Yamana Gold Inc. - President and CEO, Daniel Racine
President and CEO, Daniel Racine
Source: Twitter (@BMOmetalsmining)
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  • Yamana Gold (TSX:YRI) has altered its 2020 guidance, given the COVID-19 pandemic’s impact on the mining industry
  • The company’s Cerro Moro and Canadian Malartic mines were forced to suspend operations earlier this year, to comply with local government quarantine measures
  • Due to this and other COVID-related factors, the company has trimmed its initial annual production guidance from 857,000 ounces of gold to 786,000 ounces
  • Silver production was also brought down to 10.25 million ounces, from 11.5 million ounces
  • Yamana Gold (YRI) is down 2.24 per cent, with shares trading for C$6.55 and a market cap of $6.23 billion

Yamana Gold (TSX:YRI) has altered its 2020 guidance, given the COVID-19 pandemic’s impact on the mining industry.

The company’s Cerro Moro and Canadian Malartic mines were forced to suspend operations earlier this year, to comply with local government quarantine measures. Despite operations now recommencing, Yamana expects the full-year’s figures to be impacted.

The company has trimmed its initial production guidance from 857,000 ounces of gold to 786,000 ounces. Silver production was also brought down 10.25 million ounces, from 11.5 million ounces.

As well as the effects of the pandemic, the company is also adjusting for gold’s strong commodity performance. As investors sought traditional safe havens during the recent market volatility, the price of gold has improved substantially.

As a result, the company has increased its expected gold price for 2020 to be around C$1,635 an ounce, having previously expected a price of $1,550 per ounce.

This has somewhat offset the impact the pandemic has had on Yamana’s operations.

Despite the exact length of the pandemic still remaining unknown, Yamana does not currently expect to change its guidance for 2021 or 2022.

Despite the production downturn later in the year, the company has reported a strong first quarter.

Yamana generated net earnings of $45 million during the quarter, substantially improving on the net loss of $4.1 million in 2019’s same period.

Because of the strong performance, the company has increased its dividend by 25 per cent to 6.25 cents a share.

This is the third dividend increase in a year, bringing the year-on-year increase to 213 per cent.

To help weather the uncertain environment COVID-19 has created, the company drew down $200 million of its $750 million revolving credit facility.

However, to help offset the new debt, the company directed some of its cash flow towards repayments and brought its total debt down $20 million to $786 million.

Yamana Gold (YRI) is down 2.24 per cent, with shares trading for $6.55 at 12:09pm EDT. 

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