Yamana Gold profit falls on metal prices

Mon Oct 29, 2012 6:24pm EDT
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By Julie Gordon

TORONTO (Reuters) - Canadian miner Yamana Gold Inc (YRI.TO: Quote) reported a 6 percent fall in third-quarter adjusted profit on Monday as lower metal prices and higher production costs outweighed strong gold sales volumes.

The mid-tier gold miner, which is in the process of building three new mines, maintained its production outlook for the year and said its development projects are on time and on budget.

While cash costs rose compared with the third quarter of 2011, chief executive Peter Marrone noted that costs are trending downward as the company ramps up output at new mines and as cost inflation in the mining sector eases.

"The truth is that there is a lessening of the pressures on the metal sector, or perhaps extractive industries generally," he told Reuters. "But costs sometimes can be sticky, so it takes a bit of time before that starts to reflect itself in better operating costs and better capital costs."

Yamana expects to finish construction at its Ernesto/Pau-a-Pique and C1 Santa Cruz mines in Brazil by the end of the year, with commercial production by mid-2013. A third Brazilian development, Pilar, is set to start up in mid 2013.

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

Yamana is eyeing Cerro Moro, a project in Argentina it acquired as part of its C$413 million ($412.81 million) takeover of Extorre Gold Mines Ltd earlier this year, as its next major development project. An exploration and development plan for that project is due in early 2013.

The company has $1.15 billion in available funds, including $400 million in cash.   Continued...