncertain position regarding inflation surging for longer than expected.
AUY requires patience. However, AUY is generally a slow mover and has been quite disappointing as an investment. Thus, the best strategy for such stock is to trade short-term LIFO about 50% of your position and keep only a core position long-term for a much higher target.
3 – Stock performance
The stock’s performance has not been stellar, and AUY lags behind the group. AUY is down 29% on a one-year basis. AUY is typically a slow mover in stock appreciation but generally drops significantly on any gold and silver price weakness.
Yamana Gold: Balance Sheet and Production in 3Q21, including Preliminary 4Q21 – The raw numbers
|Total Revenues in $ Million||461.7||422.0||437.4||452.2||–|
|Net Income in $ Million||102.8||54.7||-43.9||27.0||–|
|EBITDA $ Million||427.1||205.1||217.1||246.0||–|
|EPS diluted in $/share||0.10||0.06||-0.05||0.03||–|
|Cash from operations in $ Million||181.3||160.2||153.5||190.6||–|
|Capital Expenditure in $ Million||95.1||80.2||93.5||93.2||–|
|Free Cash Flow in $ Million||86.2||80.0||60.0||97.4||–|
|Total cash $ Million||665.5||698.4||735.6||487.3||525/540*|
|Total debt in $ Million||993.8||994.4||994.9||772.8||–|
|Dividend per share in $ per share||0.02||0.02||0.03||0.03||–|
|Shares outstanding (diluted) in Million||955.1||963.0||965.6||966.0||–|
|Gold Equivalent ounce (“GEO”) Production K Oz||255,361||231,988||241,341||256,464||281,388|
|Silver Production M oz||2.59||2.13||1.63||2.273||3.143|
|Gold price realized $/ Oz||1,875||1,793||1,817||1,789||1,798~|
|Silver price $/Oz||24.02||25.66||26.05||24.23||23.51~|
|AISC GEO co-product $/Oz||
Sources: Company material
Cash and cash equivalents were $460.2 million, and total cash was $487.3 million in 3Q21. Based on what is indicated in the press release, the company had about $525 million in cash and cash equivalents in 4Q21 and about $540 million in total cash.
Gold production details for the third quarter of 2021
1 – Quarterly Gold and Silver Production
The company produced 240,718 Au Oz and 3,142,781 Ag Oz, as shown below.
The gold production per producing mine in 4Q21 is shown below.
For the quarter, El Peñón GEO production was 62,545, including 55,282 ounces of gold and 976,996 silver.
Canadian Malartic had another excellent quarter, producing 88,933 ounces of gold.
Production of 58,078 GEO at Cerro Moro.
2 – Quarterly Gold Equivalent Production GEO
The gold equivalent production was 281,388 gold equivalent ounces, up 10.2% from the same quarter a year ago and up 9.6% sequentially.
I have estimated the gold price at about $1,798 per ounce.
Yamana Gold 2021-2023 Production Guidance (from preceding presentation)
The company expects more robust production and lower costs in the second half of the year, with the fourth quarter being the highest production and lower cost quarter.
Technical Analysis and Commentary
Note: The chart is adjusted from the dividend.
AUY forms an ascending wedge pattern with resistance at $4.47, which seems very strong, and support at $4.18. The trading strategy is to trade short-term LIFO your position and allocate about 50% to short-term volatility.
I recommend selling about 30% of your position between $4.45 and $4.5 and selling another 20% at or above $4.75 in case of a breakout.
Conversely, if the gold price turns bearish, AUY could quickly fall back at or below $4.10, where it is reasonable to start accumulating again.
The gold and silver prices seem to be trading in a tight range even if gold is now above $1,840 again. The issue for gold and silver is what the Fed will do about inflation in 2022? We will know better in a few days.
Suppose the Fed acts firmly against inflation and raises interest significantly, in that case, gold will weaken. However, if the Fed is unwilling to fight inflation as it should, arguing that it is temporary or could harm the economy too much, gold will profit.
Thus, watch the gold and silver prices like a hawk.
Warning: The TA chart must be updated frequently to be relevant. It is what I am doing in my stock tracker. The chart above has a possible validity of about a week. Remember, the TA chart is a tool only to help you adopt the right strategy. It is not a way to foresee the future. No one and nothing can.
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