As the major indices dip back into unwelcomed weakness, investor portfolios the world over are again seeing more red ink than black. One intrepid mining company, however, continues to see nothing but gold.
Yamana Gold
Already sporting some of the lowest mining costs in the industry, Yamana sees those costs dropping further going forward. At a cash cost of $375 per ounce or less for 2009, and less than $300 per ounce once by-product credits are factored in, Yamana's projected cost structure is superior even to an efficient producer like Goldcorp
This Fool was particularly relieved to see that Yamana locked in fully one-third of the company's projected 2009 copper production at about $3 per pound ... twice the current spot price. An epic decline in copper prices is testing the mettle of leading producers like Southern Copper
Adapting to the uncertain economic environment, Yamana has deferred some longer-range development initiatives in order to focus more intently upon core projects like Gualcamayo and Jacobina. The streamlined budget calls for capital expenditures of about $350 million this year, and $400 million in 2010. With golden cash flows from its low-cost mining operations, $160 million in cash as of year-end 2008, and an untapped credit facility of $250 million, I see a gold miner ready to cash in on some serious organic growth.
I have been cautious on several precious-metal miners during the recent rally precisely because of concerns relating to weak prices for by-product metals like copper and zinc. Even my top pick for 2009, Agnico-Eagle Mines
Further freshly mined Foolishness:
- Gold will retain its luster.
- The U.S. dollar is a key component of the gold price.
- Demand recovery for metals is on the horizon.
