Yamana Gold continues to trade lower despite the recent rally in the price of gold. The company's upcoming earnings report could change the direction of Yamana Gold's stock if it were to impress investors. In fact, there are three important factors that could bring this miner's stock back up.

1. More production -- higher profits
Yamana Gold will release its second-quarter earnings report on July 30. This year, Yamana plans to lower its all-in sustaining costs by 2.3% to $925 per ounce of gold. In the first quarter, the company's all-in sustaining costs reached $820 per ounce -- nearly 4.2% lower than in the same quarter last year.

If Yamana Gold continues to cut its production costs below its annual guidance, this could partly offset the decline in gold prices in the past year. This could mean a rise in profitability compared to the first quarter. Moreover, the rise in production should translate into higher sales quarter over quarter. The upcoming earnings report could provide information regarding Yamana Gold's progress on this front. 

At the same time, its annual production is projected to reach 1.4 million ounces of gold. But in the first quarter, its gold production reached only 271,000 ounces -- an annual pace of 1.08 million ounces of gold. This means the pace of production will have to pick up and reach an average of 376,000 ounces for each of the remaining quarters to bring the annual production to 1.4 million ounces. 

2. Making the Osisko Mining deal work
Yamana's decision to purchase Osisko Mining from Agnico-Eagle Mines hasn't impressed investors due to the high sale price and expected rise in debt to fund this purchase. 

This, among other reasons, is why Yamana's recovery comes down to its ability to turn a sizable profit on this latest acquisition. This includes lowering its cost of production per ounce of gold, bringing the debt down, and improving profitability. 

3. Gold prices
I saved the most obvious reason for last -- the direction of gold prices. The downward trend in precious metal prices changed course in the past couple of months. Moreover, there are signs of a slow recovery in the demand for gold as an investment: SPDR Gold Trust, the world's leading gold ETF, recorded a rise in its gold hoards in the past several weeks to reach more than 800 tons of gold -- the highest level this year.

If the demand for gold continues to pick up, gold prices are likely to follow. As the price of gold slowly rallies, gold producers, including Yamana, will increase their revenues and widen their profit margins. This will also reduce the chances of Yamana revising the valuation of its gold reserves again. 

The bottom line
Shares of Yamana Gold could recover if its upcoming earnings report shows a rise in production, an improving profit margin, and progress in developing its projects. The company may have overpaid for Osisko Mining, but this deal also offers some opportunities for Yamana Gold, which could, over time, bring its valuation back up.

Lior Cohen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.