Yamana Gold (TSX:YRI, NYSE:AUY) has begun commercial production of high-grade gold and silver at its Cerro Moro mine in Santa Cruz, Argentina, the company announced on Tuesday (June 26).
Yamana aimed for commercial production in Q2 2018 after the first pour of gold and silver doré at Cerro Moro took place in mid-May of this year.
“We are pleased that Cerro Moro, an operation that we expect to contribute significantly to our production, has reached this important commercial milestone,” said Daniel Racine, Yamana’s executive vice president and COO.
“The project has been brought to this stage on schedule and on budget, which reflects the significant efforts by operations and technical services management since construction began a few years ago,” he added.
Yamana was able to move forward with commercial production because mining rates were according to plan, throughput increased steadily since start-up and recoveries for gold and silver were consistently above 90 percent of design.
In addition, grades were consistent with mine plan, mine development, both for open pit and underground, were in line with plan and the operation successfully created a high-grade stockpile of over six weeks.
“Cerro Moro is expected to generate a disproportionate amount of cash flow and free cash flow relative to the comparatively small-scale nature of the operation,” said Jason LeBlanc, Yamana’s senior vice president, finance and CFO.
“With the planned reduction in expansionary capital spending and the anticipated strong margin to metal prices at Cerro Moro, per prior guidance the step change in cash flow we have planned is expected to begin in the second half of 2018 and be more pronounced beginning in 2019,” he added.
Cerro Moro should deliver on 2018 production guidance with modest production in the second quarter of 2018. In fact, all of the expected 2018 production is set to be delivered in the second half of this year.
Now that commercial production has been announced, focus will shift to optimizing the operation and ensuring operating costs reach guidance levels.
As of 1:27 p.m. EST, shares of Yamana were trading at C$3.89.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.
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