UPDATE 2-Yamana profit jumps on higher gold output

Wed Feb 20, 2013 8:37pm EST
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* Q4 adjusted EPS $0.26 v Street-view $0.25

* Revenue up 11 percent at $629.5 million

* CEO remains growth focused, says no M&A for now

TORONTO, Feb 20 (Reuters) - Canadian gold miner Yamana Gold Inc reported a boost in quarterly profit on Wednesday as strong gold production and sales outweighed higher operating costs.

The Toronto-based mining company, which produced a record 1.2 million gold equivalent ounces in 2012, said it plans to boost output by at least 20 percent in 2013 as it ramps up production at its newest mines.

With gold prices slipping and capital costs still climbing, many mining companies are shifting away from growth to focus instead on boosting margins and increasing shareholder returns.

For Yamana, the focus remains on building up the production base. The strategy is to move forward with projects that deliver growth, maximize cash flows and demonstrate efficient use of capital, said Chief Executive Peter Marrone.

"Growth is growth. I think the challenge is always, what do we mean by growth? It can't just be about production," he told Reuters. "Ultimately it also has to be about cash flow and it has to be about earnings and about revenue and about all the financial measures."

As its new mines ramp up, the midtier producer expects cash flows to exceed capital needs, leading to more free cash flow.   Continued...