Yamana (AUY) has increased Gold production dramatically in the past few years, and it has done this through new mine development and acquisitions. There is a strong possibility that Gold can rise to $1200+ and hold the $1000 this year. That would make AUY a $17+ stock. Gold is certainly going to outperform for the year but many of the technical analysts I chat with expect a pullback to the $850-$875 range before it shoots up to $1200-$1500. I feel Marrone is a great CEO. He has made a few unwise decisions by acquisitions (Northern Orion comes to mind buying it at the top of valuation) but overall he will continue to grow Yamana Gold. (AUY)’s estimates are based on $700 POG, and Energy is 25% of the cost their mining operations. With Oil down from $147 a barrel to $35 a barrel the coming quarters should offer some real nice numbers. Another positive is Yamana generates good income in the currency swaps between their operations and selling gold in dollars. That figure is roughly 20%. Yamana is set to release their numbers March 3rd.
Yamana Gold (AUY) stacks up nicely against its Gold producing peers and should offer investors plenty of upside in the coming year, says Dundee Capital Markets analyst Ron Stewart. In fact, analysts at Genuity Capital noted “If the U.S. dollar weakening resumes in the medium term, as we believe it shall, and oil prices improve, gold should continue to prosper,” The firm’s top gold picks in the intermediate space are Allied Nevada Gold Corp. (ANV), IAMGOLD Corp. (IAG) and Northgate Minerals Corp. (NXG). It also favours seniors Goldcorp Inc. (GG) and Yamana Gold Inc. (AUY). The firm also raised its target prices for gold stocks by an average of 28% to reflect higher price assumptions for the metal.
In the eyes of many industry observers, Yamana Gold Inc. (AUY) has moved up in class and can now be considered among Canada’s Tier 1 Gold producers. According to RBC Capital Markets analyst Michael D. Curran, there’s few reasons to think the Gold miner won’t keep a seat at the big table for a long time to come. RBC is also bullish on the Gold here. “With this increase, we expect most producers should be able to more than replace gold reserves mined during 2008, and show net gains from the end of 2007,” RBC analysts told clients.
Lets not forget sight of the possibly of a take over of Yamana. Credit Suisse analyst Anita Soni has been saying that Yamana is a possible target for Kinross (KGC) Ms. Soni said “tack on” acquisitions like the Lobo Marte gold project deal with Teck Cominco Ltd. (TCK) for about $250-million, plus a royalty, in November, are possible. However, she also said a larger transaction in the senior or mid-tier space could surface, with Yamana Gold Inc. (AUY) and Teck’s Pogo mine as likely candidates. Ms. Soni also said Yamana has a good project pipeline but it does not have the near-term capital to fund that growth. An acquisition of Yamana would deliver a project pipeline and growth from 2009-2011 even using our conservative forecasts for Yamana. It is also likely that Kinross would be able to realize additional ounces beyond what we forecast for Yamana given Kinross’s ability to fund growth.
Yamana has a very ambitious growth pipeline that will culminate in 2.2 million ounces of Gold production by 2012. As far as Gold miners go, Yamana is by no means the largest, but they are one of the larger intermediate Gold producers on the world stage. I continue to like Yamana as part of my portfolio and recently have added more at the $8.80 level.
In Gold We Trust
