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Yamana Gold, Inc. Q2 2010 Earnings Call Transcript

Yamana Gold, Inc. Q2 2010 Earnings Call Transcript

Yamana Gold, Inc. (AUY)

Q2 2010 Earnings Call Transcript

August 05, 2010 11:00 am ET


Peter Marrone - CEO

Chuck Main - CFO

Ludovico Costa - COO

Evandro Cintra - SVP Of Technical Services

Darcy Marud - SVP Of Exploration


David Haughton

Anita Soni

Dan Rollins

Barry Cooper

Steven Butler


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Good morning ladies and gentlemen, and thank you for standing by. Welcome to Yamana Gold second quarter earnings release call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time.

This conference call will contain forward-looking statements that involve a number of risks and uncertainties concerning the business, operations and financial performance and conditions of Yamana Gold. Forward-looking statements include, but are not limited to statements with respect to estimation of mineral reserves and resources, the timing and amount of estimated future production, costs of production, capital expenditures, future metal prices and the cost and timing of the development of new deposits.

For a complete discussion of the risks, uncertainties and factors, which may lead to our actual financial results and performance being different from the estimates contained in our forward-looking statements, please refer to our press release of yesterday announcing our second quarter results and our management discussion and analysis for the same period, as well as other regulatory filings in Canada and inside the United States. Accordingly, you should not place undue reliance on forward-looking statements.

I would like to remind everyone that this conference call is being recorded and will be available for replay today at 2:45 PM Eastern time. The replay number is 416-849-0833 or toll-free 1-800-642-1687, both with the passcode 84950126. As well, the presentation slides accompanying the conference call are available on Yamana's website at

I will now turn the conference over to Mr. Peter Marrone, Chairman and CEO. Please go ahead, sir.

Peter Marrone

Thank you very much, and good morning to all of who are in attendance on the call. I would begin with a brief overview, and then I will pass the call to our President and Chief Operations Officer, Ludovico Costa, who will discuss our operations; Chuck Main our CFO will discuss our second quarter financial results.

We had lot to report yesterday, and so Ludovico will also give us an update on our development stage projects, although I am also pleased to let everyone know that Evandro Cintra, who is our Senior Vice President of Technical Services and responsible for our development stage projects is also here to answer any questions. Darcy Marud, our Senior Vice President of Exploration will join them in a discussion of the exploration to date and the potential that we continue to see at our projects, and principally at the projects that are in development.

We have four core themes of growth in this company, growth in cash flow, growth in production, growth in resources, and growth in net asset value. As a result of our steady focus in the first half of the year, on our operations, our development stage projects and exploration program, we are well on track to achieve these four objectives.

Our overall mission is to build on our existing base of significant gold production through optimization of operating mines, expansions throughput increases and developing new mines. In addition, we will continue to advance our very promising exploration properties and opportunities.

We are geographically focused and concentrated by country and by region as is shown on this map. We have quality operations with the target to produce above 175,000 gold equivalent ounces per year from our flagship mines, and at least 120,000 ounces gold equivalent per year for our other mines, either individually or as a cluster of mines that are near to each other or where operational, administration, management and cost synergies are possible.

There is purpose to this. Our mines either individually, or as a close cluster should be meaningful contributors to overall production, although always bearing in mind also that this is about quality advances, as much as quantity advances, that is our focus. We have as a key objective, sustainability in operational excellence in four of the best global places for mining, Brazil, Argentina, Chile and Mexico.

We take a portfolio approach to the mines, and mine clusters we own and we operate intending to be dominant in the countries or regions in which we undertake those operations. We have strong growth ahead of us, beginning with resources and production, although all of which fits into this geographical and strategic model that I've just identified.

Lets' discuss the second quarter. In the second quarter, we achieved strong operational and financial performance. We increased production across nearly all of our owned mines. Total production was approximately 253,000 ounces representing a 6% increase from the first quarter this year, and a 5% increase from the comparable period last year.

We expected production to increase sequentially throughout the year; we said that at the beginning of the year, we said that on our last conference call, which is occurring. And we expect that trend to continue into the second half of this year.

Our financial performance continued to demonstrate significant double-digit growth. Revenue increased 48% from the second quarter of last year to $351 million. Adjusted earnings increased to $86 million. Mine operating earnings increased 78% against Q2 of last year, to $146 million. And cash flow, a driver of this company and the value in this company that we've always highlighted, increased 32% to $135 million or $0.18 per share, and that again as compared to the same period year.

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