Loading ...Canada’s largest gold mine now producing at sub 600$ USD cash costs… sub 800 AISC
Yamana recently released their production report and in it was something very telling. Agnico Eagle and Yamana each owns 50 percent of Canadian Malartic which is Canada’s largest gold mine. This mine is now a sub 600$ USD cash costs producer FOR THE YEAR. The guidance for next year on nearly 600,000 ounces is 585$ USD and 800$ AISC which will probably be even lower. Keep in mind that these are real numbers and there are no tricks like massive co-product credits. Canada’s largest gold mine is and absolute PROFIT MACHINE even at todays gold prices.
This is yet another reason why Agnico Eagle is the best performing major.
I’ve been waiting for Yamana to make new lows so I can buy some more. It looks really undervalued considering the assets they have. The only down side is the streaming deal they recently made with Sandstorm so they could strengthen their balance sheet.
I’d be very careful with Yamana. It will provide a good bit of upside if gold has bottomed, but it is on my list of potential bankruptcies. Much like New Gold, they fake their low costs with by-product credits. Does one really think that there are negative cash costs to take an ounce of gold out of the ground like they fabricate at Chapala? AUY only has 2 good mines and Agnico Eagle owns half of one of them. Their best course of action would be to just sell the other half so that they can survive because their debt load is much too large.
There is a reason that it has gone from a major producer to a stock under 2$.
I like your way of presenting stuff.
Cashcosts what do you think about silver stocks?
Do you see some potential candidate for bankruptcy here?
Which of them would you consider for a buy among PAAS AG SSRI SLW ?
I can see why you’re wary but I don’t think their debt is unmanageable, especially over the next two years. They just cut their dividend by 66.7% which was a good move in my view. They have $1.86 billion in long term debt but over $12 billion in assets so I don’t see them not being able to service it even if things get worse.
That 12 billion in is a fantasy created by Yamana’s accounting department based upon higher gold prices. Different gold miners use different prices to calculate the value of their assets Do you really think that Yamana has property plant and equipment worth nearly 12 billion and an Enterprise Value of 3.3 billion?
For example, Agnico Eagle has REAL, and I can’t stress this enough, REAL assets of 5 billion USD. You think that Yamana has nearly 2.5 times the assets of Agnico? No. Randgold has REAL assets of 3 billion and a 5.5 billion mkt cap. The value of Yamana’s assets are closer to 3 billion. They could probably sell everything and not be able to pay off their long term debt at 1,000 gold. This is what the market is telling you. If one just looks at the price to book value, the market figures this out for you. The companies trading below book value will have to take large impairments and these “assets” being carried on the balance sheet will vanish. Companies trading at or above book value like GOLD or AEM will not. Their balance sheets are actually representative with reality.
This phenomenon showed itself tonight with BHP. The company had a price/book value of .84 and just took a 7.2$ billion write down or impairment of its shale assets. This will reduce the book value, and thus the assets of the company listed in the “property, plant and equipment” line.
http://www.bloomberg.com/news/articles/2016-01-14/bhp-expects-to-book-4-9-billion-writedown-on-u-s-shale-assets?cmpid=yhoo.headline
So the companies with the high price to book ratios are the ones that aren’t embellishing their assets? I had no idea. Didn’t know that. Dang. Can you write a book, or recommend one on how to properly value a company please?
Brilliant stuff, Cashcosts. Great insights into the fundamentals. Thanks!