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« Newmont Mining Corporation hits the skids | Main | Robotics, Part 1 – Where Are We Today? »

Yamana Gold Incorporated: Underwhelming

AUY Chart 24 Feb 2011.JPG

Try as we may we just cannot get excited about Yamana Gold Incorporated (AUY) it is range trading at a time when gold prices are close to hitting new highs. This stock touched $14.00 in November 2009 and here we are today closing at $12.44. Still, today Yamana Gold published its figures regarding its mineral reserves so we will take a quick look at the highlights.

Yamana's mineral reserves and mineral resources for the year ended December 31, 2010. The Company's total proven and probable mineral gold reserves increased by 4.5 million ounces to 22.1 million ounces, which represents a 26% increase over the previous year. Measured and indicated gold resources increased by 12% from 2009 to 14.5 million ounces. Silver and copper proven and probable mineral reserves increased by 3% and 9%, respectively.


- Total proven and probable gold equivalent(1) mineral reserves
increased to 25.1 million ounces, a 23% increase from 2009 and
- Total gold mineral reserves of 22.1 million ounces, an increase
of 26%
- Total silver mineral reserves of 167.3 million ounces, an increase
of 3%

- Total measured and indicated gold equivalent mineral resources
increased to 15.3 million ounces, an increase of 9% over 2009 and
- Total gold mineral resources of 14.5 million ounces, an increase
of 12%
- Total silver mineral resources of 46.0 million ounces, a decrease
of 23%

- Initial reserve estimate was declared at Jeronimo of over
1.6 million ounces (on a 100% ownership basis). A pre-feasibility
has recently been completed on Jeronimo with a feasibility expected
at the end of 2011

- Initial reserve estimate was declared at the Suruca gold area of
Chapada, which was previously announced, a feasibility study expected
by year end

- Jacobina's total mineral resources and grade increased significantly.
The Company will continue evaluating options to increase production.

- Pilar's mineral reserves to 1.4 million gold ounces, supporting
the Company's earlier decision to develop the project
with a 30% throughput increase for higher production levels

Chairman and Chief Executive Officer, Peter Marrone. Commented as follows:

"We have clearly demonstrated our ability to grow resources through the increases in the past and the significant increases this year. Our exploration budget for 2011 of $85 million is similar to last year's budget. Part of the focus of this year's program is to continue to show substantial growth in resources. We expect to deliver on our track record of doing so and of building sustainable and predictable production and growth by continuing our aggressive exploration program throughout 2011."

August 12th, 2010 we wrote the following about our stock holding in Yamana: We sold 80% of our stake in Yamana Gold Incorporated (AUY) for an average price of $9.53 and moved the proceeds onto the sidelines for redeployment at a later date.

Some of the cash went into Silver Wheaton which has doubled since then and some went into options trades as recommended by

So as the lady once sang; Non, je ne regrette rien

Yamana Gold Incorporated trades in Toronto, TSX: YRI and in New York, NYSE: AUY and in London LSE: YAU as one would expect from such a large company.

Yamana Gold Incorporated has a market capitalization of $9.22 billion, a very reasonable P/E ratio of 27.61, a 52 week price range of $9.16 - $13.13, with shares outstanding of 741.10 million

Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

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 (12)

There are quite a few PM stocks in the same boat. One of my long time favourites, Eldorado Gold, has been trending down since the end of last August, even though gold didn't peak until December. Recently it was so far below the 200 dma, anyone could have been excused for thinking some major catastrophe had occured. Well, I strongly believe that PM market intervention by various interests determined to stunt any enthusiasm for precious metals is occuring and sooner or later, market forces will rectify the imbalances already evident. I blieve there will be a strong rally in PM stocks over the next few months which will restore both Yamana and Eldorado to more palatable levels.

February 24, 2011 | Unregistered CommenterPaul D

The evidence suggests that Paul is right, Also it could be that Both Yamana and Eldorado are being stalked for take over. Yamana would be particularly juicy with their reserves and prospects. It only needs a drip of relatively few shares regularly on to the market to depress the price and the sentiment. Both Yamana and Eldorado are appreciably undervalued when compared with their peers. Silver wheaton has done well as flavour of the month but its figures and prospects are certainly not better than the other two so clearly something else is going on here. Nevertheless you sold Yamana at 25% less than its present value, and there are other more colourful French words you could use because of that. As with the gold price itself, fundamentals will eventually rule, they always do. Also you could have held on to both Yamana and Silver Wheaton and profited from both. Roger.

February 24, 2011 | Unregistered CommenterRoger

Look, AUY is cheap based on P+P. It's well run. This is a value play. If you can afford to wait, be patient, and milk some option premium from it, it's a great choice. I could be all wet, but adding the copper ounces at Agua Rica may have cooled the ardor or some looking to catch the higher PEs that more purely gold stocks command. But hey, it's cheap.

I know you're style is to play what's hot with long options and who can argue with your track record or that switch into SLW. I guess it just depends on what kind of investor/speculator you are. But AUY is destined to be a big winner.

February 24, 2011 | Unregistered Commenterfallingman

Hi Gold Price Newsletter,
\Yes AUY has had some weak times but you are completely clueless if you think they are not now doing well. Because of the recent big decline on Wall Street, gold mining companies are not doing well even though the POG is advancing. Recently, each day the gold stocks start out well and then when the DOW, Nasdaq and S&P start to decline, s significant number of miners also start a decline and then finish lower.
Check it out before say something that is false.

February 24, 2011 | Unregistered CommenterFrank

It seems that the authors have been put on the ropes by the panel this time. We await their return comment. Roger.

February 24, 2011 | Unregistered CommenterRoger

Indeed there are a number of stocks that should have performed better in our humble opinion, so this post is not just a 'knock' at Yamana.

Frank, we are not concerned about the last few weeks as there can be many reasons for a stock moving up or down in the short term. However, the chart above isn't telling lies, Yamana is lower than it was in October 2009, so we looked at a 16 month period.

The market is telling us that it does not share your optimism.

Still we will continue to monitor the situation and look for signs of a serious breakout.

February 24, 2011 | Unregistered CommenterGold Prices

I must say that while I have owned big positions (for me) in AUY in the past,and done very well with it, I'm out now...for no good reason. Shares got called away at 14 and 16 and I've just never gotten back in. Silver looked more prospective at the time and turned out to be the stellar performer, so maybe there are other like me. Excitement breeds excitement. Flatlining breeds more flatlining. AUY provided no excitement, but with the value there and the fact that the majors need ounces, you gotta think this one's a no brainer. Just a matter of time.

I think I'm talking myself into buying some.

Last thought. You guys were right about Yamana vs. SLW, so it seems to me the burden is on those who of us who would challenge your analysis to justify the bull case and not vice versa.

February 24, 2011 | Unregistered Commenterfallingman

I have to say more. A lot has beeen written about gold rising from $252 to its current price thereby sparking off comments like gold is in a bubble. It was only manipulation, short selling and gold bank shinanigans that pushed gold down to this unrealistic level. Had these moves not occurred then IMHO gold would not have fallen below $600 per ounce which I always take as the a base price for the current recovery. I trust that you notice I use the word 'Recovery' since again IMHO the real rise has not happened yet and we are not out of stage one. Since the money supply has nearly tripled since 2001 then the current gold price on that basis should be around $1800 now. Add in resultant inflation and ballooning demand and one can easily double that figure. Reckon in that a new basis for the currencies will be needed in say the next ten years then we are looking at ten times that figure. Yamana at $12.5 is a joke, this should be IMHO $100 stock in the not too distant future. I am happy that this stock is being manipulated in the way it is since it gives me the chance to buy at a knock down price. Not investment advice ofcourse and you all do whatever you like, but this is a stock that I personally would not like to be without. Roger

February 24, 2011 | Unregistered CommenterRoger


LSE:YAU) today announced its first quarter 2011 dividend of US$0.03 per share. Shareholders of record at the close of business on Thursday, March 31, 2011 will be entitled to receive payment of this dividend on Thursday, April 14, 2011. The dividend is an “eligible dividend” for Canadian tax purposes.

So, lets say we get we get 4 dividends at $0.03, thats $0.12 or 1% of the stock price, on a stock that has deteriorated over the last year or so.

My post office offers a better return!

Takeover target? well so are a lot of other stocks, but there are no signs as yet.

February 24, 2011 | Unregistered CommenterGold Prices

PS: Just in case you missed it, we have just closed an option play on with an average profit of 96.5% on Silver Wheaton Call Options

February 24, 2011 | Unregistered CommenterGold Prices

Dear Sir, I do NOT understand the trend of thought on Yamana Gold by the air-head that wrote it ??? You state that Yamana was sold on Aug. 12, 2010 for $ 9.53. On Feb. 24, 2011, you state that Yamana was at $ 12.44, which is a gain of about 30% or about $ 3.00 per share in only a 6 month period ??? The reason why Yamana Gold reached a price of $ 14.00 a share in 2009 was that air-head's and other hedge funds ran the price up to more than the company was worth in 2009 ??? The good news is that the air-head's and other hedge funds have moved away from Yamana and now run up the price of Silver Wheaton stock to much more than it is worth today ??? The good news to a shareholder like me is the price Yamana is now based on real value and I will stay away from Silver Wheaton stock where the price is based on air-head's and hedge funds ???

February 25, 2011 | Unregistered CommenterBill

i have owned gg for over 6 years.earnings are over 7percent that puts gg p/e at less than 14 great buy also slw is a great stock have owned it for over 5 years, made over 1000 percent on uxg and nak .i haqve turned 40 grand into 500000in 6 years .get rich slowly but get rich God bless all

February 27, 2011 | Unregistered Commentertom hunter

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