Sunday, February 20, 2011

Yamana Gold, Inc. (NYSE: AUY): Q4 Earnings Preview 2010

Yamana Gold Inc. (NYSE: AUY) is scheduled to release its fourth-quarter earnings after the closing bell on Wednesday, February 23, 2011. Analysts, on average, expect the company to report earnings of 20 cents per share on revenue of $535.90 million. In the year ago period, the company reported earnings of 14 cents per share on revenue of $399.82 million.

Yamana Gold Inc. engages in the acquisition, exploration, development, and operation of gold properties. The Company has significant properties involved in gold production, and other precious metal production, development, exploration and land positions throughout the Americas including Brazil, Argentina, Chile and Mexico.

In the preceding third quarter, the Toronto, Canada-based company's net income was $120.7 million, or 17 cents a share, compared with a profit of $60.8 million, or 8 cents a share, in the year-earlier period. On an adjusted basis, the company earned 16 cents a share in the latest quarter. Revenue surged 36% to $454 million from $333.18 million. Analysts, on average, expected the company to report earnings of 14 cents per share on revenue of $420.82 million.

Gold prices have risen for 10 straight years in New York. Concern about rising inflation and currency debasement drove prices up 30 percent last year, reaching a record $1,432.50 an ounce on December 7 on the Comex. The yellow metal has been helped along this year by a number of unstable events that have driven investors into gold, typically a safe-haven during times of economic uncertainty. With the second round of qualitative easing in the U.S. the devaluation of the U.S. dollar has also boosted interest in gold, as it becomes cheaper for foreign investment.

Last month, the company said that its fourth quarter production totaled 286,000 gold equivalent ounces, an increase of 7% from the previous quarter and the third consecutive quarterly production increase. Its 2011 production is expected to increase, partly helped by improving grades at its operations. The mid-tier gold miner said it expects to produce 1.04-1.14 million gold equivalent ounces in 2011. The company produced 1.046 million gold equivalent ounces in 2010. The company also expects production to rise in 2012 and 2013 as its development projects start moving towards achieving full capacity. The company hopes to produce 1.20-1.33 million gold equivalent ounces in 2012 and 1.46-1.68 million ounces in 2013. 2014 production is targeted at more than 1.7 million GEO as development projects achieve full production or any further exploration successes and optimizations and expansions that are presently underway are completed. This represents production growth over four years of approximately 65% from 2010 production levels. This production growth does not include additional production from new projects, expansions and optimizations now under evaluation.

The company is pursuing further optimizations and expansions of current and planned mines that would further increase production, all of which are being evaluated in 2011. In November 2010, the company had said that its exploration program had found significant new resources at its Mercedes silver and gold project in Mexico, which will start production in 2012.

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