- By Alberto Abaterusso
The yellow metal closed the second quarter of fiscal 2017 with an average price of $1,256.963 per ounce on the London Bullion Market; however, for Yamana Gold (AUY) -- that can mine the metal at profit from $1,150 per ounce -- it was not enough to beat analysts' expectations on both earnings and revenue.
According to the gold mining company's second quarter report for fiscal 2017 that was released Thursday, July 27, earnings per share - adjusted to one-time charges (including write-downs, other provisions and unrealized non-cash tax on foreign exchange losses) was nil versus an EPS - as forecasted by the average analyst - of 1 cent (U.S. Dollar), as you can see in the picture below.
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Warning! GuruFocus has detected 3 Warning Signs with AUY. Click here to check it out.
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The intrinsic value of AUY
Source: Yahoo Finance
The negative margin of 1 cent between what has been reported by Yamana Gold and what was forecasted by the average analyst, produced a negative surprise of 100%. We will see how the market will react to this result and what kind of impact this will have on the market value of Yamana Gold.
The mining company also missed analysts' expectations on revenue. While analysts expected that Yamana Gold would have closed the quarter with revenue coming in at $429.24 million, the company reported revenue of $428.1 million. Yamana missed expectations by $1.14 million and the difference produced a negative surprise of 0.27%.
During the quarter, the company sold 236,050 ounces of gold produced at its six producing mines, a 1% decline year over year, while the total volume of ounces sold on a consolidated basis - including also the production from BrioGold - was 278,187, down 4% from the comparable quarter of fiscal 2016. From the sale of one ounce of gold, Yamana realized an average price of $1,268 which was $1 lower than the average price per ounce of the yellow metal sold by the miner during the same quarter of fiscal 2016. Revenue coming from the sale of the yellow metal was backed by a quarterly production of 275,437 ounces (down 5% year over year), of which 88.8% was the production attributable to Yamana Gold, that is the volume of ounces that the company produced at its six producing mines. The latter was up 3% from the second quarter of fiscal 2016. It was a robust growth year over year, also thanks to a record in the production reported by the company at Jacobina mine that with its 32,000 ounces of gold was the highest since 2010. Year over year increases at Chapada, Canadian Malartic (50%) and Jacobina offset decreases in the production at El Penon, Gualcamayo and MInera Florida.