Yamana Gold reported that construction activities at its Cerro Moro project in Argentina are on time and on budget. During the fourth quarter, management of the underground and open-pit mine development was transferred from the company's technical services division to its operations unit. In 2017, underground development progressed according to plan and produced a high-grade stockpile of approximately 16,265 metric tons (mt), grading 27 grams per mt (g/mt) of gold and 1,725 g/mt of silver.
In December, open-pit operations began and development activities are now under way at the high-grade Escondida Central pit, where the ore zone starts at surface. The mechanical side of the processing plant was completed by year-end and electrical and instrumentation activities are scheduled to be completed in the first quarter of 2018.
So far, Yamana has invested $172 million at Cerro Moro, which is in line with the planned $178 million. The company expects to achieve commercial production before midyear. During the first three years, annual production at Cerro Moro is expected to be 150,000 ounces (oz) of gold and 7.2 million oz of silver.
In 2017, Yamana met and significantly exceeded production guidance at costs that were consistent with its guidance, explained Peter Marrone, chairman and CEO, Yamana Gold.
Cerro Moro is on schedule to begin operations in a few months, Marrone said. “We expect Cerro Moro to meaningfully increase our cash flows based on its planned strong production of precious metals at low costs, costs that are among the lowest in the industry,” he added. “We are now well-positioned with our six, and soon to be seven, producing mines along with a strong pipeline of advancing assets and opportunities.”
Yamana entered into a copper advanced sales program where it will receive $125 million on January 12 in exchange for approximately 40.3 million lb of copper to be delivered in the second half of 2018 and first half of 2019. This production represents approximately one-third of planned production in the period of the program or approximately 16% of the total production for 2018 and 2019. The copper is expected to be delivered against these prepaid volumes coincident with planned shipments of concentrate from its Chapada mine.
Marrone explained that the program allows a better balance of cash flows quarter-over-quarter. Cash flows that would be generated from the production and sales of copper in later periods is being realized in this quarter, which is normally a weaker quarter for cash flows and, in this case, also coincides with the final quarter of significant capital expenditure in relation to Cerro Moro, he added.