Yamana Gold to list on LSE, aims to hike dividends

El Peñón mine in Chile. (Image courtesy of Yamana Gold).

Yamana Gold’s (TSX: YRI) (NYSE: AUY) executive chairman said on Monday the miner could raise its dividend by a third as the company gears up for a London listing.

The Toronto-based miner announced on Monday it was in advanced stages of a London Stock Exchange (LSE) listing expected at the end of the third quarter.

“Presently we are paying between $60-65 per ounce on dividends, as a policy we want to pay $50-$100 and that should imply that we have room for upside,” Peter Marrone told Reuters.

“My vote would be that within the year we can get ourselves to $100 per ounce.”

The Toronto-based miner, currently listed on the TSX and NYSE, said it intends to become the ‘investment of choice’ in London for those looking for exposure to gold.

“The LSE currently has a limited number of sizeable pure-play gold producers with annual production of 1 million ounces or more,” Yamana said in a press release.

The company churned out 164,141 ounces of gold and about 2 million ounces of silver in the April-June period

Yamana’s portfolio includes the Canadian Malartic mine, the Jacobina mine in Brazil, the El Peñón mine and Minera Florida mine in Chile and Cerro Moro mine in Argentina.

In 2019, Yamana’s production platform was about one-million gold-equivalent ounces (GEOs) at all-in-sustaining costs below $980/GEO.

Last year, the company registered net earnings of $225.6 million at an average gold price of $1,392 per ounce.

“Significant upside for gold equities remains, driven by recent events and the macroeconomic backdrop. As an Americas-focussed gold producer, with a first-class management team and Board, alongside a healthy dividend yield, Yamana offers a new, high-quality investment choice for the European investor looking for long-term exposure to gold,” said Peter Marrone.

Yamana does not intend to raise equity along with the LSE listing, where it plans to trade on the main market.

Gold prices have jumped to their highest since 2011, spurring mergers and acquisitions among miners in the sector.

But Marrone said there were few assets that could deliver high returns and he preferred a transaction that was a merger of equals.

“Not an acquisition but a combination, perhaps through similarly-sized companies creating further critical mass. We are very open and receptive to that, we recognise that size does matter,” he said.

Second quarter 2020

Yamana had a better-than-expected second quarter this year across the board with production levels already exceeding the company’s revised guidance for the year.

The company churned out 164,141 ounces of gold and about 2 million ounces of silver in the April-June period and said it continued to expect more production, improved costs and significant cash flows in the second half of 2020.

The miner had adjusted output targets on April 30 to reflect the temporary suspension of its Canadian Malartic mine and Cerro Moro in Argentina. Its current production forecast for 2020 sits at 786,000 ounces of gold and 10.25 million ounces of silver, down from its original guidance of 857,000 ounces of gold and 11.5 million ounces of silver.

Yamana’s stock on the NYSE traded up 3.2% midday Monday. The company has a $5.4 billion market capitalization.

(With files from Reuters)

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