Yamana Gold Reports Second Quarter 2006 Results: Strong Cash Flows; Continued Growth; Dividend Announced
Wednesday August 9, 3:29 am ET
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TORONTO, ONTARIO--(MARKET WIRE)--Aug 9, 2006 -- Yamana Gold Inc. (TSX:YRI.TO - News)(AMEX:AUY - News)(AIM: YAU) is pleased to announce its financial and operating results for the quarter ended June 30, 2006 and declares its first dividend.
Second Quarter Highlights
Highlights from operations include the following:
- Mine operating earnings for the quarter of $11.5 million, an increase of 123% from the first quarter 2006 and 1,900% from the second quarter of 2005
- Non-GAAP earnings of $14.3 million for the first six months of 2006 and $13.1 million for the second quarter of 2006 or $0.05 per share. GAAP net loss of $61.2 million for the six months and a net loss of $55.3 million for the second quarter takes into account certain non-recurring and non-cash expenses
- Operating cash flow before movements in working capital of $15.3 million or $0.06 per share
- Revenue of $41.9 million for the quarter, an increase of 145% from the prior quarter of this year and 288% from the corresponding quarter last year, and $59.0 million year-to-date
- Total production of 83,089 ounces for the second quarter
- Declared commercial production at the Sao Francisco Mine effective August 1, 2006
- At more than 90% completion for Chapada with startup on schedule for late September 2006 and first delivery of gold and copper in concentrate expected November 2006
- Developed expansion plan for the Jacobina Mine with definitive life of mine plan and initiation of expenditures in November 2006
- $200 million revolving line of credit, commitment letter signed
"Yamana is now at a stage of financial and operational maturity consistent with our intermediate gold producer peers," said Peter Marrone, President and Chief Executive Officer of Yamana Gold Inc. "We now have five mines in full production with our largest mine still to come. Our financial performance is underpinned by robust cash flow and significant operating profit. Of importance is that we have only just completed the Jacobina transition to us and Sao Francisco's operations will be reflected only in this current quarter. One of our goals is to take advantage of opportunities aimed at enhancing and expanding our growth profile, and with Chapada nearing completion and on track to begin operations in September and Sao Francisco in commercial production, Yamana is solidifying its position as one of the largest gold producers in Latin America."
Yamana Dividend
Yamana also announces that its Board has authorized payment of its first dividend to shareholders of record on September 30, 2006. A dividend of $0.01 per share will be payable on October 13, 2006.
"As a company with significant cash balances and cash flows entering 2007, we are also very pleased to announce that our Board has approved a dividend policy allowing a return to our shareholders and has declared our first dividend under that policy," said Peter Marrone, President and Chief Executive Officer of Yamana Gold Inc. "Yamana is generating meaningful cash flow to support our new dividend policy and these cash flows will increase substantially into 2007 and thereafter. Our policy will include quarterly dividends at yields that are consistent with our peers, although we will evaluate the merits of further dividends as our operations increase to production levels that target one million ounces by 2008."
Financial Review:
A total of 83,089 ounces of gold were produced during the quarter of which 64,966 were from operations in full commercial production at an average cash cost of $332 per ounce. Commercial production for the quarter increased by 173% relative to the comparative quarter ending June 30, 2005 both through internal growth and acquisitions.
Commercial production for the quarter included three months production for the San Andres Mine in Honduras and the Jacobina Mine in Brazil, both acquired earlier in the Year. The La Libertad mine, which was sold subsequent to the quarter end produced 5,929 ounces.
A total of 158,047 ounces of gold were produced from the operations we currently own for the period of January 1, 2006 to June 30, 2006. Of this total, 112,365 are accounted for in the Company's financial statements, as pre-commercial and pre-acquisition production is not accounted for in the Company's financial statements.
Mine operating earnings were $11.5 million, an increase of 1,900% from mine operating earnings of $0.6 million for the comparative quarter in 2005. These operating earnings reflect operations from the Fazenda Brasileiro, Fazenda Nova, Jacobina and San Andres mines for the current quarter and Fazenda Brasileiro and Fazenda Nova mines for the comparative prior quarter. Mine operating earnings on a year-to-date basis were $16.7 million.
The Company reported non-GAAP earnings of $13.1 million for the quarter adjusted for certain non-cash or non-recurring items and a net loss of $55.3 million or $0.20 per share after taking into consideration certain non-cash adjustments as stated in MD&A. This compares to non-GAAP earnings of $720,000 or $0.01 per share for the comparative quarter in 2005.
Cash flow generated from operations was $15.1 million or $0.06 per share before additional cash flow from changes in non-cash working capital items of $260,000 for the quarter ended June 30, 2006 and an outflow of $55,000 before and increase of $4.5 million from non-cash working capital items.
General and administrative costs for the quarter were $5.3 million. Increases in general and administrative expenses are reflective of growing operations and acquisitions during the year.
As previously disclosed in the note disclosure in the Q1 Interim Financial Statements and in the associated Management Discussion and Analysis, earnings were affected by certain non-cash and non-recurring expenses including an expense for stock options and early repayment of long-term debt.
The Company has signed a Commitment Letter, subject only to completing satisfactory documentation, with Bayerische Hypo- und Vereinsbank AG ("HVB") and ABN AMRO Bank N.V. for a Revolving Line of Credit in the amount of US$200 million at an interest rate of LIBOR plus 1.10% to 1.50% per annum depending on the Company's Debt to EBITDA Ratio. Similarly, the Commitment Fee on the unused portion of the facility ranges from 0.375% to 0.50% per annum. This facility is expected to be in place by the end of September 2006 and will be used for general corporate purposes. The Company was advised by Auramet Trading, LLC.
Capital expenditures for the quarter on property, plan and equipment and mineral properties were $68.9 million, of which $43 million was spent on the construction of new mines. The cash balance at the end of the quarter was $142.3 million.
The complete financial statements and management and discussion analysis for the second quarter ended June 30, 2006 follows this announcement.
A conference call and audio webcast has been scheduled for August 9, 2006 at 10:00 a.m. E.T. to discuss the second quarter results.
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