Yamana adjusted profit down on sales volumes, costs

Wed Aug 8, 2012 9:11pm EDT
 
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By Julie Gordon

TORONTO (Reuters) - Canada's Yamana Gold Inc YRI.TO said on Wednesday its second quarter adjusted earnings fell 28 percent on lower metal prices, copper sales volumes and higher production costs.

With three mines currently under construction, Yamana also said its 2012 capital spending remains on track at $665 million.

"We're still on budget," chief executive Peter Marrone told Reuters. "Some projects may be a little bit more, some projects may be a little bit less, but cumulatively, we're on track for that $665 million."

Cost inflation is a major issue in the mining industry with high labor, fuel and consumable costs leading to ballooning price tags on projects around the world.

Yamana expects to start up its Ernesto and C1 Santa Cruz mines in Brazil by the end of 2012, with commercial production planned for mid-2013. A third Brazilian development, Pilar, is set to start-up in 2013.

That will help ramp up output to 1.2 million-1.3 million ounces this year, with 1.5 million-1.7 million ounces in 2013.

The gold miner also said it is moving forward with project optimization at its Jeronimo joint venture in Chile. The gold mine is expected to cost some $425 million to build with average annual production of some 150,000 ounces.

A construction decision is expected this year, pending discussions with Yamana's partner on the project, Chilean copper giant Codelco.   Continued...