Yamana Gold Gets it Right - This Time

Quarter after Quarter Yamana Gold (AUY) has failed to meet their operating objectives, which has not gone unnoticed by the market. Despite the share appreciation Yamana has seen over the last month or so, the degree to which this has occurred has been rather unspectacular relative to both the gold price and its peers, such as Agnico-Eagle (AEM).

This of course comes on the back of mediocre quarterly results in the second quarter, mostly due to production ramp up and forward guidance falling short of the market consensus. This has to do with two new mines, both of which have recently come online in a high class mine El Penon in Chile and Gualcamayo in Argentina. Due to the low expectations regarding El Penon in the short term, I think Yamana surprised the market by increasing quarter over quarter output 18% in addition to mining higher metal grades. The latter, Gualcamayo, achieved commercial production in July (although technically some production was realized in Q2) , grew production 61% from preliminary production in Q2.