Yamana Gold's Q4 a Known Commodity

NEW YORK (

TheStreet

) -- Mid-tier gold producer

Yamana Gold

(AUY) - Get Report

, which runs a sprawling set of mines across Latin America, is expected to post huge year-over-year gains when it reports fourth-quarter numbers after the closing bell Wednesday.

The sell side estimates that Yamana will turn a profit of 15 cents a share in the period, on revenue of about $424 million. Both numbers have come down recently as analysts fine-tuned their forecasts, but they still represent growth of 200% and 270% on the bottom and top lines, respectively, from the year-ago period, when Yamana earned 5 cents a share on revenue of $114 million.

This should surprise no one, of course, given that the fourth quarter of 2009 progressed like a gold bug's dream, with fear-induced demand for the yellow metal pushing its price to an all-time high of $1,227.50 in early December.

Last month, large-cap producers

Barrick Gold

(ABX)

and

Kinross Gold

(KGC) - Get Report

both turned in better-than-expected results.

But, according to many gold-miner observers, Yamana has made its own hay (we'll spare you the alchemical metaphors): Known as a high-growth and low-cost operator, the company has an aggressive expansion plan and owns mines with good ore grades -- at least for the most part -- allowing it to remove the element from the earth more cheaply than its peers.

Investors, therefore, have paid up for its stock -- expensive when judged by a valuation metric that divides a miner's market cap by every ounce of gold it has in production. For Yamana, that measure stands at $720 per ounce, compared with an industry average of $500, according to the calculations of John Doody, founder and editor of the investment newsletter

Gold Stock Analyst

.

But the company's planned expansion from 1 million ounces of gold in 2009 to 1.5 million in 2013 makes Yamana stock a savvy buy, in Doody's opinion. He said recently that the Toronto-based miner, which has assets in Brazil, Chile, Argentina, Colombia and Mexico, has done a good job of laying out -- and proving out -- its planned pipeline of yellow-metal output.

"There's no if-and-or-maybe kind of stuff," Doody said.

Others are a bit more skeptical. "I've got a small position in Yamana," said Caesar Bryan, portfolio manager of the Gamco Gold Fund. "But I'm a little concerned." He notes that the company

has

faced problems with the grade of ore found at its Brazilian sites. Therefore, cash costs could be higher than anticipated.

Furthermore, he says, the company owns "an awful lot of mines. There are quite a lot of moving parts -- lots of bits and pieces -- and it's a challenge to bring it all together."

Yamana shares were trading Wednesday morning at $10.79, up 13 cents from the previous close. The stock has slid a little more than 5% year to date, having reached its 52-week peak of $14.37 at the same moment, no surprise, as gold itself, in early December.

-- Written by Scott Eden in New York

RELATED STORIES:

>>Barrick Outlook Depends on Cortez

>>Kinross Reiterates Scaled-Down Views

Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.