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Yamana Gold Inc.
Yamana Gold Inc. (TSX: YRI) is a Canada based precious metals company which is engaged in the production of precious metals like gold and silver, from its development stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile and Argentina.
Key Highlights:
Source: Company Presentation
Risks associated with investment:
The Company’s financial performance is mostly dependent on the price of gold, which directly affects their profitability and cash flow. Any drawdown in the gold prices would impact the group’s performance. Further inherent risks associated with mining and mineral processing such as the company's mines may not perform as planned; uncertainty with the company's ability to secure additional capital to execute its business plans; the speculative nature of mineral exploration and development, including the risks of obtaining and maintaining necessary licenses and permits, including the necessary licenses, permits, authorizations and/or approvals from the appropriate regulatory authorities.
Financial overview of Q3 2021
Source: Company Filing
Top-10 Shareholders
The top 10 shareholders have been highlighted in the table, which forms around 27.36% of the total shareholding. Van Eck Associates Corporation and The Vanguard Group, Inc. hold the company's maximum interests at 11.33% and 3.13%, respectively. The company's institutional ownership stood at 54.49%. Higher institutional holding boost confidence to the retail investors.
Source: REFINITIV, Analysis by Kalkine Group
Valuation Methodology (Illustrative): Price to Cash Flow based Valuation Metrics
Note: Premium (discount) is based on our assessment of the company’s growth drivers, economic moat, competitive advantage, stock’s current and historical multiple against peer group average/median and investment risks.
Stock recommendation
With strong operational results, the Company is well positioned to meet its 1,000,000 gold equivalent ounces "GEO" guidance for the year, which is supported by momentum at Canadian Malartic, Jacobina, and El Peón, as well as a strong fourth quarter performance at El Peón and Cerro Moro, as previously guided. Furthermore, the firm has substantial liquidity, with USD 460.2 million in cash and cash equivalents and USD 750.0 million in available credit, which appears to be sufficient to fund its planned projects and pay dividends.
Additionally, the company is deleveraging its balance sheet by cutting debt, which is a critical positive that might lower finance costs, resulting in improved margins in the near future. We also believe that average realized gold prices per ounce would continue to expand, which would lead to margin expansions. Moreover, we predict silver prices to stay constant in the coming months since most governments worldwide have relaxed shutdown restrictions, resulting in more industrial activity resumption.
Hence considering the aforesaid facts, we recommend a “Speculative Buy” rating on the stock at the closing price of CAD 5.26 on December 22, 2021. For the said purposes, we have considered peers like Centerra Gold Inc, B2Gold Corp, Endeavour Mining PLC, etc.
*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.
Technical Summary Analysis
One-Year Technical Price Chart (as on December 22, 2021). Source: REFINITIV, Analysis by Kalkine Group
*The reference data in this report has been partly sourced from REFINITIV.
*Recommendation is valid on December 23, 2021, price as well.
Disclaimer
The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.