Stick with Yamana Gold despite share price weakness
YAMANA GOLD (AUY) 344p
Loss to date: 25.2%
Original entry point: Buy at 460p, 22 October 2020
The first three months of 2021 have been strong in operational terms for gold miner Yamana Gold (AUY), but that hasn’t been reflected in its share price as the reopening of society leads investors to ditch the safe haven of gold in favour of riskier assets.
Miners are leveraged plays on the commodities they produce and this works both upwards and downwards, with the 25% fall in the share price since we said to buy – shortly before the first Covid vaccines received authorisation – exceding a 6.5% drop in the gold price in that timeframe.
Importantly the firm reported decent first quarter growth with net earnings of $54.7 million compared to $45 million a year earlier, with net free cash flow of $123.5 million, up from $91.1 million in the same quarter a year ago. Net debt also decreased by $26.6 million in the period.
The assets analysts are most focused on, its Canadian Malartic mine and its Jacobina mine in Brazil, both had standout quarters with production ahead of expectations, along with its Minera Florida mine.
Yamana Gold continues to increase production and free cash flow, and bring down its debt. As such, we remain positive on the stock.
SHARES SAYS: Focus on the long-term and use the dip as a buying opportunity.