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« QE2 to Dilute the US Dollar and Boost Precious Metals | Main | Strategies for Junior Mining Investors: The Whites of Their Eyes »

Yamana Gold Incorporated: Results Generate a 200% Dividend Increase

Yamana Gold Incorporated

Despite good results Yamana Gold still fails to gain traction in terms of its stock price. Having reduced our holdings recently we see no reason to acquire more of this stock at the moment. Yamana Gold Incorporated (AUY) has published its financial and operating results for the third quarter ending 30 September, 2010, accompanied by this comment from Chief Executive Officer, Peter Marrone:

"Our operations performed well this quarter, building on the production increases of the past two quarters in 2010. We indicated that our mines would demonstrate sustainability and increases in production throughout the year and this is evident once again in our production this quarter,"

Financial and Operating Highlights are as follows:

Highlights for the three and nine month periods include: (Percentage comparisons versus comparable 2009 period)

- Revenue increased by 36% to $454.0 million and increased 45% to
$1.2 billion, for the quarter and year to date respectively

- Mine operating earnings increased 48% to $201.2 million and increased
68% to $476.6 million, for the quarter and year to date respectively

- Cash flows increased 24% to $208.8 million or $0.28 per share and
increased 42% to $485.3 million or $0.65 per share(1), for the
quarter and year to date respectively

- Net earnings increased 98% to $120.7 million or $0.17 per share, and
increased 85% to $291.0 million or $0.39 per share, for the
quarter and year to date respectively

- Adjusted earnings(1) increased 35% to $118.9 million or $0.16 per
share, and increased 12% to $277.9 million or $0.38 per share(1), for
the quarter and year to date respectively

- Production of 267,409 gold equivalent ounces (GEO) and 760,509 GEO,
for the quarter and year-to-date respectively
- Cash costs(1) of $104 per GEO and $154 per GEO, for the quarter and
year to date respectively

- Substantial increase in cash balances to $280 million and reduction
in long-term debt of $45 million

Yamana reiterates annual production guidance in the range of 1.030-1.145M GEO and lowers annual by-product cash costs to less than $175 per GEO from less than $200 per GEO as previously stated.

For disclosure purposes we do own this stock and will continue to monitor its progress although we would like to see it gain some ground and head north.

Yamana Gold Incorporated trades on the following Stock Exchanges:

AUY on the New York Stock Exchange
YRI on Toronto Stock Exchange
YAU on the London Stock Exchange, giving it global exposure to investors.

Yamana Gold has a market capitalization of $8.68 billion, a P/E ratio of 32.67, with 741 million shares outstanding, has a 52 week high of $14.37 and 52 week low of $9.16 and closed this week at $11.71.

So, the question is: Are you going to make the decision to join us today?

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

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Reader Comments (6)

AUY is really undervalued.

November 6, 2010 | Unregistered Commenterfallingman

Yes it is. Roger Levinson.

November 14, 2010 | Unregistered CommenterRoger Levinson

And has been for a long time so why isnt it performing better than it is?

November 14, 2010 | Unregistered CommenterGold Prices

Good question. Dunno. And your shift to SLW was certainly a great call. But value is value and it will likely be recognized. If someone doesn't want to simply buy, hold and hope, AUY is a great stock to sell options against, because it's so cheap and hasn't run like the others, but the premia are still rich. Low downside risk.

As always guys, thanks for what you do.

November 15, 2010 | Unregistered Commenterfallingman

In the current [minor] correction in the gold price, Yamana has not dropped in the way it has in previous corrections. hmmm. Roger Levinson.

November 16, 2010 | Unregistered CommenterRoger Levinson

Just maybe its as low as it can go, will need to show some signs of improvement before we are tempted...

November 16, 2010 | Unregistered CommenterGold Prices

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