Shiny investment prospects are a dime-a-dozen in the precious metals realm, but there is only one Yamana Gold
When a Fool can pinpoint a deep-bargain share price for an ultra-low-cost operator with tremendous production growth potential, and apply even the more conservative outlooks for continued increases in the gold price, I maintain that the resulting outlook for this stock approaches a richness that is virtually without peer among producers of its scale. For the fourth quarter, Yamana extracted $173 million in adjusted net profit from record revenue of $535 million; yielding a gorgeous net profit margin of 32%.
Consider this juicy tidbit: Thanks to the company's 188 million pounds of low-cost copper production to offset its gold mining costs, Yamana expended only $50 to procure each of the 1.05 million gold equivalent ounces (GEOs) the company mined during 2010! With gold averaging more than $1,200 for 2010, Yamana logged a year for the industry's record books with a competition-busting 4-digit cash margin per GEO. Yamana's per-ounce profitability continues to outrank those of much larger producers like Barrick Gold
While Yamana's industry-leading cost structure is reason enough to propel the stock to the top of a Fool's golden watchlist, it's the company's incredible outlook for both organic reserve growth and organic production growth that really gets me singing the stock's praises year after year. The company's performance on both fronts during 2010 glistens with the promise of more to come. Alongside Goldcorp
Partly as a result of that exploration success, Yamana expanded the scale of its targeted four-year production growth spurt from 50% to 65%, and now eyes massive 2014 output of more than 1.7 million GEOs. That growth will be fed by four new mines coming online in 2012 and 2013, and is wholly independent of any eventual production from the Agua Rica project in Argentina. For those who enjoy considering the very long-term outlook, consider that Agua Rica alone accounts for more than one-third of Yamana's GEO reserves, and a gargantuan 80% of the company's 12.2 billion-pound copper hoard.
While non-producing exploration plays like Seabridge Gold