With its latest acquisition, this gold producer is forecasted to grow at triple-digits for the rest of this quarter and year.
Yamana Gold (YRI.TO)
From Stock Pickers Digest
Yamana Gold (YRI.TO) owns and operates 10 gold mines in Canada, Mexico, Brazil, Chile and Argentina. It also holds a 12.5% stake in the Alumbrera copper/ gold mine in Argentina, and has a number of other properties in advanced stages of development.
In February 2016, Yamana bought the Riacho dos Machados gold mine in Brazil for $51 million. This open-pit operation produces 100,000 ounces per year.
In the three months ended June 30, 2016, the company’s overall gold production rose 6.6%, to 313,086 ounces from 293,707 a year earlier. The increase was the result of higher output at some of Yamana’s smaller mines, plus the contributions of Riahco dos Machados.
Gold prices rose 6.0% in the latest quarter. That, plus the higher production, pushed up Yamana’s cash flow by 35.3%, to $150.5 million from $176.7 million. (All figures except share price and market cap in U.S. dollars.) Cash flow per share rose 31.3%, to $0.21 from $0.16, on more shares outstanding.
The company held cash of $93.4 million, or $0.10 a share, on June 30, 2016. Its $1.7 billion U.S. of debt is a manageable 33% of its market cap. To conserve cash, the company cut its dividend by 66.7% with the April 2016 payment, to $0.02 per year from $0.06. The stock now yields 0.4%.
Like most gold firms, Yamana’s shares will be heavily influenced by which direction gold prices move. But, the stock offers speculative appeal thanks to the company’s strong cash flow and the rising output as its many development projects start production.
Yamana Gold is a buy.
Patrick McKeough, Stock Pickers Digest, www.tsinetwork.ca, 888-292- 0296, September 2016