Please ensure Javascript is enabled for purposes of website accessibility

Why Yamana Gold Inc.’s Stock Is Sinking Today

By Matthew DiLallo - Feb 16, 2018 at 3:46PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The gold miner reported an unexpected loss.

What happened

Shares of Yamana Gold Inc. (AUY -7.88%) slumped on Friday and were down nearly 12% at 2:45 p.m. EST. The culprit was the gold miner's poorly received fourth-quarter results.

So what

Yamana Gold reported a loss from continuing operations of $191 million, or $0.20 per share, which was a far cry from the $0.03 per-share profit that analysts expected. The main issue was that the company took a $356 million non-cash impairment charge relating to the remeasurement of Gualcamayo and related exploration properties in Argentina, which the company is in the process of selling. That writedown was one of several non-cash charges and other items that impacted the quarter to the tune of $250.7 million, or $0.26 per share.

A close-up of a gold nugget in a person's hand.

Image source: Getty Images.

While the company's financial results underwhelmed, "in 2017 we exceeded our production guidance for all metals and did so at costs in line with expectations," according to CEO Peter Marrone. Further, he noted that, "Throughout 2017 and into 2018 we advanced various initiatives to complement cash flow from operations, including the sale of certain exploration assets, refinancing a portion of our debt to extend the tenor of our fixed term debt profile, and initiating a program of strategic evaluation of our portfolio and certain monetization initiatives."

As a result of those moves, the CEO stated that Yamana is "in a strong financial position and are well positioned to deliver a step change in free cash flow in the second half of 2018 and more significantly into 2019," as its new Cerro Moro mine ramps up.

Now what

That rise in free cash will hopefully start creating value for investors, who have suffered as the stock has done nothing but slump in recent years. This potential upside is what makes Yamana one of the top gold stocks to consider buying, as it seemingly becomes even more attractive after today's slide.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Yamana Gold Inc. Stock Quote
Yamana Gold Inc.
$4.38 (-7.88%) $0.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.