Yamana Gold Q3 2021 Earnings Call Transcript

Quartr
Provided by Quartr
October 28, 2021

There are 10 speakers on the call.

Operator

This conference is being recorded. Thank you all for joining us this morning. Before I turn the call over, I need to advise that certain statements made during this call today may contain forward looking information and actual results could differ from the conclusions or projections In that forward looking information, which include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, The timing and amount of estimated future production, cost of production, capital expenditures, future metal prices and the cost and timing of the development of new projects. For a complete discussion of the risks, uncertainties and factors, which may lead to actual financial results And performance being different from the estimates contained in the forward looking statements, please refer to Yamana's press release issued yesterday Announcing Q3 2021 results as well as the management's discussion and analysis for the same period and other regulatory filings in Canada and the United States. I would like to remind everyone that this conference call is being recorded and will be available for replay today at 12 pm Eastern Time.

Operator

Replay information and the presentation slides accompanying this conference call and webcast are available on Yamana's website at yamana.com. I will now turn the call over to Mr. Daniel Racine, President and CEO.

Speaker 1

Thank you, operator. Thank you all for joining us, Welcome to our Q3 2021 conference call and webcast. Presenting with me today is Jason LeBlanc, our CFO Yohan Bouchard, our Chief Operating Officer Gerardo Fernandez, Senior VP, Corporate Development and Henry Marsden, Senior VP, Exploration will be available to answer questions during the Q and A portion of the call. I will start as always with health and safety. Our total recordable injury rate was 0.68 for the 1st 9 months of 2021.

Speaker 1

The health and safety of our employees always come first and is something we have always trying to improve. Since the beginning of the pandemic, we have taken quick action to limit the impact of COVID-nineteen on our operations and the communities in which we operate. We put in place across the company to minimize the spread of COVID-nineteen. We are happy to report that we expect over 90% of our employees to be fully vaccinated before the end of Q4. During the Q3, we completed human rights risk assessment at all our sites in line with the voluntary principles on security and human rights.

Speaker 1

We also approve a responsibility policy covering all aspects of health and safety and sustainable development. This is available to view on our website. Earlier this year, we introduced our climate Strategy. In Q3, we performed workshops with each operation to establish roadmaps for each operation that describe project, cost and schedule. These actions will help ensure that its long range GHG reduction efforts are supported by practical and operationally focused short, medium and long term action to achieve the targets.

Speaker 1

Moving on to our 3rd quarter results. Jason will review our quarter in more detail, But I want to spend a moment to recognize the strong performance of our mines, our mines delivered. Canadian Malartic, Jacobina and El Penon all that standout quarter and Cerro Moro also produced excellent results. In total, from our 5 operating mines, we achieved the 2nd highest quarterly gold production ever in Q3 was weighted at 53% for the second half of the year, with the 4th quarter being the strongest quarter. We did better than planned in the first half of the year.

Speaker 1

So don't be surprised if we do the same in the second half. We are in a very good position, strong position to achieve our or exceed our production guidance of 1,000,000 GEO ounces. I will also mention that September was the lowest cost month of the quarter And we expect this trend to continue to Q4, where we expect to deliver meaningfully lower costs. Before talking about the Odyssey project, let me congratulate our exploration team at the Canadian Malartic General Partnership. They have been awarded Discovery of the Year by the Quebec Mineral Exploration Association for East Godi.

Speaker 1

What an important discovery for the underground mine, assuring multi decades of production. We are very proud of them at Yamana. At Odyssey, development of the underground ramp continued to perform well. The F frame slip form pour started in September And 93 meter was completed October 2019 in 21 days. Structural steel installation Mining the Odyssey internal zone, which are not currently included in the life of mine plan, but have potential to add underground production within the next 5 years.

Speaker 1

Exploration continues to deliver exciting results at Odyssey and something we will continue to provide updates on. Turning now to Jacobina and our exploration project expansion project, which continues to exceed our expectations. The mine has delivered significant progress on the Phase 2 expansion, a new daily throughput of over 8,800 tons per day was achieved In September, during a trial test to test the plant capacity. But the potential we see for Jacobina extend well beyond Phase 2. As we have mentioned in the past, we will advance work towards our Phase 3 expansion, but the true potential lies even beyond this.

Speaker 1

Jacobina is located in a mining jurisdiction with huge potential. It shares similar geology to the gold district in West and South Africa That hosts massive gold deposit. We are seeing the potential for the Jacobina Belt to become an entire gold mining district, Which we own 100 percent. The Jacobina mine has produced over 2,000,000 ounces and has over 8,000,000 more ounces in mineral inventory And this is all within a small portion of our land package, which is over 150 kilometer. In the future, Jacobina could very well be a complex of mines producing at a scale of over 400,000 ounces and continuing to be one of the lowest cost mines in the Americas.

Speaker 1

At our Wazamak project, Permitting and engineering are continuing to advance. And as you may have seen from our press release during the quarter, exploration is already beginning to deliver some exciting results, especially at the Wildcat target. The Wildcat zone is located 300 meters south of the Wazashir. Initial step up step out drilling has expanded the down deep continuity of the known historic zones Our plan in field and exploration drilling has the potential to generate additional mining mineral reserves That will sustain a 200,000 ounces production level for an extended period and support a strategic mine life of more than 15 years. I also want to take a moment to speak about Mara, another high quality asset in our portfolio with huge potential.

Speaker 1

The project is one of the world's lowest capital intensity copper projects and we are working to advance it. In the quarter, work progressed on the engineering design, drilling at site and furthering studies and permitting. We are at a very important moment for this asset and there are multiple paths forwards, all of which deliver value for our shareholders. That value is huge as you can see on this slide. At $4 per pound copper and $1700 per ounces, Mara has an NPV Of over $4,000,000,000 and we own 56.25 percent of that.

Speaker 1

We will evaluate all possible avenues to deliver the most value to our controlling interests. The opportunity we have to deliver value from this project that is not currently captured in our share price It's truly exciting. And I will now pass the call over to Jason, who can go over our quarterly results in more detail.

Speaker 2

Thank you, Daniel, and good morning, everyone. I'll now provide a brief overview of our Q3 results, as Daniel mentioned. We recorded net earnings of $27,000,000 or $0.03 per share And on an adjusted basis, dollars 69,700,000 or $0.07 per share with the main adjusting item relating to our early note redemption premium. We also saw strong cash flows in the 3rd quarter with a step change increase quarter over quarter, which I'll come back to in more detail in a moment. But this profile of a strong 3rd quarter is what we had expected at the start of the year.

Speaker 2

If you recall, at the beginning of the year, we guided that production would be weighted 47% to the first half and 53% to the back half of the year and that the 4th quarter would be our strongest. Our results through 9 months have tracked this profile and we expect Q4 production to exceed 270,000 GEO, which positions us to achieve our annual guidance of 1,000,000 GEO production for the year. On costs, recall in the second quarter, We had indicated that we were seeing some inflationary pressures from certain consumables with an impact of approximately $20 per ounce above our planning assumptions at the start of the year. This is still our expectation. But with our planned ramp up in sequential quarterly production, our unit costs have been decreasing since earlier this year.

Speaker 2

We really started seeing some of that better cost performance later in Q3. In September, we had meaningfully lower costs at several mines. And to give some gauge of that on a consolidated basis, ASIC for September was about 10% lower than our average Q3 costs. We expect that trend to continue into Q4, where along with the increase in production, our ASIC for Q4 should be between 5% 10% lower Then our AISC for Q3, which will translate to our strongest cash flows for the year. Moving on to results from our mines in a bit more detail.

Speaker 2

Canadian Malartic followed its exceptional second quarter with another strong quarter in Q3, benefiting from higher grade and recoveries compared to last year. Jacobina also followed its strong performance in Q2 with another solid quarter in Q3. Production in the quarter was close to the record setting production established in Q2 With mill throughput above plan and with recovery and grade as expected, the mine is on track to sustain 7,500 tonnes per day of ore to the mill by the end of the year, 50% from the Q2. More mining phases continue to be opened up in the quarter with more mill feed coming from the higher grade underground ore. This trend will continue in the Q4, which is expected to be the strongest production of the year with stable throughput but at higher grades.

Speaker 2

Stronger production expected in Q4, Cerro Moro's costs are expected to be lower as well. Shifting over to operations in Chile. El Penon delivered solid results with GEO production increasing 19% quarter over quarter. Recall, we had indicated El Penon was one of the mines that We expect this will continue through the remainder of the year with a further increase in silver production for Q4. At Monera, Florida production was just under 22,000 ounces, But we are expecting a strong 4th quarter both in terms of higher production and lower costs and the mine is off to a great start so far in October.

Speaker 2

And on to our financial performance for the Q3. We continue to generate robust cash flows with cash flows from operating activities and cash flows from operating activities before working capital increasing from the 2nd quarter by 24% and 21%, respectively. We also generated great free cash flow during the quarter, which increased 59 percent to $81,600,000 up from Q2. There were some other notable events during the quarter. We further strengthened our financial position by repaying $720,000,000 of existing debt In completing an offering of $500,000,000 in senior notes to 2,031 with a net impact reducing our gross debt by about $220,000,000 Aside from increasing our average tenure on debt, our interest costs were reduced by approximately $20,000,000 annually, which provides further flexibility for capital allocation.

Speaker 2

We also repurchased 3,300,000 shares during the quarter since we initiated our share repurchase program. We will remain opportunistic with our NCIB and continue to use it as a further tool in delivering returns. But to wrap up, I want to come back to the strong Q4 we expect With our highest production and lowest cost for the year, by extension, we'll see our strongest cash flow and free cash flow generation of the year as well. With that, I'll now turn the call back over to Daniel.

Speaker 1

Thank you, Jason. And with that, I will turn it back over to the operator for questions. Operator?

Operator

Certainly. Thank you. We will now take questions from the telephone lines. The first question is from Fahad Tariq with Credit Suisse. Please go ahead.

Speaker 3

Hi, good morning. Thanks for taking my question. Maybe first just to clarify, I thought I heard you say 5% to 10% lower Basic quarter over quarter in Q4. Can you just confirm that?

Speaker 2

Yes, you're right, Fahad.

Speaker 3

Okay, great. And then my second question, maybe Just extending that, can you talk a little bit about like 2022? I know Q4 of this year benefits from the higher production. But what about going into next year? How does the inflation angle play in then?

Speaker 2

First, I'd say we're Obviously, we're going through a planning process right now. We'll deliver a full update on our guidance early next year. Directionally though, yes, there's some inflation impact that will that will carry over to next year. We're trying to keep a lid on that. We saw most of the inflation coming to costs later this year.

Speaker 2

That's most of the impact that I mentioned. So we expect that to continue over to next year as well. But we'll be taking other efforts to try to offset that. But we do think It's here for the shorter term. We don't think this is something that's going to continue on for years in the past.

Speaker 2

It does look like it's basis some dislocations on their Supply side impacts, some commodity inputs are hurting us as well, but we're doing our best to offset it.

Speaker 3

Okay. And then just maybe as a quick follow-up, can you talk a bit about some of the measures you're taking to mitigate the inflation? Because it sounds like from your comments that It's actually a bit more muted for Yamana than it is for some of your peers that are talking about 5% to 7 Inflation on consumables or even higher than that, 3% to 4%, maybe 5% labor inflation. It sounds like If I'm hearing correctly, it sounds like it's a bit more muted for Yamana. So I'm just trying to get a sense of what are the measures you're taking that's allowing you to Kind of see less of an impact on inflation.

Speaker 1

Well, good morning, Fahad. You're right. We have already said in Q2 that we're seeing At a maximum $20 per ounces, so that's 2% in our case. So what we did is early in the pandemic, We have increased our inventory. We have continued to maintain our inventory a lot higher than they usually are.

Speaker 1

And the fact that we bought some of the materials we need to operate our mines sooner, so that's why this year that was not I don't know highly impacted maybe compared to others. So there's some measures like that. And then on continuous basis, We review our contract. We try goods from other companies that are Other suppliers and then if they can provide the same quality with a better cost then we're going to take advantage of this. So and then we mentioned many times, all our mines Operation excellence, we call it in the company.

Speaker 1

So there's many projects each year at each of the mine that are there To know reduce costs, mitigate costs, improve costs because we have inflation on a normal basis with manpower And materials. So that's part of our culture. That's part of what we do all the time to find ideas. And it's coming From everybody in the organization, from the miners having ideas, from engineers, from people of technical service, from all across the company, And then we're sharing in between. So Johan and the team, they meet each mine meets together on a monthly basis or quarterly basis to share You know what they're doing to improve their costs and then if another mine can do the same, we do it.

Speaker 1

We have an initiate global procurement Many years ago, so when we go on tender for globally, you can assume we have a lot better price than mine by mine. So That's a few of the things we're doing, but we're doing a lot to mitigate costs and then we've been successful doing it.

Speaker 3

Okay, great. Thank you. That's it for me.

Operator

Thank you. The next question is from Mike Gelinon with Bank of America. Please go ahead.

Speaker 4

Good morning, Dan, Jason, Johan, Gerardo and Henry. Just had a couple of questions. Dan, you mentioned earlier that you don't think Mara is being valued in your share price, I'm misquoting you. Just wondering what was your basis for that assumption and what steps are you taking to Enhance the value, maybe a joint venture or sell the asset or is it more longer days? And my second question, I'll come back to it.

Speaker 4

That was a long one to start off with.

Speaker 1

Okay. I will start and then Gerardo can complement. But you know, There's many that are carrying no value for Marra after we even published a strong pre feasibility study Last year, the numbers we showed on our slide are speaking for themselves. That mine is half built. When we have integrated Alumbrera and Agua Rica together to form Mara, there's always risk to spend $2,500,000,000 $2,800,000,000 on a project or $5,000,000,000 if you have to build a mill.

Speaker 1

This is behind us. The mill is built. We have the permit for the tailing facilities. We have all the infrastructure in place at Alumbrera To operate the mill, we have the permit to do it. We have huge open pit to even dispose tailing in the future.

Speaker 1

We have pipeline to transport the concentrate to the port. So that all exists. What we need to do at Mara is to Strip a big open pit and install the conveyors over land to the mill. So that's something very simple to do. So this is why we say and then when we look at the valuation that's put on the market compared to the numbers you saw on the slide at $1,301.03 copper, that's not the price the gold is today in copper.

Speaker 1

So there's a lot of value there. We're working To show you the value, we're going to publish a feasibility, a final feasibility study next year. We're in the permitting phase. There's a lot of interest on that project. And then our goal at Yamana is to demonstrate the potential of Marah.

Speaker 1

I don't know, Gerardo, if you want to add something on this, but We see huge potential with Mara in the future.

Speaker 5

Thank you, Daniel. Maybe just to add, Mike, from a valuation perspective, Daniel was saying there are a few points there that have zero value for the assets. I would say maybe others have multiples of metal content. But if you look at what is the consensus Versus what a similar asset based on the development stage and the value, I think you can see that It would be a significantly higher value even with a multiple for feasibility stage. That's the reason behind that.

Speaker 5

It's a high quality asset and with a profile for developing, as Daniel was saying, that it's a lot lower risk than a comparable asset. In terms of path to unlock value, our main path is to advance the project. We're doing the feasibility. We're advancing the permitting, Advancing the social engagement, the social license, we have good progress there with the local team. We have good progress on the technical side, ourselves leading the study, but also with our partners.

Speaker 5

There are other paths, there are other alternatives and in some industry there is interest for corporate assets in the industry. We've considered all options as we progress the project. It's obviously the more we advance it, the more the risk becomes, the more value it has.

Speaker 1

Well, we have great partner Mike with Glencore and Newmont and then the 3 companies were fully aligned. We're working together now for over 2 years too on the project. So I think there's big value creation for the 3 companies in this project.

Speaker 4

Okay, great. Thanks for that comprehensive answer. And second question is on your London listing. There was a lot of fanfare about this last year and early this year and but I noticed the volumes have been Very, very low on London, still very high in Toronto and New York. So just wondering is Jim, are you happy if the London listing has achieved what you wanted?

Speaker 4

Just curious. Thanks.

Speaker 5

Yes. Thank you for the question, Mike. Yes, I think this is a process. It's not a one day event. It's a process and we understand Investors in the UK and Europe value relationship and long term relationship and we started traveling.

Speaker 5

Now the restrictions are lifted I'm starting having a face to face meeting. So it is a long term commitment from our part and we're going to put the effort To go there and meet face to face and tell our story and show our results to the investors.

Speaker 1

Well, we had already a good base shareholders in Europe and in London specifically. And now we're meeting a lot of new And like Gerardo mentioned, Mike, it's not a one day situation. It's a long term establishing Partnership or meeting new people in the future. So we're there for long.

Speaker 4

Okay. Thanks for that and good luck.

Speaker 1

Thank you.

Operator

Thank you. The next question is from Tanya Jakusconek with Scotiabank. Please go ahead.

Speaker 6

Good morning, everyone. Thank you for taking my questions. Just wanted to circle back to Jason on the inflation question for 2022. As we go through the inventory that you Purchased earlier this year. Appreciate you on the labor side, you've done all of your agreements.

Speaker 6

Just want to check with you, if We look at 2022, would it be fair to assume that your inflationary pressures are coming from Buying additional fuel, consumables, etcetera, and therefore, something in the 3% range Would be appropriate over the $700 per ounce sort of cost this year?

Speaker 2

Yes, Danny, I think that's the way you laid it out there, that's a reasonable thesis as we work through lower cost inventory purchases more at market than you would have, Call it a cost plus compared to what we saw this year. But I think that the jury is still out for us and we're still through a planning process. And I think a less exposure on some of the items that you mentioned there. Obviously, we've got exposure to fuel, but with predominantly underground mines, we're just not consuming As much as other operations, we've got power locked up at all of our operations through next year at well better than market rates. So I think there's a few other things going In our favor.

Speaker 2

And to the extent we've had any inflation in region, I think you see the kind of the natural hedge of currencies working out here as well and Canadian dollar, I guess, being the outlier in that regard. So again, that was our impact this year. That was for a partial year. So I think it's fair to say by extension that, that impact could be Impact this year plus a little bit more for next year, but the final numbers will roll out into next year with our guidance.

Speaker 6

Okay. I appreciate that. And just wanted to understand also, as we look at some of your catalysts coming Through in the next few months. We didn't have we had an expiration update in September. Wondered when we would get a next expiration update Or any other studies or other things from now until you release your Q4 financials?

Speaker 1

I think the next big Catalyst update, Tanya, it's going to be in February. February, we're going to have our new R and R, the Q4 result. We're going to talk about the Cerro Moro, Yps Leach and then Mill expansion. We said we were doing studies on both, so we're going to talk about it. Sure.

Speaker 1

Canadian Malartic with the Odyssey project, the advance, maybe some more exploration result. We have very good result You know, after we did release news earlier this year. So You can assume that early next year we will probably have an exploration update. Also Jacobina, Hopefully, we'll get the permit, but we of the 8,500 tons per day, the mine is already adjusting to that. We said $57,000,000 at the beginning.

Speaker 1

Now we're talking $15,000,000 to $20,000,000 and that number is still going down as you have seen in Q3 3 we have achieved, we're able to achieve with the actual mill 8,800 tons per day. So even better than What our Phase 2 plan? So there's a lot of catalyst news coming early in the year. Until then, I think it's going to be Quiet in November December January, but February will be there will be a lot of news. We'll try to not to have all of them at the same time, I would say, maybe A week or 2 apart, but there's many news coming early in the next year.

Speaker 6

That's good. And then maybe just on your reserves and resources, I just wanted to confirm with you on your pricing. Are we looking at keeping the same pricing? We are seeing a bit of inflationary pressures through the costs. I'm just trying to understand whether the pricing, You will keep that constant as you had in 2020?

Speaker 6

And then that's the first question. And secondly, How do you feel about replacing your production in your reserve base this year or growing resources? And what mines should I focus on?

Speaker 1

The price won't change. We have $12.50 now for many years. The $12.50 is there to stay for many more years. So that That inflation doesn't have any impact on this. So $12.50 is our number.

Speaker 1

And what is it, dollars 18 or $17 For copper, for silver, that's the two numbers that are constant for many years. That's the one we're going to keep. On all the mines, And we can put colors, but we see very good result. As you can imagine, Canadian Malartic, when you mine close to 700,000 ounces of your reserve each year, The reserve will go down, but the resources will continue to go up with the underground. Jacobina, we are already I said earlier this year that we have more than replaced our final ounces to replace what we got in mine.

Speaker 1

We had very good success At El Penon, like usual, Cerro Moro, some very good news this year. We didn't really speak a lot about it, but You're going to see. So all in all, in general, we're very confident that we will do like in the past few years. So replace depletion And then maybe add some ounces at some of the operation. I don't know, Henry, if you want to say something else, but we're very confident.

Speaker 6

Go ahead.

Speaker 7

Just Daniel covered it really well. We've had this Very strong targets for the last few years of always replacing depletion. The sites are performing very well. We're fairly confident we'll make that target. And over the last few years, we've seen consistent growth in Jacobina, and I think we'll see that again this year.

Speaker 7

And then obviously, at Canadian Malartic, we're going to see Some growth in resources there and perhaps a conversion of some of that inferred to indicated for that February release.

Speaker 6

Okay. So what I kind of take from that is you've got a good chance of at least replacing production in your reserves and growing your resources this year. And just maybe one last one on Sierra Moro. Can I just have a feel for how much additional material You could unlock if you decide to expand the mill?

Speaker 1

Yes. It's basically our cutoff tenure at Cerro Moro is very high because it's a very high grade mine. When you have a high cutoff underground of 6 gram per ton in the open pit 3 grams per ton, so That mill was built expandable. We know the front end of the mill, so crushing and grinding, it's already above 2,000 ton per day or Processing, no 1,000 to 1100 tons per day right now. That's the max.

Speaker 1

But we know the front end can be able to do more than that. So you'll see in the study what's our thinking. And then sure with expanding the mill, we can expand the resources and reserve because we can mine Lower grade. We have huge potential on the heap leach. We have mentioned earlier that that heap leach Can bring us 40,000 to 50,000 ounces per year more because we're not mining any one Gram type material and then huge land position there, huge target.

Speaker 1

And this is where Henry and the team are going to focus by the end of this year and early next year To bring resources at lower grade that will justify the heap leach option And then the mill option to be to upgrade the mill, it's not very costly. Like I said, it's already planned like that. You just add tanks on the flotation circuit and know the sanitation circuit also to increase capacity. So the unlocking that will permit To mine zones that right now we're mining right next to it underground, we have the development done. But because they're lower than cutoff grade, we don't mine them.

Speaker 1

You have already paid for all the infrastructure ramping down and then getting access. So it will have, but what's the amount of ounces Right now, let us finish the study, then we'll see what we can bring into the mineral inventory.

Operator

The next question is from Mike Parkin with National Bank. Please go ahead.

Speaker 8

Hi, guys. Thanks for taking my question. A follow-up on the inventory comment that you've got excessive inventory now. What's the thought of that going into 2022? Is that something that you would be looking to maintain levels at or draw it down

Speaker 1

And to more normalized levels. Good morning, Mike. We're still in the pandemic, so There's no reason for us to reduce our inventory for now. And the plan right now is to continue. Nothing will change in our planning for, I'll say at least next year and probably the next 3 years forecast that we're going to release the inventories are high, but we benefit of having Our inventory, there was a price to pay in 2020 to do that, but now we're benefiting of having done that right away when the pandemic start Last year.

Speaker 1

Okay.

Speaker 8

And then has there been any discussion with Tony Makuch at Kirkland now that the merger of Equals with Nikolas, it's been announced in terms of like what the vision is on Canadian Malartic. It seems like Possibly, we might be seeing some expansion in budgets for exploration. And certainly with that asset, it's showing quite a bit of upside. So maybe that's

Speaker 1

The answer is no, Mike. Let's them do their Deal closed their deal together later this month or later in November. Then after that, I'm assuming at the management committee level, then Then we're going to have discussions. So we'll speak with Tony at the time when the deal is closed. And then I think on the management committee level where the mines Managed and where Johan and his counterpart at Agnico, the new Agnico will continue to be the same.

Speaker 1

I don't we don't see Any changes and we'll be very happy to provide more money to the exploration as we generate as you know Good strong free cash flow. Malartic has been an amazing on exploration. I mentioned what day 1 today, the discovery of the year with East Goldie and That East Gold is always continuing to grow. So we'll be happy to speak with Tony when it's the time.

Speaker 8

Okay. And then just last one question for me. There's been a lot of chatter around labor tightness in Ontario and Quebec. For Quebec operations, are you seeing much in the way of price pressures to Attract people to the Wazimak project, maintain staffing at Canadian Malartic?

Speaker 1

I'll start with Wazimak. The answer is no. We were able to attract very good people so far for the Wazamak project. We are building the team there. We're close to Rohenorado, so that helps a lot I think To attract people, there's many that are working in the mining industry that work closer from home.

Speaker 1

So we've been able to attract good people at Malartic. The underground project is basically now mostly a contractor thing. We're going to switch to our own employees in April. Next year we have started to hire people. I mean on the staff side point of view where we are Hiring right now, we had no issues so far.

Speaker 1

But we will see when it comes the time to go with the underground. But The open pit will go down in the future. There's people that I've already mentioned, they want to be transitioned from the open pit mining to the underground. So We have already these employees. They're working at the mine for many years.

Speaker 1

They want to stay and learn from the underground. So we're going to start training also Some of our actual manpower at the site. So we have not seen that pressure at these two Operation, but we'll see what happen in the future. But so far, no problem, Mike.

Speaker 8

Great. And one last question. South America has obviously been a bit of a COVID hotspot through the pandemic. That seems to be Turning a corner here with Q3, so a little bit of color in terms of employee availability. How do you guys see that kind of today?

Speaker 8

Is that Kind of best it's been in kind of year to date and thus supporting further that call for a very strong Q4 coming?

Speaker 1

Yes. Like I mentioned, Chile to give an example, we have 100% vaccination rate at the 2 mines. Jacobina is getting close is above 80% now and the same at Cerro Moro for 1st dose And then the vaccine is getting more available than they're getting vaccinated. So Thermo is back in full production now for the last quarter and then this quarter. The other 3 mines we had no issue since the beginning.

Speaker 1

We have no cases at any of our mines. So We've put protocols in place at the beginning and then they're bearing fruit because we're running the mines at full capacity Like before the pandemic. We still have the same protocol at site, but the mines are running like normal. Great. All right.

Speaker 1

That's it for me guys. Thanks very much. Congrats on a good quarter. Thank you.

Operator

Thank you. The next question is from Ralph Profiti with 8 Capital. Please go ahead.

Speaker 9

Thanks, everyone. Good morning. Daniel, my first question is on Jacobina Phase 3 permitting. By your own account, Phase 2 permitting has gone very well, tracking ahead. When it comes to Phase 3, do you think it's probably going to go as smoothly?

Speaker 9

And I'm specifically talking about Incremental issues such as tailings and use of the rail there, if that's going to produce any more sort of scrutiny or more difficulties in getting the permitting for Phase 3?

Speaker 1

Thank you, Ralph. Good morning. So we're going to get permit for Phase 3 when we get the permit next year. So the tonnage of 10,000 ton per day, that's the permit we're going to get. So we need 8,500 tons per day for the 2nd phase, but We have asked the permits like we were doing Phase 3.

Speaker 1

So it's not the permit to 85, then another addendum to increase the permit to 10,000. We had decided to go directly to the 10,000.

Speaker 9

Understood. Okay. My second question is going back to the earlier comment about incremental Canadian Malartic investment now that we have sort of a new and bigger player. Is that changing your thinking on the pace at potential dividend bumps, the pace at which we get NCIB action, just in order for Yamana to sort of build up that balance sheet for maybe bigger capital commitments? No,

Speaker 1

our balance sheet is pristine. So we can afford giving more dividends, buying back more shares and then continue to invest If needed more in Canadian Malartic, we're going at a very high speed pace there to I mentioned the headframe, it's Ahead of plan, now we're working on the other infrastructure. So if we need to spend more money underground at one point, We have I think 12 drills or 14 drills at Manantik right now. Can we go to more drills? Yes, we can.

Speaker 1

But that's not an issue For us to continue to have the same priorities, no, we had 3 before, balance sheet that's fixed, that's fixed. So We're focusing on returning to shareholders and reinvesting in the mines and in the project. But You know that's not an issue for us to put more money at Malartic or any of the other mines. We have increased budget internally to all our mines Exploration budget this year because it's going well and then they have been successful to find more ounces. So that's not an issue.

Speaker 1

We should not hear that's a problem for Yamana even if our partner is a bigger partner. Whatever we decided, we have always decided since day 1 what we want to do at Malartic. I'm assuming it will continue To be the same for both partners. We're fifty-fifty in there and then it's going extremely well. I don't see any changes.

Speaker 1

We At the mine level, we're going to deal with the same people and then maybe on the corporate level, it will be a bit different. But like I mentioned many time and I think both company mentioned on my side and then on Sean's side and Tony's side now in the future, Nothing has ever come to the higher management of the 2 company because there was no problem at the mine level that the management committee It's the Board of Director of the partnership. Never know the 2 groups together disagree on anything. So No, it's going to be almost, it's what, 7.5 years that we were in partnership. It's going to be 8 years in June next year.

Speaker 1

It's been a great partnership and it will continue to be like that In the future.

Speaker 9

Yes. That's really good news. Thank you, Daniel.

Speaker 1

Thank you, Ralf.

Operator

Thank you. There are no further questions registered at this time. So I will turn the meeting back over to Mr. Racine.

Speaker 1

Well, thank you, operator. Thank you all for joining us on our Q3 2021 conference call and webcast. We look forward to sharing more a recap of our full year

Powered by Quartr
Earnings Conference Call
Yamana Gold Q3 2021
00:00 / 00:00