Yamana lifts gold guidance on back of RDM acquisition

TORONTO (miningweekly.com) – Bolstered by strong first-quarter output, and with the addition of the Riacho dos Machados (RDM) mine, in Brazil, TSX- and NYSE-listed Yamana Gold on Monday said it was increasing its guidance for gold output over the next three years.

The Toronto-headquartered miner said it now expected 2016 output to range between 1.26-million ounces and 1.33-million ounces, up from 1.23-million ounces to 1.31-million ounces previously expected. Meanwhile, 2017 output was now expected to be 1.3-million ounces, while 2018's expected output was now 1.46-million.

Silver output was expected to range between 6.91-million ounces and 7.17-million ounces this year, falling to 6.94-million ounces in 2017, and jumping to 10.45-million in 2018. Copper output was expected to range between 122-million pounds and 125-million pounds this year, with 122-million pounds targeted for 2017 and 115-million pounds targeted for 2018.

Yamana said the guidance did not include production from C1 Santa Luz, which would not start until 2017, subject to completing technical studies by mid-2016. Increased production at Canadian Malartic from the Barnat extension, which would not start until 2018, was subject to receipt of required permits which were in progress. Any further production increases at other mines as a result of optimisation efforts were under review.

Yamana also reported 308 000 oz of gold output for the three months ended March 31, 1.9-million ounces of silver and 26-million pounds of copper, saying all production met or exceeded budget and previous guidance. All-in sustaining costs (AISC), after by-product credits, were $811/oz gold, $10.79 /oz silver and $1.97/lb for copper.

On a by-product basis, the expected gold AISC for 2016 was $805/oz and $10.20/oz for silver.

RDM ACQUISITION
Yamana said the acquisition of the RDM mine would increase the production profile for its Brio Gold division. For 2016, Yamana said it expected RDM output of about 50 000 oz and an AISC of $930/oz. While the company said it had started to accrue economic benefit from RDM as of March 31, it expected to report attributable production for the period of May to December.

During this period, RDM was expected to produce at least 30 000 oz of gold, with an AISC of about $905/oz. These production and cost expectations assumed that the mine was operating at about 40% availability, owing to undersized water storage facilities, said Yamana.

Most of this production was expected to be delivered in the fourth quarter of 2016, as the company was planning to spend about $10-million in capital over the course of 2016 to expand water-storage capacity for the mine, which was expected to ensure sufficient water for the mine to consistently run at full capacity. Yamana further advised that, at full capacity, the mine was expected to begin operating at an annualised production rate of nearly 100 000 oz/y, starting in 2017.