Yamana Gold Q3 Profit Falls 60%; Lowers FY09 Production Outlook

11/3/2009 9:58 PM ET

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(RTTNews) - Canada-based gold mining company Yamana Gold Inc. (AUY: News ,YRI.TO: News , YAU.L) on Tuesday reported a 60% fall in profit for the third quarter compared with last year, hurt by a loss on commodity derivatives compared to a hefty gain on commodity derivatives in the year-ago period. The company also reported a lower foreign exchange gain for the quarter. Excluding items, adjusted earnings per share more than doubled from a year ago, but missed analysts' consensus estimate by a penny. The company lowered its production outlook for fiscal year 2009.

Third-Quarter Results

The company's net earnings for the third quarter dropped to US$60.82 million or US$0.08 per share, from US$150.20 million or US$0.21 per share in the year-ago quarter.

The results for the latest quarter include stock-based compensation of US$1.8 million, foreign exchange gain including discontinued operations of US$6.7 million, unrealized loss on derivatives including discontinued operations of US$21.0 million, and future income tax expense on foreign currency translation of inter-company debt of US$18.9 million.

The year-ago quarter's results include foreign exchange gain of US$45.10 million, unrealized gain on derivatives of US$138.93 million, write-off of investments of US$22.72 million, write-off inventory of US$11.06 million and future income tax expense on foreign currency translation of inter corporate debt of US$33.39 million and mark-to-market on unsettled concentrate sales of US$38.38 million.

Adjusted earnings for the latest quarter rose to US$88.34 million or US$0.12 per share from US$31.50 million or US$0.05 per share in the year-ago quarter. On average, fifteen analysts polled by Thomson Reuters expected the company to report earnings of US$0.13 per share for the quarter.

The company noted that net earnings and adjusted earnings for the latest quarter were impacted by a deferred tax provision of US$0.03 per share.

Revenues for the quarter surged 50% to US$333.18 million from US$221.62 million in the year-ago quarter. Analysts had a consensus revenue estimate for the quarter of US$357.66 million.

Mine operating earnings for the quarter were US$136.42 million, representing a 138% increase from US$57.24 million in the year-ago period. The increase in mine operating earnings for the quarter was mainly due to increased sales in all metals and higher prices for gold and silver, partially offset by lower copper prices.

Yamana's average realized price for gold rose to US$962 per ounce from US$861 in the year-ago period, while the average realized price for silver increased to US$14.97 per ounce from US$14.56 per ounce a year ago. The average realized price for copper declined to US$2.74 per pound from US$3.45 per pound in the prior-year period.