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Introduction

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.

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Table from press release

Yamana Gold

Below shown is the production per mine.

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Production detail per mine

Yamana Gold

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:

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Chart production comparison

Fun Trading

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.

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Data by YCharts

Yamana Gold: Balance Sheet and Production in 3Q21, including Preliminary 4Q21 – The raw numbers

Yamana Gold 4Q20 1Q21 2Q21 3Q21 4Q21
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 Production 4Q20 1Q21 2Q21 3Q21 4Q21
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

1,076

1,045

1,081

1,041

Sources: Company material

*

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PR about cash and cash equivalents

Yamana Gold

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.

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AUY Production in GEO history

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The gold production per producing mine in 4Q21 is shown below.

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Chart gold production per mine

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For the quarter, El Peñón GEO production was 62,545, including 55,282 ounces of gold and 976,996 silver.

Comment

Press release

Yamana Gold

Canadian Malartic had another excellent quarter, producing 88,933 ounces of gold.

Comment

Press release

Yamana Gold

Production of 58,078 GEO at Cerro Moro.

Comment

Press release

Yamana Gold

2 – Quarterly Gold Equivalent Production GEO

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Chart Production GEOs history

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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.

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Chart gold and silver price history

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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.

Yamana Gold - 3 Year Production Guidance

Guidance 2021-2023

Yamana Gold

Technical Analysis and Commentary

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TA Chart

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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.

Author’s note: If you find value in this article and would like to encourage such continued efforts, please click the “Like” button below as a vote of support. Thanks!

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