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The Company is an intermediate gold producer engaged in the acquisition, exploration, development and operation of mineral properties in Brazil, Argentina, Honduras and Nicaragua.
Yamana Gold... will outperform the other producers in its category, and is a tempting takeover target to boot.
My original pitch from so long ago is so wildly understated in the light of everything I could now say about the company.With its buying spree completed, Yamana Gold is now turning its focus to organic growth from existing properties through 2012, with a projected increase in gold production from 1 million ounces in 2007 to a sustainable 2.2 million ounces per year by 2012. More importantly, it has one of the lowest cash costs per ounce of production in the business. The cost a company incurs to produce each ounce of gold is a matter of grave concern within the industry, and with rising energy costs and scarcity of equipment and experienced labor, gold companies have been feeling the pinch despite the meteoric rise in gold prices. When judged by this metric, Yamana begins to look like the gold company with a silver lining. Thanks to its copper reserves of 2.3 billion pounds, and over 6 million ounces of silver acquired from the Meridian properties, Yamana is poised to remain an industry leader in terms of cash costs for production. Their cash cost per ounce of gold declined from $337 in Q3 2006 to -$339 for the current quarter! Yes, that’s a minus sign! Yamana’s press release asserts that those negative cash costs are sustainable, and with the price of silver expected to rise in lock-step with gold, that sounds like a reasonable claim to this fool.Gold will rise to $1,650 on its way to $2,000 and beyond, as this is NOT a recession we are in.... but rather the start of the Second Great Depression. The US Dollar is in free-fall and has no support in the horizon. As this correction runs its course, gold's going to advance to $1,200 so fast it'll give you whiplash. :)Also, while the P/E looks pricey, it is a trailing P/E based on 2007 earnings, during which AUY had to unwind some unfortunate copper by-product contracts. Now that those are complete, and copper too is on the rise, AUY's earnings will undoubtedly, positively, surprise every analyst on the street.The market was wrong to punish AUY when they bought Meridian and Northern Orion, and they're wrong again this time to have brought it back into the $14s. This is one of the very best buying opportunities anywhere for 2008.The company is targeting $2 billion in free cash flow by the end of 2010.
Thanks for your thoughts here. This was written in April, do you feel the same know?Thanks again.Wayne Smith
The Ramped-Up Resurgence of Yamana Gold:http://www.fool.com/investing/general/2009/03/09/the-ramped-up-resurgence-of-yamana-gold.aspxTomorrow's Monster Move in Gold:http://www.fool.com/investing/general/2009/02/26/tomorrows-monster-move-in-gold.aspxThe Golden Portfolio:http://www.fool.com/investing/general/2009/01/16/the-golden-portfolio.aspxYamana Stands the Golden Test of Time:http://www.fool.com/investing/general/2008/11/05/yamana-stands-the-golden-test-of-time.aspxYawanna Have Yamana:http://www.fool.com/investing/dividends-income/2008/10/22/yawanna-have-yamana.aspx
I want to acknowledge your great help in getting me into AUY while it was undervalued...it has certainly been doing very well as of late, making new highs since the beginning of August. It isn't the best outperformer among the precious metals stocks I ended up buying (virtually all of them informed by you), as that honor belongs to GPL (aka GPRLF), but by virtue of the relatively largest position I accumulated in Yamana, it is nominally a very handsome gain.And in other news....gold is getting mighty close to your original conservative target of $2000/oz. I look forward to your updated thoughts on the future for gold and silver. Thank you, best of luck, and keep up the awesome work helping us Fools out!- Marcus
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