February 23, 2012 / 12:17 AM / 5 years ago

Yamana Gold Q4 adjusted profit up on higher metal

TORONTO (Reuters) - Yamana Gold YRI.TO reported on Wednesday an 8 percent increase in fourth-quarter adjusted profit on higher precious metal prices and a boost in concentrate sales volume.

The Toronto-based gold miner also announced an 11 percent boost in its overall reserves and said it would increase its annual dividend by 10 percent to 22 cents.

On an adjusted basis, earnings for the quarter ended December 31, rose to $184.2 million, or 25 cents a share from $170.98 million or 23 cents per share. That was slightly above analyst expectations of 24 cents a share on revenue of $601.5 million, according to Thomson Reuters I/B/E/S.

Revenue rose 6 percent to $568.8 million, as the average realized gold price climbed more than 21 percent to $1,670 per ounce and the silver price rose 11 percent to $31.29.

For the full year, revenues rose to $2.2 billion from $1.7 billion in 2010 as the company boosted production by 5 percent to 1.1 million gold equivalent ounces. Production for the quarter rose to 276,918 gold equivalent ounces.

Net earnings for the quarter fell to $89.6 million, or 12 cents a share, as the miner was hit with an $81 million non-cash impairment charge on an investment. In the year ago period the company had net income of $125.6 million, or 17 cents a share.

Yamana operates mines in Argentina, Brazil, Chile and Mexico. In January, the company said it would boost production by 13 percent in 2012, as the Mercedes mine in Mexico ramps up to its commercial production rate.

GROWTH PLANS

Yamana boosted its overall reserves by 11 percent to 18.6 million gold equivalent ounces. That includes a 10 percent increase in gold ounces to 17 million ounces and a 28 percent jump in silver reserves to 82.9 million ounces.

Yamana has budgeted some $125 million for exploration in 2012 and is not focused on mergers and acquisitions right now, Chief Executive Peter Marrone told Reuters.

"I'm not feeling good about it," he said of the current climate for dealmaking. "I still think that the best way for us to deliver value to shareholders is organic growth."

Marrone said that Yamana will spend some $25 million to $35 million of its exploration budget at the El Penon project in Chile and a significant amount at the Pilar project in Brazil.

Overall, exploration spending will be 40 to 45 percent focused in Chile and about 30 to 35 percent in Brazil, with the balance in Argentina and Mexico.

Yamana, which started up its Mercedes project in Mexico in the fourth quarter of 2011, said construction is on track at its two development-stage projects in Brazil, Ernesto and C1 Santa Luz. Both are expected to start production this year.

Reporting by Julie Gordon; Editing by Peter Galloway and Carol Bishopric

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