Embed Size (px)
Citation preview
TSX: YRI | NYSE: AUY
Bank of America Merrill Lynch
2014 Global Metals, Mining & Steel
Conference
2
Cautionary Note Regarding Forward-
looking Statements
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This presentation contains “forward-looking statements” within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Except for statements of historical fact relating to the Company,
information contained herein constitutes forward-looking statements, including any information as to the Company’s strategy, plans or future financial or operating
performance. Forward-looking statements are characterized by words such as “plan,” “expect”, “budget”, “target”, “project”, “intend,” “believe”, “anticipate”,
“estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions,
assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and
uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking
statements. These factors include the Company’s expectations in connection with the expected production and exploration, development and expansion plans at the
Company’s projects discussed herein being met, the impact of proposed optimizations at the Company’s projects, the impact of the proposed new mining law in Brazil
and the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities
based on projected future conditions, fluctuating metal prices (such as gold, copper, silver and zinc), currency exchange rates (such as the Brazilian Real, the Chilean
Peso, the Argentine Peso, and the Mexican Peso versus the United States Dollar), possible variations in ore grade or recovery rates, changes in the Company’s hedging
program, changes in accounting policies, changes in mineral resources and mineral reserves, risk related to non-core mine dispositions, risks related to acquisitions,
changes in project parameters as plans continue to be refined, changes in project development, construction, production and commissioning time frames, risk related
to joint venture operations, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other
consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected
changes in mine life, final pricing for concentrate sales, unanticipated results of future studies, seasonality and unanticipated weather changes, costs and timing of
the development of new deposits, success of exploration activities, permitting time lines, government regulation and the risk of government expropriation or
nationalization of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing
and possible outcome of pending litigation and labour disputes, as well as those risk factors discussed or referred to in the Company’s current and annual
Management’s Discussion and Analysis and the Annual Information Form for the year ended December 31st, 2013 filed with the securities regulatory authorities in all
provinces of Canada and available at www.sedar.com, and the Company’s Annual Report on Form 40-F for the year ended December 31st, 2013 filed with the United
States Securities and Exchange Commission. Although the Company has attempted to identify important factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated
or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from
those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates,
assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The
forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and operational
performance and results as at and for the periods ended on the dates presented in the Company’s plans and objectives and may not be appropriate for other purposes.
Please note that “GEO” means gold equivalent ounces throughout this presentation.
Silver production is treated as a gold equivalent converted at a ratio of 50:1.
All amounts are expressed in United States dollars unless otherwise indicated.
3
Business Philosophy
– A Balanced Approach
Strategic Direction
• Growth – top line and bottom line
• Capital and cost discipline
• Maximizing investment and returns
• Risk and reward
• Value creation
• Cash distributions to shareholders
Production growth is important but
not at the expense of costs and cash
flow
Focus
on Cash
Flow
Focus on Cornerstone Assets
Building for the Future
4
8 assets – the
cornerstones
of production
and cash flow
generation El Peñón
Chapada
Mercedes
Gualcamayo
Minera Florida
Jacobina
Canadian Malartic
Cerro Moro
Other
Core assets
contribute
1.5+ M GEO
Future Production Outlook
Core assets expected to continue contributing most to cash flow
2 high quality,
high margin
assets adding
to production
base
2014 Production Growth
Stronger second half production growth
5
H1 12 H2 12 H1 13 H2 13 Q1 14 Q2 14E Q3 14E Q4 14E
Stronger second half production with quarter over quarter growth
• Q1 production within budget expectation
• Year to date production ~380,000 GEO
Q2 average monthly production planned for a 16%
increase over Q1 average monthly production
April Production at 105,000 GEO
Production
growth to
unfold
throughout
2014
Established trend of production
Production growth accelerates in the
second half
Consistent Performance from Core Assets
Production & Cash Flow
Core assets delivered 80% of production & 98% of cash flow in 2013
Larger contribution expected in 2014
Chapada 8%
El Peñón 35%
Mercedes 9%
Gualcamayo 14%
Minera Florida
10%
Other
23%
Q1 Production By Asset • Production in line with budget
• Costs in line with budget
• Stable and improving production
initially expected from core and by
year end all assets
• Core assets contribute most to the
generation of cash flow
6
Delivering on Production Growth
Throughout 2014
7
1.2M
2013 2014E
1.4M GEO
Production
Budget for
2014
Continued production growth expected
• Budgeted production of 1.403 M GEO* in 2014 * 70,000 GEO of budgeted production is deemed to have a lower level of
relative certainty
• Range: 1.33M to 1.4M GEO in 2014
– Total production for first four months of the year
totaled approximately 380,000 GEO
– Q2 average monthly production expected to be 16%
higher than average monthly production in Q1
– Improved grades and production expected at El Peñón,
Chapada, Mercedes, and Jacobina
– Gualcamayo performing ahead of budget with
record production in April
1.4M
Chapada
El Peñón
Mercedes
Minera Florida
Status of Mines
Achieving budgeted production
• Grade improving
• Now in dry season
• Corpo Sul advancing
• Budgeted production 2014: 103,000 GEO
134M lbs. Cu
• Normal mine sequencing
• Grade improvements expected for gold
• Budgeted production 2014: 448,000 GEO
• Normal mine sequencing
• Grade improvements by Q4 to 2013 grades
• Budgeted production 2014: 129,000 GEO
• Cash costs down 15% year-over-year
• Continuous execution of cost improvement
initiatives
• Budgeted production 2014: 114,000 GEO
8
Gualcamayo
Jacobina
Other
Canadian Malartic (Pro forma)
• 28% increase in production year-over-year
• 10% increase over Q4 2013
• Record monthly production in April ~ 20,000 oz.
• Installation of conveyor belt expected to decrease costs
• Average grades expected similar to Q1
• Budgeted production 2014: 170,000 oz.
• Mine sequencing results in increasing grades
• Remediation plan to improve production in effect by Q314
• Grades at higher levels from Q2 and over 2.0 g/t in Q4
• Budgeted production 2014: 89,000 oz.
• Includes Fazenda Brasileiro and Alumbrera
• Budgeted production 2014: 109,000 oz.
• Subject to completion of acquisition
• Attributable production 2014: 266,000 oz.
9
Status of Mines
Achieving budgeted production
Pilar
C1 Santa Luz
Status of New Projects
Continuing to Advance
• Large mineral inventory
• Multiple satellite deposits
• Fully operational in summer
• Budgeted production 2014: 90,000 oz.
• Large mineral inventory
• Conventional open pit
• Fully operational in summer
• Opportunity for significant longer term recovery
improvements
• Budgeted production 2014: 90,000 oz.
10
Pilar Tonnes (M) Grade (g/t) Contained
(Moz)
P&P 10.8 4.03 1.40
M&I 1.9 4.44 0.27
Inferred 12.7 4.12 1.68
C1 Tonnes (M) Grade (g/t) Contained
(Moz)
P&P 26.7 1.57 1.34
M&I 11.7 1.27 0.48
Inferred 13.6 2.49 1.09
More than fifty per cent of lower certainty ounces were from these mines
11
Lower AISC Cost Structure
Established & Improving
Q1 2013 Q1 2014 Q1 2013 Q1 2014
G&A Exploration Sustaining Op costs
$1,014
$856 $820
1. A non-GAAP measure. A reconciliation of can be found at www.yamana.com/Q12014 in accordance with previous Canadian GAAP for public entities.
2. Includes co-product cash costs, sustaining capital, corporate general and administrative expense, and exploration expense. .
New cost structure sustainable, longer term initiatives underway
• Cost structure successfully contained over
2013
• Newly established average lower AISC
structure sustainable
• Costs are expected to be in line with 2013
2014 average AISC
expected below
$925/GEO Co-product
&
$850/GEO By-product
$975
All-in Sustaining Cash Costs
Co-product By-product
Cash Flow Focus
Cash Flow Generation Capacity Increasing
Continued focus on balancing production growth & costs to
sustain & grow cash flow
$0.20
$0.22
EstablishedBaseline
Q2 - Q4 2013Average
• Cash flow is expected to increase over the remainder
of 2014 Capital spending declining
Exploration spending declining
Cash costs contained and stabilizing
Other costs continuing at newly established lower levels
Increasing production
Cash flow in 2014
is expected to
exceed baseline
average cash flow
level established
in 2013
$94M generated in cash flow in Q1
$0.12 cash flow per share
12
13
Canadian Malartic Mine
Acquisition Strategy
- A Balanced Approach
Adding another high quality, high
margin cornerstone asset
50% Canadian
Malartic adds
+4.7M oz. P&P reserves
• Mining friendly jurisdiction with proven mining competency – Located in Quebec, a mining friendly jurisdiction
• Focus on mid-size projects/acquisitions – Adding initial 300,000 ounces of annual production
• Maintain low cost structure – Costs consistent with current cost structure
• Maximize sustainable cash flow – Immediate cash flow contribution
• Conventional operations – Open pit with convention processing
• Potential to enhance value through exploration – Significant potential with Canadian Malartic and Kirkland Lake
On April 16, 2014, Yamana Gold and Agnico Eagle Mines announced they
will jointly acquire Osisko Mining for total apportioned transaction
value of C$1.67 billion. Yamana and Agnico Eagle will jointly own the
Canadian Malartic mine, Kirkland Lake assets, and Hammond Reef
project.
Note: The transaction is subject to the approval of Osisko shareholders by a two thirds vote at a meeting to be held by the
end of May 2014. 13
Accretive Across Key Per Share Metrics
The Addition of a New Cornerstone
14
• Increasing sustainable production
level
• Maintaining 2014E AISC per GEO
• Creating another cornerstone asset
expected to contribute significantly to
cash flow
Cerro Moro, Argentina
- Updated feasibility study
Mining and Processing Methods • Small open pits for first 3 years, followed by development of
underground areas
• Phase one: crushing, grinding, and gravity recovery, producing a gold/silver doré
• Phase two: addition of flotation circuit and Merrill-Crowe plant to enhance recovery rates
Operating and Economic Highlights • Estimated initial capital cost: $126M
– Detailed engineering to confirm
• Estimated sustaining capital cost: $174M or $116 per GEO
– $133M for underground development
• Annual production: 150,000 GEO
• LOM cash costs: $352 per GEO
• LOM AISC: $525 per GEO
• Mine life: 10 years
• Expected to generate significant cash flow and robust returns
Over 40%
Internal
rate of
return
Disciplined capital allocation driving
robust rate of return
15
16
Looking Forward
“The excitement we feel this year with our
production growth balanced with low costs,
acquisition in Canada and the impressive
prospects that come with it, advancing
development of our high grade, high margin
Cerro Moro project and our next high grade,
high margin Suyai project through the
permitting phase, defies description.”
- Peter Marrone
Canadian Malartic Cerro Moro
A balanced
approach to
deliver top line
and bottom line
growth to create
and unlock value
17
200 Bay Street, Suite 2200
Toronto, Ontario
M5J 2J3
416-815-0220/1-888-809-0925
www.yamana.com
18
• CAUTIONARY NOTE REGARDING MINERAL RESERVES AND MINERAL RESOURCES: Readers should refer to the Annual Information Form of the
Company for the year ended December 31, 2013 and other continuous disclosure documents filed by the Company since January 1, 2013 available
at www.sedar.com, for further information on mineral reserves and mineral resources, which is subject to the qualifications and notes set forth
therein.
• CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF MINERAL RESERVES AND MINERAL RESOURCES
• This Presentation has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ in certain
material respects from the disclosure requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and
“probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure
for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) - CIM Definition Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the disclosure
requirements promulgated by the Securities and Exchange Commission (the “Commission”) and contained in Industry Guide 7 (“Industry Guide
7”). Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report mineral reserves, the three-year historical
average price is used in any mineral reserve or cash flow analysis to designate mineral reserves and the primary environmental analysis or report
must be filed with the appropriate governmental authority.
• In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are
defined in and required to be disclosed by NI 43-101. However, these terms are not defined terms under Industry Guide 7 and are not permitted
to be used in reports and registration statements of United States companies filed with the Commission. Investors are cautioned not to assume
that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves. “Inferred mineral resources” have a
great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources
may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of
an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a mineral resource is permitted
disclosure under Canadian regulations. In contrast, the Commission only permits U.S. companies to report mineralization that does not constitute
“mineral reserves” by Commission standards as in place tonnage and grade without reference to unit measures.
• Accordingly, information contained in this Presentation may not be comparable to similar information made public by U.S. companies subject to
the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations of the Commission
thereunder.
Cautionary Note Regarding Mineral Reserves and
Mineral Resources
