Had our recent series been titled "The Best Stock for the Next Two Weeks," I would have some serious bragging rights today.
We won't be hearing the final numbers until late March, so it was nice to get a sneak peek at the December results, even though they were limited to rough production figures. The numbers were actually light. For example, less copper/gold concentrate was produced at Chapada, resulting in fewer gold ounces from the young Brazilian mine, which is still working out kinks on the way to full capacity.
The outlook put forth by Yamana was solid, but I didn't see anything that increased the shares' appeal. The company bumped up production guidance for both 2008 and 2009, but cash costs were forecast higher than I expected. That said, projections use a $700 per ounce gold price, and actual costs should come in lower.
For better or worse, Yamana is one of the lower-cost gold producers. It's perverse, but in a rising gold price environment like today's, folks sitting on uneconomic assets experience a greater boost in valuations when they find their marginal mines or deposits profitable.
On the chance that gold continues its run toward $1,000 an ounce, Yamana has little upside, according to the analysts at RBC Capital Markets. But let's not get greedy -- Yamana has outperformed the streetTRACKS Gold Trust