Yamana Gold Inc. [YRI-TSX; AUY-NYSE] released fourth quarter production results, 2021 guidance and its 10-year production outlook ahead of a corporate update conference call with analysts on Tuesday January 26.
The company said COVID-19 and other operating challenges at Cerro Morro gold-silver operation in Argentina weighed on fourth quarter production results and operating outlook, which is expected to lead to a year-end impairment charge at the asset.
However, this was partially offset by better results and outlook at the El Penon mine in Chile.
Yamana’s maiden 10-year production outlook shows flat base case annual production of one million gold equivalent ounces (GEOs), a forecast that is predicated on expansions or other earlier stage projects at its operations and significant exploration success beyond its current reserve and resource base.
In the near term, the company said it expects its annual GEO production to increase to 1.0 million ounces this year from 901,000 ounces in 2020 and remain at that level in 2022 and 2023.
Cerro Morro is expected to produce 166,000 GEOs in 2021 at an all-in-sustaining cost of US$1,175 to US$1,225 an ounce.
Yamana shares declined on the news, easing 3.8% or $0.25 to $6.29 on volume of 2.9 million and trade in a 52-week range of $9.29 and $3.11.
Looking ahead, Yamana said several growth opportunities are available, and in the near and medium term, the company remains focused on optimizing the existing portfolio of five operating mines, while advancing studies for various expansion projects and long-term development assets.
The GEO forecasts assume gold ounces plus the equivalent of silver ounces using a ratio of 72:1. In 2020, the company produced a total of 780,000 ounces of gold and 10.4 million ounces of silver, including 18,929 gold ounces of pre-commercial production related to the company’s 50% interest in the Canadian Malartic mine’s Barnat deposit in northwestern Quebec.
Canadian Malartic is Canada’s largest gold mine and Yamana’s biggest producer. Production at Canadian Malartic is expected to increase to 350,000 ounces this year compared to 284,000 ounces in 2020. All-in-sustaining costs at the site are expected to decline to between US$850 and US$885 an ounce from US$945 in 2020.
The company said mining is transitioning from the Canadian Malartic pit to the Barnat pit, which is now in commercial production and 70% of the tonnes mined in 2021 are expected to come from Barnat.