Yamana Gold Research Report - Possible Upside
This report reflects the research and analysis I've performed on this company. It is provided for informational purposes only and does not constitute personalized financial advice nor an endorsement or solicitation to purchase stock in this or any other company. Please do your own due diligence or hire a financial advisor before making any investment decisions.- AUY:US research report posted: 2007, July 15
- Risk Detail
- Possible Upside
- Competitor Review
- Valuation and Assessment
- Yamana has a good growth profile. Their four prime properties:
- Chapada (Brazil). Proven+probable reserves of 2.5 million oz/gold & 2.3 billion lbs copper. Scheduled production of 180,000 oz/yr this year at negative cash cost.
- São Francisco (Brazil): Proven+probable reserves of 2.8 million oz/gold. Scheduled annual production of 120,000 oz at $295/oz.
- Jacobina (Brazil): Proven+probable reserves of 1.2 million oz/gold. Revised 2007 production goal of 75,000 oz at $400+/oz.
- Gualcamayo (Argentina): Feasibility study to be finished mid-2007 with permitting to follow shortly thereafter. Indicated resources of 2.3 million oz
- CEO Peter Marrone is very dynamic. A different-type CEO than other companies we invest in, Marrone can sell and Yamana share price has performed very well in the last few years.
- To be fair, Yamana has a solid balance sheet, has ramped up production to intermediate level and propelled itself to mid-tier status in less than 5 years. So Marrone does walk the talk.
- Other Upside Possibilities
- The company should hit 1 million oz production mark by 2009 even if NTO/Meridian transaction doesn't go through.
- The company does not hedge any of its gold production. Unless all of the major countries drastically alter their fiscal and economic policies in the next few years, the fundamentals for gold are very strong. All of the major currency blocs are undergoing rapid monetary expansion and the backdrop for inflationary pressures are set. While we cannot predict gold prices, inflationary environments are bullish for gold.
- Company has many acres for potential exploration, none of which is factored in our evaluation.
- Yamana carries the vast bulk of its cash balance in non-US$ currencies and has hedged against US$.
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