Annual Report 2020
Strategy Strength
Resilience
YAMANA GOLD is a Canadian-based precious
metals producer with significant gold and silver
production, development stage properties,
exploration properties, and land positions
throughout the Americas, including Canada, Brazil,
Chile and Argentina. Yamana plans to continue
to build on this base through expansion and
optimization initiatives at existing operating mines,
development of new mines, the advancement of
its exploration properties and, at times, by targeting
other consolidation opportunities with a primary
focus in the Americas.
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10
Executive Chairman Message
President and CEO Message
17 Mineral Reserves and Mineral Resources
27
2020 Financial Review
169 Corporate Governance & Committees of the Board
170 Corporate Information
Executive Chairman Message
Strategy, Strength, Resilience
We will remember 2020 as a year in which we experienced a
great deal of uncertainty, with the pandemic testing the strength
and resilience of countries, communities, and businesses around
the world. While we were not exempted, our people rose to the
challenge, exemplifying the courage, commitment, and compassion
that underpin our culture and values. We remain saddened by
the loss of life and health and financial harm brought on by the
pandemic. We are, however, grateful that we were able to prevent
harm to people we employ and in local communities and, financially,
remain comparatively unscathed.
Peter Marrone
Executive Chairman
Annual Report 2020
1
Executive Chairman Message (cont.)
Since the emergence of the pandemic, we have taken
there yet. Yamana will continue to manage its business
decisive action to ensure business continuity, mitigate
in a way that respects and is mindful of the impact that
supply chain risk, and above all, protect people in our
COVID-19 has had and could have on local communities.
employ and in the communities in which we operate.
Precautionary measures such as physical distancing and
enhanced health screening are now fully embedded across
our operations. And the use of contact tracing protocols,
testing, and quarantine allowed us to quickly isolate cases
when they did occur and prevent spread of the disease. We
have now begun a vaccination program as well.
We exited the year with
cash balances of almost
$430 million, our highest
level since 2011.
This rapid yet careful planning and execution have shown
that it is possible to manage risks posed by COVID-19 while
Increased financial flexibility to realize
capital allocation objectives
The strength and resilience of our business was evident in
our financial results and strategic advances last year. We
had a very strong year for cash flows, further strengthening
our cash position and financial resilience. Operating cash
flows in 2020 before net change in working capital were
almost $700 million, and free cash flow before dividends
and debt repayments was just below $300 million—more
than 200 percent higher than 2019.
We exited the year with cash balances of almost
$430 million, our highest level since 2011. This does not
include the more than $220 million in cash acquired upon
completion of the agreement to integrate the Agua Rica
project with the Minera Alumbrera plant and infrastructure.
That cash is available for utilization by the integrated entity,
which is now known as the MARA project. I will discuss
MARA in more detail later in this letter.
continuing to operate and support our host communities.
Our increasing cash balances allowed us to achieve our
In the past year, we have donated critical equipment and
objective of a net debt to EBITDA ratio of below one,
supplies such as face masks, hand sanitizer, respirators;
assuming a bottom-of-cycle gold price of $1,350 per ounce.
provided food packages to those in need; and made site
Furthermore, with our current and expected growth in
medical teams and ambulances available to support local
cash balances we have a best-in-class balance sheet and
health authorities. With vaccines now being distributed
the financial flexibility to meet our three capital allocation
around the world, there is hope that we may be closer to
objectives: a continued focus on financial strength and
turning a page on this global health crisis. But we’re not
resilience with increasing liquidity; investing in targeted
growth opportunities particularly at our current operations
as well as exploration to ensure our future; and maximizing
returns by paying, maintaining, and increasing dividends.
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Yamana Gold
780k oz
gold
10.4M oz
silver
Ultimately, we believe we can effectively manage and
Continue on our steady path
reinvest in our business with growth that begins with the
drill bit, fund our obligations, improve our financial strength
and resilience, and have sufficient cash available to pay and
increase our dividend. This is exactly what we are doing,
prudently advancing key projects, maintaining capital
discipline, and consistently raising our dividend, including
a 50 percent increase in the fourth quarter of 2020. For
further reference, since the second quarter of 2019, we
have increased our dividend by 425 percent to $0.105 per
share or $100 per gold equivalent ounce (GEO).
The dividend rate of $100 per GEO is now our new
dividend floor. Consistent with our dividend policy, we
have sufficient cash reserves on hand to support payment
of the dividend at the current level for many years. The
We have, in short, clearly defined strategic priorities. These
priorities have not changed in recent years and are unlikely
to anytime soon as we believe they are foundational to our
success. We will therefore continue to focus on advancing
the compelling growth opportunities at our existing
operations. We will continue to invest heavily in exploration
to replenish our mineral reserve and mineral resource base.
We will continue to maximize free cash flow and prioritize
shareholder returns. Finally, we will continue to advance
and opportunistically expand our project pipeline while
exercising capital discipline and restraint.
Odyssey underground project a go,
and key cog in long-term growth
reserve fund provides us with the flexibility to pay the
Our asset portfolio includes an outstanding mix of
dividend at the new floor for an extended period, even in
advanced and early stage projects, perhaps none more
a bottom-of-cycle gold price environment.
exciting than the Odyssey underground project at our
Portfolio optimization
We continued to optimize our portfolio in 2020,
monetizing certain assets including a large portion of our
stake in certain public companies which we owned as a
result of the sale of non-core assets and a royalty portfolio.
Portfolio optimization does not merely refer to asset
monetization. It is also about taking steps to improve and
optimize our existing assets, be it by debottlenecking,
improved mine modeling, or right-sizing operations, as we
have done at Jacobina and El Peñón in recent years. In this
way, we position ourselves to further maximize cash flow
and increase shareholder returns.
Canadian Malartic mine.
We announced the approval for construction of the
Odyssey project earlier this year in a decision that marks
the beginning of the transition of Canadian Malartic from
an open pit mine to an underground operation. We knew
in 2014, when we acquired our 50 percent interest in
Canadian Malartic, that there was a future underground
opportunity, although we didn’t know it would be this big.
As of year-end 2020, mineral resources for the project had
grown to approximately 14.4 million ounces of gold (100
percent basis) in just six years. That includes a year-on-
year increase of four million ounces.
The transition to underground mining will take place over
approximately six years, from 2023 through 2028. Ore
Annual Report 2020
3
Executive Chairman Message (cont.)
We will continue to
maximize free cash
flow and prioritize
shareholder returns
from the upper zones will be transported to surface via
Phase 1 in June 2020 at a higher-than-planned steady state
ramp, with first production expected in 2023. Ore from
throughput of approximately 6,800 tonnes per day (tpd).
the lower zones will be transported to surface via shaft
This increased annual production to approximately 180,000
and is expected to commence by 2027. This model is very
ounces of gold, up from just 75,000 ounces in 2014.
favourable for project economics, as cash flows derived
from the approximately 932,000 ounces that are expected
to be mined from the upper zones during the transition
period will be used to fund ongoing construction. I would
not be doing justice to this development and production
plan were I to call it anything but brilliant! We commend
mine management for creating this plan along with our
partner’s management for their critical assessment and
peer review of the plan. The plan brings forward production,
fills an otherwise large production gap as Canadian Malartic
transitions from open pit to underground mining, and
brings forward cash flows without adversely affecting the
value of the underground. In the process, capital risk is also
mitigated: assuming a $1,550 per ounce gold price, which
is the gold price used in the Odyssey technical study, this
would reduce the projected capital requirements for the
project by over 50 percent.
When fully ramped in 2029, Odyssey is expected to
produce an average of approximately 545,000 ounces
of gold per year through 2039, with total cash costs of
approximately $630 per ounce. What’s more, the current
We are now advancing the Phase 2 expansion, which
will increase throughput to 8,500 tpd and raise annual
production to 230,000 ounces, a 28 percent increase
from current levels. Phase 2, which is not expected to cost
more than $57 million, is also expected to reduce costs
and generate significantly more cash flow and attractive
returns. Engineering, permitting, and procurement of long
lead-time items for Phase 2 has already begun.
With continued exploration success at Jacobina—which
replaced depletion in 2020 and added approximately
300,000 ounces of additional mineral reserves—we have
begun a conceptual study for a Phase 3 expansion that
would increase throughput to 10,000 tpd and bring annual
production to 270,000 ounces. We will provide updates
as our evaluation progresses, but the takeaway should be
clear: Jacobina is a standout operation with significant
further upside.
El Peñón the embodiment of Yamana
culture and values
plan only factors in half of the project’s 14.4 million ounces
While Daniel will delve into our operations in greater detail
of mineral resources, meaning there is excellent potential
in his letter, I would be remiss if I did not devote some
to add more production and extend mine life significantly
space to El Peñón. El Peñón, in many ways, is emblematic
beyond 2039.
of the strength, resilience, and strategic knowhow that
sets Yamana apart. It has implemented a number of
Jacobina phased expansion continues to advance
successful strategic transformations through the years,
The Jacobina phased expansion is another compelling
growth project. We began the project in 2018, completing
not least of which was the rightsizing of the operation in
late 2016 that aligned costs to production, increased cash
flows, and extended mine life. The operation is nothing
4
Yamana Gold
Odyssey expected
to produce
545,000 ounces
of gold per year
through 2039.
Executive Chairman Message (cont.)
22nd
year of production
for El Peñón
if not resilient. In its 22nd year of production, El Peñón
The integration also underscores the advantages of
continues to replace mineral reserve depletion—a feat
partnership in pursuing mining opportunities and
that it accomplished yet again in 2020—and generate
enterprises. Case in point: the partnership with Glencore
new discoveries. We regularly cycle El Peñón’s people to
and Newmont has facilitated an integration agreement
our other operations and bring employees from other
that effectively turns what was a higher risk greenfield
operations to El Peñón to further embed the operation’s
project into a low-risk brownfield project. It enhances
can-do spirit, grit, and tenacity across the company.
project economics, simplifies permitting, and reduces the
El Peñón will continue to be an integral part of our production
platform, and an important part of our 10-year base case
production outlook for 1 million GEO per year through 2030.
Integration agreement gives rise to MARA project
We have high hopes that our majority-owned MARA
project will, in the decades to come, prove as successful
as El Peñón. As mentioned above, the project, located in
Argentina’s Catamarca Province, is comprised of what was
formerly known as the Agua Rica project and the nearby
Minera Alumbrera plant and infrastructure. Yamana holds
a 56.25 percent controlling interest in the MARA project,
Glencore International AG holds a 25 percent interest, and
Newmont Corp. holds an 18.75 percent stake.
The integration of Agua Rica and Alumbrera creates
project’s environmental footprint, significantly increasing
the value of the project. Yamana will continue to lead
the engagement with local, provincial, and national
stakeholders as well as completion of the feasibility study,
which is expected in 2022.
MARA is one of the
largest undeveloped
copper-gold deposits in
the world.
significant synergies by combining the existing
Our joint venture agreement for the Suyai gold project in
infrastructure from Alumbrera, a former operating mine
Argentina is another example of the benefits of partnership.
whose infrastructure includes processing facilities, a fully
Quite simply, the joint venture, with a well-respected
permitted tailings storage facility, logistical installations,
Argentina-based company that understands the country’s
and ancillary buildings, with the Agua Rica copper-gold
regulatory and approval process, significantly improves
deposit. Agua Rica is one of the largest undeveloped
the chances that Suyai will be developed. Hence, it made
copper-gold deposits in the world with 11.8 billion pounds
sense for us to enter this agreement as it is better to have 60
of proven and probable copper mineral reserves and
percent of an outstanding gold mining project that proceeds
7.4 million ounces of proven and probable gold mineral
to development than 100 percent of a dormant project.
reserves (100 percent basis).
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Yamana Gold
Wasamac project a high-quality addition to portfolio
exacerbated by the pandemic as governments around the
Our acquisition of Monarch Gold Corporation is an
excellent example of opportunistic portfolio expansion
coupled with financial discipline and restraint. The
transaction added Monarch’s principal asset, the Wasamac
project, to our pipeline at a very reasonable price paid for
with a modest amount of cash and stock. In exchange, we
received a high-quality underground project located in
Quebec’s prolific Abitibi District, a region where we have
deep operational and technical expertise, as it is home to
our Canadian Malartic mine.
Wasamac has proven and probable mineral reserves of
1.8 million ounces of gold that are supported by a feasibility
level study completed in 2018. This is consistent with our
criteria for evaluating growth opportunities, which call for
projects with mineral reserves and mineral resources of at
least 1.5 million ounces of gold and the potential to support a
mine plan with annual production of at least 150,000 ounces
for at least eight years. Wasamac meets these criteria, and
we are confident it will deliver robust returns, significant
cash flows, and accelerated payback. Indeed, we believe the
project has excellent potential for further expansion, and we
are in the process of updating the Monarch feasibility study,
which we expect to complete in the third quarter of this year.
Gold price resilience
world added double-digit trillions in stimulus spending to
combat economic disruption wrought by the pandemic.
Debt-to-GDP levels are at unprecedented levels, yet
stimulus spending is likely to persist as central banks
endeavour to manage the economy. At the same time, as
the pandemic subsides, pent-up demand for everything
from cars and other luxury items to travel to simply
enjoying an evening out again will drive an inflationary
cycle in what is sure to remain a low interest rate
environment. All of that is supportive of gold.
While we may see the price of gold fluctuate near term, as
has been the case in the early part of 2021, the underlying
fundamentals support a higher gold price longer term.
Ultimately, more investors will recognize this and the sector
rotation that began in the latter half of 2019 will accelerate.
Follow the money
While we believe investors, specialists and generalists alike,
will increase their exposure to gold equities, we also believe
that it is our obligation to seek out investors wherever they
may be or, put another way, it is our obligation to follow
the money.
That is why we listed on the London Stock Exchange this
past October. There are large pools of investor capital
A word on gold price. Many of the factors that positively
in the United Kingdom, Europe, the Middle East, and
impacted gold in 2020 were in place before the onset
Asia, and a dearth of senior gold miner listings on this
of the global pandemic: geopolitical uncertainty, socio-
venerable exchange, particularly those that offer exposure
economic imbalances, global trade tensions, low interest
to a portfolio of high-quality assets in politically stable
rates, and elevated levels of government debt. These
jurisdictions in the Americas. Furthermore, Yamana’s focus
issues remain and some, notably government debt, were
on sustainability, financial performance, and cash returns
Annual Report 2020
7
Executive Chairman Message (cont.)
We are now listed
on the London
Stock Exchange
to shareholders are a great hand-to-glove fit with the
commitment to the transition to a low-carbon future.
values and priorities of these investors who, by choice or
Our climate strategy includes the adoption of two
necessity, prefer to invest in London-listed companies.
targets: a 2° Celsius science-based target (SBT) and an
It will take time to build a following in London, and
clearly the pandemic has prevented us from holding
face-to-face meetings with prospective investors and
building relationships with them. We look forward to
that opportunity and we are confident that our London
listing will improve our overall liquidity and expand our
share register.
Adoption of board-approved climate strategy
aspirational net-zero 2050 target. The targets will be
supported by foundational work being performed this
year to establish a multi-disciplinary climate working
group, determine our emissions baseline, develop the
greenhouse gas (GHG) abatement pathways required
to achieve the 2° Celsius SBT and establish preliminary,
operations-specific roadmaps that describe abatement
projects, and estimated costs and schedules. These
actions will help ensure that our long-range GHG
reduction efforts are supported by practical and
From our earliest days, we have placed a relentless
operationally focused short-, medium-, and long-term
focus on ensuring our business responds to critical
actions to achieve our targets.
sustainability imperatives. Holding ourselves to high ESG
and sustainability standards underpins our social license
to operate, creates positive social outcomes for the
communities we serve, and is fully aligned with running a
profitable business and attracting investment.
For some, the idea of a social license to operate is a
notional one. At Yamana, it is quantified and integrated
into our strategy and operations through key metrics like
our Social License to Operate Index, which is based on
quarterly surveys that measure local perceptions of our
ESG performance. We are proud to have developed this
approach to measuring how responsibly we are operating,
and we will continue to tailor this tool to ensure it remains
market leading.
Earlier this year we
formally adopted a
board-approved climate
strategy to transition to a
low-carbon future.
Our climate strategy, I would add, is a continuation of our
climate change actions begun in 2018. Those actions have
We are taking a similar quantitative approach to
focused on climate adaptation to ensure our operations
climate change. Earlier this year, we formally adopted
are resilient and can adjust to the changes that may occur
a board-approved climate strategy, underscoring our
with a changing climate in terms of energy efficiency, water
availability, and biodiversity. This work will continue.
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Yamana Gold
Strategy, strength, resilience
I will end where I began. While 2020 was a year like no other,
we were able to overcome the challenges posed by the
pandemic and advance opportunities. We were able to do
this with a clearly defined strategy underpinned by a strong
portfolio of mines and projects and a very talented and
tenacious workforce, management, and board of directors.
We developed and deployed strategies to advance and
improve our business, we made that business stronger,
and we created resilience that will ensure the sustainability
and durability of our business. I would like to express my
gratitude and appreciation to Yamana’s employees for
their dedication and commitment through these most
unprecedented of times. I could not be more proud.
“Peter Marrone”
Peter Marrone
Executive Chairman
Performance
Highlights
• Formally adopted a board approved
climate strategy underpinned by the
adoption of two targets:
• 2° C science based target
• Aspirational net zero 2050 target
• 16% improvement in our social
license since 2018 as measured by
third party SLO Index
• Best in class tailings management
governance and systems that include
regular 3 rd party reviews & monthly
oversight by senior management
• Zero process water discharge
• 18% reduction in the total recordable
injury rate (TRIR) since 2018
• 5th consecutive year with no
material environmental spills or
incidents
Annual Report 2020
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President and CEO Message
Tenacity and talent
drive strong performance
Working with tenacity is one of Yamana’s core values. Our success
depends on the commitment, persistence, and determination of
our people, and I can state unequivocally that our people showed
remarkable tenacity last year in the face of the uncertainty caused
by the pandemic. They went the extra mile in support of their
colleagues and communities and drove our strong operational,
financial, and safety performance.
Daniel Racine
President and Chief
Executive Officer
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Yamana Gold
14%
decrease in total
recordable injury rate
from 2019
Last year, our total recordable injury rate improved to 0.49,
financial flexibility to pursue our growth initiatives and
a 14 percent decrease from 2019. We also successfully
increase shareholder returns.
completed our first year of implementation of objectives
associated with the Mining Association of Canada’s
Jacobina continues to outperform
Towards Sustainable Mining Framework, a globally
recognized sustainability program that supports mining
companies in managing key environmental and social risks.
Yamana has always prioritized the health and safety of its
workers and communities, environmental protection, and
supporting the development of sustainable communities
where it operates. The adoption of a board-approved
climate strategy that sets clear, science-based targets
underscores this commitment to ESG excellence and is a
natural extension of our business approach.
Strong operational and financial results
We produced 901,155 gold equivalent ounces (GEO) last
year, which exceeded our original guidance for 890,000
GEO and was in line with the plus or minus three percent
variance range of our revised guidance. Production at
Jacobina, Canadian Malartic, El Peñón, and Minera Florida
all came in well above plan.
Our operating earnings surged to $702.4 million in 2020,
a 96 percent year-over-year increase. This was partly due
to a net impairment reversal of $191 million—more on
that later—but it also reflects the strong performance at
our mines. Furthermore, we were able to generate higher
operating earnings in spite of temporary suspensions at
Canadian Malartic and Cerro Moro due to government-
ordered restrictions on the mining sector related to
COVID-19. Our strong earnings and cash flows allowed
us to strengthen our balance sheet, further increasing our
Jacobina continues to be a standout performer,
consistently exceeding expectations. The operation posted
record full-year production in 2020 and increased year-
on-year production for the seventh year in a row. Jacobina
also replaced 2020 depletion of gold mineral reserves and
added 300,000 ounces of new mineral reserves.
Our operating earnings
surged to $702.4 million
in 2020, a 96% year-over-
year increase.
Mineral resources in the measured and indicated and
inferred categories also increased last year, bringing the
aggregate year-on-year increase in gold mineral reserves
and mineral resources to 823,000 ounces. The increase
further reinforces Jacobina as a multi-decade operation
and supports the Phase 2 expansion, which will increase
throughput to 8,500 tonnes per day (tpd) and lift annual
production to 230,000 ounces of gold per year. And,
as Peter noted in his letter, we are currently evaluating
a potential Phase 3 expansion that would increase
throughput to 10,000 tpd and raise annual production to
270,000 ounces.
Annual Report 2020
11
President and CEO Message (cont.)
Canadian Malartic exceeds production guidance
I can tell you that, in all my experience, I have never been
Production at Canadian Malartic of 284,317 ounces in
2020 (50 percent basis) exceeded our revised guidance
by nearly 10,000 ounces. The guidance revision came on
the heels of a temporary suspension in early spring due to
restrictions on mining in Quebec related to COVID-19.
Mining was subsequently declared an essential industry
by the province and the operation ramped up quickly but
safely, posting record throughput in the fourth quarter. We
expect Canadian Malartic to return to more normal levels
of production this year, with guidance for 350,000 ounces
of gold (50 percent basis) at all-in sustaining costs of $850
to $885 per ounce, down from $945 per ounce in 2020.
Currently, in the open pit, mining is transitioning from
the Canadian Malartic pit to the Barnat pit, which is now
in commercial production. Seventy percent of the total
tonnes mined in 2021 are expected to come from Barnat.
With the approval to construct the Odyssey underground
project, the operation will shift progressively from open
pit to underground mining beginning in 2023. To help
facilitate this transition, Yamana optimized the design of
the Barnat pit, adding 290,000 ounces to mineral reserves
(100 percent basis), which will help fill the production gap
between 2026 and 2029 as the operation completes the
transition to underground mining.
as excited about a project as I am about the Odyssey
underground project.
Future Odyssey mine to
be a modernized electric
underground operation.
Odyssey hosts three main underground-mineralized
zones: East Malartic, the eponymously named Odyssey
zone, and East Gouldie. We disclosed the East Gouldie
discovery in September 2019, and it’s fair to say it was a
game changer. It is the largest and most profitable of the
three zones due to its higher grades and tonnage. Last year,
exploration increased the inferred mineral resource at
East Gouldie by 134 percent to 6.4 million ounces of gold
(100 percent basis). Average grade is 3.17 grams per tonne.
With further exploration along East Gouldie’s 1.4-kilometre
strike length, which remains open to the east and at depth,
we believe that additional mineralization will be added to
the Odyssey mine plan in the coming years.
Odyssey underground a world-quality project
One additional point on the future Odyssey mine: it will be
I have spent a large part of my career working in Quebec’s
a modernized electric underground operation. All major
Abitibi District. You might even say that I cut my teeth,
mobile production equipment such as trucks, scoop trams,
literally and figuratively, on the gold-bearing pyrites of
jumbos, bolters, and longhole drill rigs will be electric
some of the province’s most well-known gold mines:
powered, greatly reducing the operation’s carbon footprint.
LaRonde, Goldex, and of course, Canadian Malartic.
On the two main levels with loading pockets, trucks and
12
Yamana Gold
Exploration success and increased mineral
reserves at El Peñón unlocks opportunities to
incrementally increase production
hammers will be remotely operated 24 hours a day, seven
processing capacity. The mine can process approximately
days a week from a surface control room, significantly
4,200 tpd, which represents upside of 20 percent to
increasing equipment utilization.
30 percent above currently budgeted levels, with no
Odyssey, in sum, is a world-quality project, and together
additional capital expenditures required.
with our recently acquired Wasamac project, which is
One final point on El Peñón: due to the operation’s
located just 100 kilometres west of Canadian Malartic, our
consistently high production levels, sustained cost
production pipeline in Quebec will last for generations.
reductions, and significant exploration successes in
El Peñón replaces gold mineral reserves
reversed impairment losses recorded in 2015 and 2016
for third straight year
totaling $560 million.
recent years, in the fourth quarter of 2020 Yamana
El Peñón had another strong year, producing 216,749 GEO,
well above our original guidance and revised guidance
Firmly committed to Cerro Moro
for 209,000 GEO and 202,000 GEO, respectively. We
The impairment reversal at El Peñón was partially offset
expect to produce 222,000 GEO in 2021, underpinned
by an impairment charge of $369 million recorded in
by production from higher-grade zones. We also expect
the fourth quarter for Cerro Moro, resulting in the net
the operation’s costs to decline this year, with cash costs
impairment reversal of $191 million that I referred to above.
forecast in the range of $620 to $660 per GEO and all-in
sustaining costs projected at $835 to $870 per GEO.
That compares to $657 per GEO and $922 per GEO,
respectively, in 2020.
Cerro Moro was significantly impacted by COVID-19
due to inter-provincial travel restrictions in Argentina,
which impacted mine employees travelling from within
and outside of Santa Cruz Province. The restrictions—
El Peñón replaced gold mineral reserve depletion for the
which followed a three-week, government-ordered
third straight year in 2020. At year-end, mineral reserves
suspension on mining in Argentina in early spring—were
stood at 921,000 ounces of gold compared to 764,000
particularly stringent in December and resulted in lower
ounces at year-end 2017. Gold and silver measured and
than planned production for the quarter and for the
indicated mineral resources increased by 16 percent and
year. However, unlike many other mining operations in
17 percent respectively last year while inferred gold mineral
Argentina, Cerro Moro was able to operate continuously
resources rose 16 percent, providing additional targets for
through December and production in the fourth quarter
infill drilling in 2021.
was the highest of the year.
The exploration success and increased mineral reserves
We are firmly committed to Cerro Moro, investing
unlocks opportunities to incrementally increase
heavily in exploration drilling on the large mine property
production at El Peñón by leveraging the operation’s excess
and surrounding area, which together exceed 300,000
Annual Report 2020
13
President and CEO Message (cont.)
hectares. Our current efforts are focused on both the core
increase monthly throughput from 2,450 tpd to 3,300 tpd
mine area and new mineralized zones close to existing
with a corresponding production increase of up to
mineral reserves.
120,000 ounces of gold per year at all-in sustaining costs
below $1,000 per ounce.
Further upside is available from significant mineralization
that could potentially be mined economically using lower-
cost heap leach processing, which would occur in parallel
with the existing processing plant, potentially extending
mine life. Although COVID-19 related disruptions
impacted our ability to add new inferred mineral resources
in 2020, approximately 56,000 ounces of gold inferred
mineral resources have been added as potential heap leach
inventory. Our evaluation of the heap leach opportunity is
in the early stages, with a preliminary study completed and
metallurgical lab testing currently underway.
Momentum at Minera Florida continues
Our mineral reserves
increased to 13.81 million
ounces of gold at year-
end, up from 7.86 million
ounces at year-end 2019.
Minera Florida, I am pleased to report, sustained the
Replaced mineral reserve and
momentum generated in 2019, exceeding full year 2020
mineral resource depletion
production guidance and posting outstanding fourth
quarter results. The operation produced 26,352 ounces of
gold in the fourth quarter, its highest quarterly production
since 2010 and the second highest since the mine entered
production in 1986, excluding gold production from the
reclamation of historic tailings.
Minera Florida also continued to generate robust
exploration results in new production sectors of the mine,
notably Patagua and Don Leopoldo, as well as newly
explored areas such as La Flor Oeste and Bandolera.
These results are expected to drive incremental
production growth and support a low-cost opportunity
to increase capacity at the mine’s existing processing
plant. Our long-term strategy at Minera Florida is to
Our exploration successes allowed us to replace mineral
reserve depletion at our operating mines in 2020. Overall,
our mineral reserves increased to 13.81 million ounces of
gold at year-end, up from 7.86 million ounces at year-end
2019. This includes 1.8 million ounces from the recently
acquired Wasamac project, 4.15 million ounces from the
MARA project (56.25 percent basis) and the previously
mentioned increase in mineral reserves from Jacobina and
El Peñón.
Measured and indicated mineral resources climbed to
14.60 million ounces from 12.67 million ounces a year
earlier, while inferred mineral resources rose to 15.71 million
ounces from 12.01 million, including a notable increase at
East Gouldie of 1.84 million ounces (50 percent basis).
14
Yamana Gold
1m GEO/year
steady state production
for next several years
Silver mineral reserves increased to 112.80 million ounces
Well-positioned to thrive
from 63.82 million ounces, largely due to the addition of
the MARA project to our mineral reserve inventory.
In addition to its gold and silver mineral reserves, MARA
also adds 6.70 billion pounds of copper (56.25 percent
basis) to our mineral reserve inventory, a fact that
often goes overlooked. Copper is a metal that is on the
rise, a green metal that is a key raw material in electric
vehicles and renewable power infrastructure. With the
MARA project, Yamana is the majority owner of one of
In closing, I would like to acknowledge and thank our
employees for their dedication and commitment through
one of the most challenging years in living memory.
Yamana is well-positioned to thrive, both near term and
long term, underpinned by our outstanding asset portfolio,
a robust balance sheet, strong ESG performance, and most
of all, our talented and tenacious people.
the lowest capital intensity copper-gold projects in the
“Daniel Racine”
world. We have a range of options to realize value from
this outstanding project and, ultimately, the market will
recognize that value.
Daniel Racine
President and Chief Executive Officer
Long-term production upside
Looking ahead, we see steady state production of 1 million
GEO per year for the next several years, with excellent
long-term upside potential from our robust project
pipeline. This includes Wasamac, MARA, as well as our
Suyai gold project in Argentina, which is a development
ready project that is projected to produce up to 250,000
ounces of gold in its first eight years. With production
from the Wasamac project alone, a project that we
conservatively included in our upside case scenario when
we issued our 10-year production outlook earlier this year,
annual production could top 1 million GEO by mid-decade,
reaching 1.2 million GEO by 2028.
In addition, there is potential for further upside from our
generative exploration properties, which include advanced
projects like Lavra Velha, Monument Bay, Jacobina Norte,
and Borborema.
Annual Report 2020
15
Operations
CANADA
Wasamac
(100%)
Underground gold development project
located 100 Km from the Canadian Malartic
mine with proven and probable reserves of
1.8M oz of gold at 2.56 g/t
CAnAdA
CHILE
El Peñón
(100%)
CHILE
Minera Florida
(100%)
ARGENTINA
Suyai
16
Yamana Gold
CANADA
Canadian Malartic
(50%)
Canada’s largest gold mine, advancing the
underground Odyssey project with the
potential to extend mine life for decades
Operations
Development
Projects
BRAZIL
Jacobina
(100%)
ARGENTINA
MARA
(56.25%)
BRAZIL
CHILE
ARGEnTInA
ARGENTINA
Cerro Moro
(100%)
Established underground mine transitioning to newer high-grade zones that will provide the foundation for future production increases and extended mine lifeSuyai is an advanced stage gold project located in Chubut Province in southern Argentina that is expected to produce up to 250,000 ounces of gold annually in its first eight years.Underground mine with consistent performance and strong cash flow generation and a remarkable track record of ongoing exploration successWorld-quality underground mine that has more than doubled production since 2014, with significant low risk organic growth projects and spectacular exploration upsideHigh-grade underground and open-pit mine with exploration upside to provide sustainable production and drive future growthGlobally competitive, de-risked copper development project with highly attractive economics which will be one of the lowest capital intensity projects worldwide Mineral Reserves
and Mineral Resources
Mineral Reserves (Proven and Probable)
Gold
Yamana Gold Operations
Proven Mineral Reserves
Probable Mineral Reserves
Total – Proven and Probable
Tonnes
(000’s)
Grade Contained
oz. (000’s)
(g/t)
Tonnes
(000’s)
Grade Contained
oz. (000’s)
(g/t)
Tonnes
(000’s)
Grade Contained
oz. (000’s)
(g/t)
Canadian Malartic & Barnat Open Pit (50%)
Canadian Malartic Underground (50%)
Canadian Malartic Total (50%)
25,370
0
25,370
Cerro Moro
El Peñón Ore
El Peñón Stockpiles
El Peñón Total
Jacobina
Minera Florida Ore
Minera Florida Tailings
Minera Florida Total
328
368
9
377
28,821
1,215
0
1,215
Total Gold Mineral Reserves: Operations
56,112
Yamana Gold Projects
Jeronimo (57%)
MARA (56.25%)
Wasamac
Total Gold Mineral Reserves: Projects
Total Gold Mineral Reserves
6,350
330,300
1,028
337,678
393,790
0.85
0.00
0.85
6.58
5.73
1.40
5.63
2.16
3.60
0.00
3.60
1.65
3.91
0.25
2.66
0.33
0.51
696
0
696
69
68
0
68
36,068
0
36,068
1,338
5,121
651
5,772
2,004
11,277
141
0
141
2,104
1,248
3,352
2,978
57,807
798
2,331
2,655
291,150
88
20,427
3,541
6,519
313,908
371,715
1.31
0.00
1.31
8.40
5.02
1.26
4.60
2.22
3.70
0.94
2.67
2.06
3.79
0.16
2.56
0.34
0.61
1,518
0
1,518
361
827
26
853
804
250
38
288
61,438
0
61,438
1,666
5,489
660
6,149
40,098
3,319
1,248
4,567
3,824
113,918
284
1,498
1,679
3,461
7,285
8,681
621,450
21,455
651,586
765,505
1.12
0.00
1.12
8.04
5.07
1.26
4.66
2.18
3.66
0.94
2.92
1.86
3.88
0.21
2.56
0.33
0.56
2,214
0
2,214
431
895
27
921
2,807
391
38
428
6,802
1,082
4,152
1,767
7,001
13,803
Silver
Yamana Gold Operations
Cerro Moro
El Peñón Ore
El Peñón Stockpiles
El Peñón Total
Minera Florida Ore
Minera Florida Tailings
Minera Florida Total
Tonnes
(000’s)
Grade Contained
oz. (000’s)
(g/t)
Tonnes
(000’s)
Grade Contained
oz. (000’s)
(g/t)
Tonnes
(000’s)
Grade Contained
oz. (000’s)
(g/t)
328
368
9
377
1,215
0
1,215
390.0
213.4
54.1
209.5
23.4
0.0
23.4
4,109
2,526
16
2,542
915
0
915
1,338
460.0
19,788
1,666
446.3
23,897
5,121
651
5,772
2,104
1,248
3,352
160.2
14.1
143.7
21.9
14.5
19.2
26,378
294
26,672
1,481
584
2,065
5,489
660
6,149
3,319
1,248
4,567
163.8
14.6
147.8
22.4
14.5
20.3
28,904
310
29,214
2,396
584
2,979
Total Silver Mineral Reserves: Operations
1,921
122.5
7,566
10,461
144.3
48,525
12,382
140.9
56,091
Yamana Gold Projects
MARA (56.25%)
Total Silver Mineral Reserves: Projects
Total Silver Mineral Reserves
Totals may not add due to rounding
*Wasamac property acquired on January 21, 2021
330,300
330,300
332,221
3.0
3.0
3.7
32,070
32,070
39,636
291,150
291,150
301,611
2.6
2.6
7.5
24,618
24,618
73,143
621,450
621,450
633,832
2.8
2.8
5.5
56,689
56,689
112,780
18
Yamana Gold
Proven Mineral Reserves
Probable Mineral Reserves
Total – Proven and Probable
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
330,300
330,300
0.57
0.57
4,151
4,151
291,150
291,150
0.39
0.39
2,503
2,503
621,450
621,450
0.49
0.49
6,654
6,654
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
1,215
0
1,215
1,215
1.22
0.00
1.22
1.22
33
0
33
33
2,104
1,248
3,352
3,352
1.17
0.58
0.95
0.95
54
16
70
70
3,319
1,248
4,567
4,567
1.19
0.58
1.02
1.02
87
16
103
103
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
Tonnes
(000’s)
Grade Contained
lbs (mm)
(%)
Copper
Yamana Gold Projects
MARA (56.25%)
Total Copper Mineral Reserves
Zinc
Yamana Gold Operations
Minera Florida Ore
Minera Florida Tailings
Minera Florida Total
Total Zinc Mineral Reserves
Molybdenum
Yamana Gold Projects
MARA (56.25%)
330,300
0.030
Total Molybdenum Mineral Reserves
330,300
0.030
Totals may not add due to rounding
*Wasamac property acquired on January 21, 2021
218
218
291,150
0.030
291,150
0.030
192
192
621,450
0.030
621,450
0.030
411
411
Annual Report 2020
19
Mineral Resources (Measured, Indicated and Inferred)
(exclusive of Mineral Reserves)
Gold
Yamana Gold Operations
Canadian Malartic, Barnat & Other Zones (50%)
Odyssey Underground (50%)
East MalarticUnderground (50%)
East Gouldie Underground (50%)
Canadian Malartic Total (50%)
Cerro Moro Mine
Cerro Moro Heap Leach
Cerro Moro Total
El Peñón Mine
El Peñón Tailings
El Peñón Stockpiles
El Peñón Total
Jacobina
Minera Florida
Total Gold Mineral Resources: Operations
Yamana Gold Projects
Arco Sul
Jeronimo (57%)
La Pepa
Lavra Velha
Agua Rica (56.25%)
Alumbrera (56.25%)
MARA Total (56.25%)
Monument Bay
Suyai
Wasamac
Total Gold Mineral Resources: Projects
Total Gold Mineral Resources
Measured Mineral Resources
Indicated Mineral Resources
Total – Measured and Indicated
Inferred Mineral Resources
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
149
0
0
0
149
77
0
77
667
0
0
667
28,777
2,455
32,124
0
772
15,750
0
30,150
65,297
95,447
0
0
2,770
114,739
146,864
0.55
0.00
0.00
0.00
0.55
5.22
0.00
5.22
4.81
0.00
0.00
4.81
2.44
5.03
2.68
0.00
3.77
0.61
0.00
0.13
0.31
0.26
0.00
0.00
2.46
0.38
0.89
3
0
0
0
3
13
0
13
103
0
0
103
2,257
397
2,773
0
94
308
0
126
660
786
0
0
219
1,407
4,180
2,566
1,000
5,658
0
9,225
647
0
647
6,355
0
1,019
7,374
17,070
3,776
38,092
0
385
133,682
0
116,044
5,154
121,198
36,581
4,700
4,180
300,726
338,818
1.24
1.90
2.03
0.00
1.79
3.70
0.00
3.70
3.06
0.00
1.13
2.79
2.29
4.62
2.52
0.00
3.69
0.57
0.00
0.11
0.29
0.12
1.52
15.00
2.28
0.76
0.96
103
61
368
0
532
77
0
77
625
0
37
662
1,257
561
3,089
0
46
2,452
0
411
48
459
1,787
2,286
306
7,336
10,426
2,715
1,000
5,658
0
9,373
725
0
725
7,022
0
1,019
8,041
45,847
6,230
70,216
1,157
149,432
0
0
146,194
70,451
216,645
36,581
4,700
6,950
415,465
485,681
1.21
1.90
2.03
0.00
1.77
3.86
0.00
3.86
3.22
0.00
1.13
2.96
2.38
4.79
2.60
0.00
3.74
0.57
0.00
0.11
0.31
0.18
1.52
15.00
2.35
0.65
0.94
105
61
368
0
535
90
0
90
728
0
37
765
3,514
959
5,862
0
139
2,760
0
537
708
1,245
1,787
2,286
525
8,742
14,604
3,688
13,853
43,444
31,469
92,454
1,281
825
2,106
5,208
13,767
0
18,975
20,078
4,678
138,292
6,203
1,118
37,900
3,934
417,881
1,708
419,590
41,946
900
3,780
515,370
653,662
0.78
2.05
1.91
3.17
2.32
4.80
2.11
3.75
3.61
0.55
0.00
1.39
2.31
5.02
2.30
3.08
4.49
0.50
4.29
0.09
0.23
0.09
1.32
9.90
2.17
0.33
0.75
92
913
2,669
3,209
6,883
198
56
254
605
245
0
850
1,494
755
10,235
615
161
620
543
1,209
13
1,222
1,781
274
263
5,479
15,714
Totals may not add due to rounding
*Wasamac property acquired on January 21, 2021
NOTE: Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
20
Yamana Gold
Gold
Yamana Gold Operations
Canadian Malartic, Barnat & Other Zones (50%)
Odyssey Underground (50%)
East MalarticUnderground (50%)
East Gouldie Underground (50%)
Canadian Malartic Total (50%)
Total Gold Mineral Resources: Operations
Cerro Moro Mine
Cerro Moro Heap Leach
Cerro Moro Total
El Peñón Mine
El Peñón Tailings
El Peñón Stockpiles
El Peñón Total
Jacobina
Minera Florida
Yamana Gold Projects
Arco Sul
Jeronimo (57%)
La Pepa
Lavra Velha
Agua Rica (56.25%)
Alumbrera (56.25%)
MARA Total (56.25%)
Monument Bay
Suyai
Wasamac
Total Gold Mineral Resources: Projects
Total Gold Mineral Resources
Totals may not add due to rounding
*Wasamac property acquired on January 21, 2021
Measured Mineral Resources
Indicated Mineral Resources
Total – Measured and Indicated
Inferred Mineral Resources
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
149
0
0
0
149
77
0
77
667
0
0
667
28,777
2,455
32,124
0
772
15,750
0
30,150
65,297
95,447
0
0
2,770
114,739
146,864
0.55
0.00
0.00
0.00
0.55
5.22
0.00
5.22
4.81
0.00
0.00
4.81
2.44
5.03
2.68
0.00
3.77
0.61
0.00
0.13
0.31
0.26
0.00
0.00
2.46
0.38
0.89
3
0
0
0
3
13
0
13
103
0
0
103
2,257
397
2,773
0
94
308
0
126
660
786
0
0
219
1,407
4,180
2,566
1,000
5,658
0
9,225
647
0
647
6,355
0
1,019
7,374
17,070
3,776
38,092
0
385
0
133,682
116,044
5,154
121,198
36,581
4,700
4,180
300,726
338,818
1.24
1.90
2.03
0.00
1.79
3.70
0.00
3.70
3.06
0.00
1.13
2.79
2.29
4.62
2.52
0.00
3.69
0.57
0.00
0.11
0.29
0.12
1.52
15.00
2.28
0.76
0.96
103
61
368
0
532
77
0
77
625
0
37
662
1,257
561
3,089
0
46
2,452
0
411
48
459
1,787
2,286
306
7,336
10,426
2,715
1,000
5,658
0
9,373
725
0
725
7,022
0
1,019
8,041
45,847
6,230
70,216
0
1,157
149,432
0
146,194
70,451
216,645
36,581
4,700
6,950
415,465
485,681
1.21
1.90
2.03
0.00
1.77
3.86
0.00
3.86
3.22
0.00
1.13
2.96
2.38
4.79
2.60
0.00
3.74
0.57
0.00
0.11
0.31
0.18
1.52
15.00
2.35
0.65
0.94
105
61
368
0
535
90
0
90
728
0
37
765
3,514
959
5,862
0
139
2,760
0
537
708
1,245
1,787
2,286
525
8,742
14,604
3,688
13,853
43,444
31,469
92,454
1,281
825
2,106
5,208
13,767
0
18,975
20,078
4,678
138,292
6,203
1,118
37,900
3,934
417,881
1,708
419,590
41,946
900
3,780
515,370
653,662
0.78
2.05
1.91
3.17
2.32
4.80
2.11
3.75
3.61
0.55
0.00
1.39
2.31
5.02
2.30
3.08
4.49
0.50
4.29
0.09
0.23
0.09
1.32
9.90
2.17
0.33
0.75
92
913
2,669
3,209
6,883
198
56
254
605
245
0
850
1,494
755
10,235
615
161
620
543
1,209
13
1,222
1,781
274
263
5,479
15,714
NOTE: Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
Annual Report 2020
21
Silver
Yamana Gold Operations
Cerro Moro Mine
Cerro Moro Heap Leach
Cerro Moro Total
El Peñón Mine
El Peñón Tailings
El Peñón Stockpiles
El Peñón Total
Minera Florida
Total Silver Mineral Resources: Operations
Yamana Gold Projects
Agua Rica (56.25%)
Alumbrera (56.25%)
MARA Total (56.25%)
Suyai
Total Silver Mineral Resources: Projects
Total Silver Mineral Resources
Copper
Yamana Gold Projects
Agua Rica (56.25%)
Alumbrera (56.25%)
MARA Total (56.25%)
Total Copper Mineral Resources
Zinc
Yamana Gold Operations
Minera Florida
Total Zinc Mineral Resources
Molybdenum
Yamana Gold Projects
Agua Rica (56.25%)
Alumbrera (56.25%)
MARA Total (56.25%)
Total Molybdenum Mineral Resources
Measured Mineral Resources
Indicated Mineral Resources
Total – Measured and Indicated
Inferred Mineral Resources
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
77
0
77
667
0
0
667
2,455
3,198
30,150
0
30,150
0
30,150
33,348
202.4
0.0
202.4
143.0
0.0
0.0
143.0
30.7
58.2
1.6
0.0
1.6
0.0
1.6
7.0
504
0
504
3,063
0
0
3,063
2,422
5,989
1,502
0
1,502
0
1,502
7,491
647
0
647
6,355
0
1,019
7,374
3,776
11,797
116,044
0
116,044
274.6
0.0
274.6
105.4
0.0
28.8
94.8
23.5
81.9
1.9
0.0
1.9
4,700
23.0
120,744
132,541
2.7
9.7
5,716
0
5,716
21,535
0
942
22,478
2,857
31,051
6,940
0
6,940
3,523
10,463
41,513
725
0
725
7,022
0.00
1,019
8,041
6,230
14,996
146,194
0
146,194
150,894
165,889
266.9
0.0
266.9
109.0
0.0
28.8
98.8
26.4
76.8
1.8
0.0
1.8
2.5
9.2
6,220
0
6,220
24,599
0
942
25,541
5,279
37,039
8,442
0
8,442
3,523
11,965
49,004
1,281
825
2,106
5,208
13,767
0
18,975
4,678
25,759
417,881
0
417,881
418,781
444,541
183.7
46.1
129.8
118.0
18.9
0.0
46.1
23.9
48.9
1.6
0.0
1.6
1.7
4.4
7,561
1,224
8,786
19,758
8,380
0
28,138
3,596
40,520
21,765
0
21,765
575
22,340
62,859
4,700
23.0
900
21.0
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
30,150
65,297
95,447
95,447
0.22
0.31
0.28
0.28
146
445
591
591
116,044
5,154
121,198
121,198
0.30
0.21
0.30
0.30
767
24
791
791
146,194
70,451
216,645
216,645
0.28
0.30
0.29
0.29
914
469
1,383
1,383
417,881
1,708
419,590
419,590
0.23
0.17
0.23
0.23
2,119
6
2,125
2,125
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
2,455
2,455
1.37
1.37
74
74
3,776
3,776
1.33
1.33
110
110
6,230
6,230
1.34
1.34
184
184
4,678
4,678
1.42
1.42
147
147
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
30,150
65,297
95,447
95,447
0.020
0.012
0.014
0.014
14
16
30
30
116,044
5,154
121,198
121,198
0.030
0.010
0.029
0.029
77
1
78
78
146,194
70,451
216,645
216,645
0.030
0.011
0.022
0.022
90
17
107
107
417,881
1,708
419,590
419,590
0.030
0.008
0.030
0.030
276
1
277
277
Totals may not add due to rounding
*Wasamac property acquired on January 21, 2021
NOTE: Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
22
Yamana Gold
Total Silver Mineral Resources: Operations
Total Silver Mineral Resources: Projects
Total Silver Mineral Resources
Silver
Yamana Gold Operations
Cerro Moro Mine
Cerro Moro Heap Leach
Cerro Moro Total
El Peñón Mine
El Peñón Tailings
El Peñón Stockpiles
El Peñón Total
Minera Florida
Yamana Gold Projects
Agua Rica (56.25%)
Alumbrera (56.25%)
MARA Total (56.25%)
Suyai
Copper
Yamana Gold Projects
Agua Rica (56.25%)
Alumbrera (56.25%)
MARA Total (56.25%)
Total Copper Mineral Resources
Zinc
Yamana Gold Operations
Minera Florida
Total Zinc Mineral Resources
Molybdenum
Yamana Gold Projects
Agua Rica (56.25%)
Alumbrera (56.25%)
MARA Total (56.25%)
Total Molybdenum Mineral Resources
Totals may not add due to rounding
*Wasamac property acquired on January 21, 2021
Measured Mineral Resources
Indicated Mineral Resources
Total – Measured and Indicated
Inferred Mineral Resources
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
Tonnes
(000’s)
Grade
(g/t)
Contained
oz. (000’s)
647
0
647
6,355
0
1,019
7,374
3,776
11,797
116,044
0
116,044
120,744
132,541
274.6
0.0
274.6
105.4
0.0
28.8
94.8
23.5
81.9
1.9
0.0
1.9
2.7
9.7
4,700
23.0
5,716
0
5,716
21,535
0
942
22,478
2,857
31,051
6,940
0
6,940
3,523
10,463
41,513
725
0
725
7,022
0.00
1,019
8,041
6,230
14,996
146,194
0
146,194
266.9
0.0
266.9
109.0
0.0
28.8
98.8
26.4
76.8
1.8
0.0
1.8
4,700
23.0
150,894
165,889
2.5
9.2
6,220
0
6,220
24,599
0
942
25,541
5,279
37,039
8,442
0
8,442
3,523
11,965
49,004
1,281
825
2,106
5,208
13,767
0
18,975
4,678
25,759
417,881
0
417,881
183.7
46.1
129.8
118.0
18.9
0.0
46.1
23.9
48.9
1.6
0.0
1.6
900
21.0
418,781
444,541
1.7
4.4
7,561
1,224
8,786
19,758
8,380
0
28,138
3,596
40,520
21,765
0
21,765
575
22,340
62,859
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
116,044
5,154
121,198
121,198
0.30
0.21
0.30
0.30
767
24
791
791
146,194
70,451
216,645
216,645
0.28
0.30
0.29
0.29
914
469
1,383
1,383
417,881
1,708
419,590
419,590
0.23
0.17
0.23
0.23
2,119
6
2,125
2,125
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
2,455
2,455
1.37
1.37
3,776
3,776
1.33
1.33
110
110
6,230
6,230
1.34
1.34
184
184
4,678
4,678
1.42
1.42
147
147
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
Tonnes
(000’s)
Grade
(%)
Contained
lbs (mm)
30,150
65,297
95,447
95,447
0.020
0.012
0.014
0.014
116,044
5,154
121,198
121,198
0.030
0.010
0.029
0.029
77
1
78
78
146,194
70,451
216,645
216,645
0.030
0.011
0.022
0.022
90
17
107
107
417,881
1,708
419,590
419,590
0.030
0.008
0.030
0.030
276
1
277
277
667
143.0
77
0
77
667
0
0
2,455
3,198
30,150
30,150
0
0
30,150
33,348
202.4
0.0
202.4
143.0
0.0
0.0
30.7
58.2
1.6
0.0
1.6
0.0
1.6
7.0
30,150
65,297
95,447
95,447
0.22
0.31
0.28
0.28
504
0
504
3,063
0
0
3,063
2,422
5,989
1,502
1,502
0
0
1,502
7,491
146
445
591
591
74
74
14
16
30
30
NOTE: Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
Annual Report 2020
23
Year End 2020 Mineral Reserves and Mineral Resources Reporting notes
Final December 31, 2020
1. Metal Price, Cut-off Grade, Metallurgical Recovery
Mine
Mineral Reserves
Mineral Resources
Yamana Gold Operations
Canadian Malartic (50%)
Price assumption: $1,250 gold
Open pit cut-off grades range from 0.39 to
0.40 g/t gold
Metallurgical recoveries for gold averaging 90.5%
Cerro Moro
Price assumptions: $1,250 gold and $18.00 silver
Price assumption: $1,250 gold. Cut-off grades correspond
to 75% of the cut-off used to estimate the mineral reserves
Canadian Malartic, Barnat and other zones cut-off
grades range from 0.29 to 0.40 g/t gold inside pit, and
from 1.15 to 1.20 g/t gold outside or below pit
(stope optimized)
Underground cut-off grade at Odyssey is 1.00 to
1.30 g/t gold (stope optimized)
Underground cut-off grade at East Malartic is 1.10 to
1.40 g/t gold (stope optimized)
Underground cut-off grade at East Gouldie is 1.10 to
1.25 g/t gold (stope optimized)
Price assumptions: $1,250 gold and $18.00 silver. NSR
cut-off values correspond to 75% of reserves cut-off
Underground NSR cut-off at $215/ton and open pit NSR
cut-off at $123/ton
Underground NSR cut-off at $161.25/ton and open pit
NSR cut-off at $92.25/ton
Metallurgical recoveries average 95% for gold and 93%
for silver
Heap leach resource reported at NSR cut-off value of
$95/ton (underground) and $26/ton (open pit)
Constrained in optimized stopes and pit shells
El Peñón
Price assumptions: $1,250 gold, $18.00 silver
Price assumptions: $1,250 gold, $18.00 silver
Open Pit cut-off at $49.14/ton
Underground cut-off at $127.08/ton
Low grade stockpiles cut-off 0.90 g/t gold equivalent
Metallurgical recoveries for open pit ores range from
84.13% to 89.22% for gold and from 79.71% to 81.67%
for silver
Metallurgical recoveries for underground ores range from
84.13% to 97.38% for gold and from 56.47% to 92.33%
for silver
Metallurgical recoveries for low grade stockpiles are 95.2%
for gold and 83.0% for silver
Underground cut-off at $95.31/ton, which corresponds
to 75% of the cut-off value used to estimate the mineral
reserves
Tailings and stockpiles reported at cut-offs of 0.50 g/t and
0.79 g/t gold equivalent respectively
Metallurgical recoveries for underground ores range from
84.13% to 97.38% for gold and from 56.47% to 92.33%
for silver
Metallurgical recoveries for tailings estimated to be 60%
for gold and 30% for silver
Metallurgical recoveries for stockpiles estimated to be
88.0% for gold and 80.8% for silver
Jacobina
Price assumption: $1,250 gold
Price assumption: $1,250 gold
Underground reserves are reported at variable cut-off
grades by zone ranging from 0.99 g/t gold to 1.20 g/t gold
Metallurgical recovery is 96.5%
Underground cut-off grade of 1.00 g/t gold, which
corresponds to 75% of the cut-off used to estimate the
mineral reserves
Underground mining shapes were subsequently excluded
based on evaluation for eventual conversion to mineral
reserves based on proximity to existing mined-out stopes
and cut-off grade
Minimum mining width of 1.5 meters, considering internal
waste and dilution
24
Yamana Gold
1. Metal Price, Cut-off Grade, Metallurgical Recovery
Mine
Mineral Reserves
Mineral Resources
Yamana Gold Operations
Minera Florida
Price assumptions: $1,250/oz gold, $18.00/oz silver
and $1.25/lb Zinc
Price assumptions: $1,250/oz gold, $18.00/oz silver and
$1.25/lb Zinc
Underground cut-off for the Core Mine Zones $92.86/ton
and for Las Petaguas Zone $91.48/ton
Metallurgical recoveries range between 91.36% and
92.17% for gold, between 62.93% and 65.88% for silver
and between 75.22% and 75.38% for zinc
Underground mineral resources are estimated at a
cut-off value of $92.86/ton for the Core Mine Zone and
$69.64/ton for Las Pataguas Zone which is constrained
to underground mining shapes
Metallurgical recoveries are 92.17% for gold, 65.88% for
silver and 75.22% for zinc
Yamana Gold Projects
Arco Sul
N/A
Price assumption: $1,250 gold.
Underground cut-off grade at 2.00g/t, which corresponds
to 75% of the cut-off that would be used for mineral reserves
Mineral resources reported within optimized underground
mining shapes
Jeronimo (57%)
Price assumption:$900 gold
Cut-off grade at 2.0 g/t gold
Cut-off grade at 2.0 g/t gold
Metallurgical recovery for gold is 86%.
La Pepa
Lavra Velha
N/A
N/A
Price assumption: $780 gold
Cut-off grade at 0.30 g/t gold
Price assumptions: $1,300 gold and $3.50 copper
Cut-off grade at 0.2 g/t gold and 0.1% copper
MARA: Agua Rica (56.25%)
Mineral Reserves are estimated using a variable
metallurgical recovery.
Mineral Resources are estimated using a variable
metallurgical recovery.
Average metallurgical recoveries of 86% Cu, 35% Au, 43%
Ag, and 44% Mo were considered.
LOM average metallurgical recoveries of 86% Cu, 35% Au,
43% Ag, and 44% Mo were considered.
Open pit mineral reserves are reported at a variable
cut-off value averaging $8.42/ton, based on metal price
assumptions of $3.00/lb Cu, $1,250/oz Au, $18/oz Ag,
and $11/lb Mo. A LOM average open pit costs of
$1.72/ton moved, processing and G&A cost of
$6.70/ton of run of mine processed. The strip ratio of the
mineral reserves is 1.7 with overall slope angles varying
from 39° to 45° depending on the geotechnical sector.
MARA: Alumbrera (56.25%)
N/A
Mineral resources are constrained by an optimized pit
shell based on metal price assumptions of $4.00/lb Cu,
$1,600/oz Au, $24/oz Ag, and $11/lb Mo. Open pit
Mineral Resources are reported at a variable cut-off
value which averages $8.42/ton milled with overall
slope angles varying from 39° to 45° depending on the
geotechnical sector.
Price assumptions: $1,300 gold, $2.83 copper.
Alumbrera deposit: Whittle pit shell cut-off at 0.22%
copper equivalent
Bajo El Durazno deposit: 0.2 g/t Au cut-off within pit shell
Monument Bay
N/A
Price assumption: $1,200 gold
Suyai
Wasamac
N/A
Price assumption: $1,300/oz gold
Cut-off grades are 0.4 g/t gold and 0.7 g/t gold for the
open pits and 4.0 g/t gold for underground
5.0 g/t gold cut-off inside mineralized wireframe modeling
Price assumption: $1,500 gold. Exchange rate of
US$0.80 = C$1.00
Underground cut-off grade 1.0 g/t gold (stope optimized)
Underground cut-off grade at 1.0 g/t gold
Average of 16.2% mine dilution and 86.4% mine recovery
Minimum mining width of four metres
Annual Report 2020
25
2. All Mineral Reserves and Mineral Resources have been estimated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and
Petroleum and National Instrument 43-101, other than the estimates for the Alumbrera mine which have been estimated in accordance with the JORC Code
which is accepted under NI 43-101.
3. All Mineral Resources are reported exclusive of Mineral Reserves.
4. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
5. Mineral Reserves and Mineral Resources are reported as of December 31, 2020.
6. For the qualified persons responsible for the Mineral Reserve and Mineral Resource estimates at the Company’s material properties, see the qualified
persons list below
Property
Qualified Persons for Mineral Reserves
Qualified Persons for Mineral Resources
Canadian Malartic
Guy Gagnon, Eng., Canadian Malartic Corporation
Pascal Lehouiller, P. Geo, Canadian Malartic Corporation
El Peñón
Jacobina
Sergio Castro, Registered Member of the Chilean Mining
Commission, Yamana Gold Inc.
Marco Velásquez Corrales, Registered Member Chilean
Mining Commission, Yamana Gold Inc.
Eduardo de Souza Soares, MAusIMM CP (Min),
Yamana Gold Inc.
Dominic Chartier, P.Geo, Yamana Gold Inc. and
Dr. Jean-François Ravenelle, P.Geo., Yamana Gold Inc.
26
Yamana Gold
2020 Financial Review
28 Management’s Discussion and Analysis
29 Highlights and Relevant Updates
42
50
Core Business, Strategy and Outlook
Review of Financial Results
57 Operating Segments Performance
66 Construction, Development and Other Initiatives
76 Mineral Reserve and Mineral Resource Estimates
81
85
89
92
92
Exploration
Financial Condition and Liquidity
Economic Trends, Business Risks and Uncertainties
Contingencies
Critical Accounting Policies and Estimates
93 Non-GAAP Performance Measures
101 Disclosure Controls and Procedures
106 Management’s Responsibility for Financial Reporting
107 Reports of Independent Registered Public Accounting Firm
111 Consolidated Financial Statements
116 Notes to the Consolidated Financial Statements
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION
This Management’s Discussion and Analysis of Operations and Financial Condition ("MD&A") should be read in conjunction with
Yamana Gold Inc.'s (the "Company" or "Yamana") most recently issued annual consolidated financial statements for the year
ended December 31, 2020 ("Consolidated Financial Statements"). (All figures are in United States Dollars ("US Dollars") unless
otherwise specified and are in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board (“IFRS”).
The Company has included certain non-GAAP financial measures, which the Company believes, that together with measures
determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the
Company. Non-GAAP financial measures do not have any standardized meaning prescribed under IFRS, and therefore they may
not be comparable to similar measures employed by other companies. The data is intended to provide additional information and
should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The non-
GAAP financial measures included in this MD&A include:
• Cash costs per gold equivalent ounce ("GEO") sold;
All-in sustaining costs ("AISC") per GEO sold;
•
• Net debt;
• Net free cash flow;
•
•
Average realized price per ounce of gold/silver sold; and
Average realized price per pound of copper sold.
Reconciliations and descriptions associated with the above performance measures can be found in Section 12: Non-GAAP
Performance Measures in this MD&A.
Cautionary statements regarding forward-looking information and mineral reserves and mineral resources can be found in Section
13: Disclosure Controls and Procedures in this MD&A.
MANAGING COVID-19
Since the emergence of the global COVID-19 pandemic, the Company’s crisis response team, the members of which are its senior
executives and operational leaders, has taken quick and decisive action to respond to the pandemic during a fluid and fast-moving
environment. The Company has adjusted and managed its business effectively during this period, mitigating risks and further
advancing opportunities, while ensuring the safety of employees, contractors and host communities.
Although the Company responded rapidly to the COVID-19 pandemic and has been successful in limiting the spread of COVID-
19, there have been confirmed employee cases at site and in the communities surrounding the Company's operations. However,
with the implementation of monitoring, testing, quarantine and contact tracing protocols, the Company has been able to isolate
incidents of infection and limit their spread. Overall, the number of infected persons is not significant at sites and the Company
continues to monitor the recoveries of those infected. In the fourth quarter of 2020, the number of employees infected with COVID-
19 rose, primarily as a result of increasing cases globally and in the regions where employees reside.
The Company will continue to manage its business in a way that respects, and is mindful of, the impact that COVID-19 has had
and could have on local communities. The Company has endeavoured to manage its operations with the safeguarding of
individuals at site and in local communities in mind. Numerous protocols have been adopted to ensure that the safety and health
of employees and persons in local communities is maintained. The Company has had the assistance of a team of International
SOS doctors at all South American sites to review and validate the Company’s COVID-19 protocols. These reviews found that the
Company’s operations were doing extremely well in preventing the contagion and spread of COVID-19 at sites. Contributions in
communities via employee screening and testing have helped to identify and trace cases near our mine sites, and the Company
served an important early warning function in the communities in which it operates. Further, the Company has implemented best-
in-class COVID prevention measures in its Toronto and regional offices, which are abiding by recommendations of local public
health and government authorities. Staff at office sites are primarily working remotely and the Company expects a phased re-
opening of offices once COVID caseloads decline and vaccination rates have increased.
28
Yamana Gold
The Company has actively responded to the global COVID-19 pandemic through a variety of means, such as:
•
Implementing heightened levels of health screening and where cases are potentially revealed, isolation and support to
workers who may have been exposed;
• Donating face masks, hand sanitizer, medical equipment and other critical supplies, and making site medical teams
•
available to support ambulances and local health officials in the communities in which the Company operates;
Transferring beds and supplies from camps to temporary hospitals, and working alongside local NGOs and small
businesses to shift production to manufacturing masks for local community members and employees;
• Working with host communities to develop and implement local crisis management plans;
•
Building up the capacity of local health clinics to be able to effectively manage community COVID cases, including the
purchase of respirators, testing equipment, computers and other critical equipment;
• Donating, and anticipating to donate, hundreds of thousands of dollars in support of communities moving forward.
• Creating digital platforms for the company to maintain a dialogue with communities about COVID-19 and other concerns.
Further, in an effort to improve procedures, protect workers and respond quickly to specific situations, Canadian Malartic
•
installed a COVID-19 screening test laboratory directly at the site were nursing staff collect samples and anyone entering
the site may be required to take a screening test.
Yamana commends the remarkable dedication, commitment, professionalism, and compassion of its employees, contractors and
suppliers, who have come together in these challenging times to drive success.
For further details on how the Company has actively responded to the global COVID-19 pandemic, please refer to Section 1
Highlights and Relevant Updates - Health, Safety, Environment and Corporate Responsibility.
1.
HIGHLIGHTS AND RELEVANT UPDATES
For the three months ended December 31, 2020 unless otherwise noted
•
Strong gold production of 221,659 ounces, following standout performances from Jacobina and Minera Florida. At
Jacobina, production reached an all-time high and increased for the seventh consecutive year, and annual production at
Minera Florida reached its highest level since 2010 and the second highest total since the mine entered production in
1986, excluding gold production from the reclamation of historic tailings.
• While production was on plan during the fourth quarter, further changes to COVID-19 restrictions were imposed by the
Government of Argentina near the end of the year. Such restrictions were particularly stringent during December,
impacting production at Cerro Moro. While production at Cerro Moro was below budget, production in the fourth quarter
was the highest of the year and production in December was 15,121 GEO, which represents a significant improvement
over prior months and quarters. Cerro Moro was also particularly impacted during the year. After the Government of
Argentina mandated shutdown in March, the mine resumed operations in early April following the government's
declaration of mining an essential service in April. Nonetheless, provincial restrictions over interprovincial travel
temporarily extended the length of the operational ramp-up that occurred through the third quarter.
•
Above plan silver production of 2,586,662 ounces, underpinned by an exceptionally strong performance from El Peñón,
which greatly exceeded plan with mine sequencing favouring mining of higher silver grade zones.
• GEO production of 255,361 ounces in line with plan.
•
•
Full year production(ii) of 901,155 GEO, including 779,810 ounces of gold and 10,365,662 ounces of silver, exceeded
original guidance for the year of 890,000 GEO, and was within the plus or minus three per cent variance range of the
Company's revised guidance. GEO production for the year at Jacobina, El Peñón, Canadian Malartic, and Minera Florida
were all well above plan. The entire difference was attributable to further changes to COVID-19 restrictions imposed in
Argentina near the end of the year which impacted production at Cerro Moro.
Full year unitary total cost of sales, cash costs(i) and AISC(i) were $1,151, $701 and $1,080 respectively, which were
modestly higher than previously forecast, mostly impacted by lower production at Cerro Moro, resulting from the re-
imposition of national safety measures in Argentina in December. The Company had also anticipated that more production
from Barnat at Canadian Malartic would be classified as commercial production, and as costs for such production were
expected to be lower than the Company's average, overall costs would have been positively impacted. With more pre-
Annual Report 2020
29
commercial production from Barnat, costs were not positively impacted, but the margin generated from Barnat’s pre-
commercial production was treated as a reduction to expansionary capital. This significant cash flow benefit resulted in
the reduction of expansionary capital for the year by a further $14 million compared with plan. The net results of the
modestly higher costs and lower expansionary capital was neutral, and consequently had little impact to overall generation
of cash flows for the year.
• Mine operating earnings of $364.3 million, which increased by $268.9 million or 282%, in relation to the comparative prior
year quarter. The increase is related the strong precious metal price environment, strong operational performances
despite the impact of COVID-19 in the current year, and a net gross impairment reversal of $191.0 million taken in the
fourth quarter of 2020, as noted in the Other Financial Updates section below.
• Net earnings of $103.0 million or $0.11 per share basic and diluted, compared to $14.6 million or $0.02 per share basic
and diluted for the three months ended December 31, 2019. Adjusting items of $4.7 million, that management believes
may not be reflective of current and ongoing operations, and which may be used to adjust or reconcile input models in
consensus estimates, increased earnings for the current period. Adjustments in the current period include $9.2 million of
costs incurred in association with COVID-19-related temporary suspensions, standby and other incremental costs at
certain operations. For a complete list of adjustments, refer to Section 3: Review of Financial Results.
•
•
•
•
•
Strong cash flows from operating activities of $181.5 million and cash flows from operating activities before net change
in working capital(i) of $207.4 million reflect the impact of strong precious metal prices and the positive impact of foreign
exchange on the costs of the Company. Cash flows from operating activities are at multi-year highs, which include periods
with considerably more production from mines that have since been divested or discontinued.
The Company generated net free cash flow(i) of $118.9 million, comparable to net free cash flow(i) of $123.2 million in the
comparative prior year quarter, despite a reduction of sales predominantly attributable to production exceeding sales for
the quarter, driven largely by strong gross margins, along with lower interest and other finance expenses in the period
associated with lower levels of long term debt.
To ensure consistency of, and prospects for cash flows, the Company compares cash flows in a particular quarter with
the average of cash flows in the preceding three quarters. This measure is looked at on a rolling basis quarter over
quarter. Continuing with a recent trend, cash flows from operating activities and net free cash flow(i) for the quarter
exceeded the averages of such cash flows for the preceding three quarters by 25% and 6% respectively, thereby further
demonstrating the strength and resilience of the cash flow generation capacity of the Company.
As at December 31, 2020, the Company had cash and cash equivalents of $651.2 million. Cash balances include cash
acquired on the integration of the Agua Rica project with the Minera Alumbrera plant and infrastructure in the fourth quarter
of 2020 ("MARA Project"), with a December 31, 2020 balance of $223.1 million, which is available for utilization by the
MARA Project. The remainder of the cash balance of $428.1 million, along with further liquidity and incoming cash flows,
is sufficient to fully manage the Company's business and available for the Company's capital allocation objectives. This
includes, but is not limited to obligations related to the Jacobina plant expansions, development of the Odyssey
underground project at Canadian Malartic, generative exploration, and further financial position improvements, while
having excess funds to dedicate to possible other opportunities and dividend increases.
The Company has achieved its financial management objective of a leverage ratio of net debt to EBITDA(i) of below 1.0x
when assuming a bottom-of-cycle gold price of $1,350 per ounce, underscoring the Company’s significant financial
flexibility and best-in-class financial position. Net debt(i) decreased by $53.4 million in the quarter to $565.7 million, which
advances the Company's objective of achieving a positive net cash(i) position, which is now well ahead of schedule. As
expected and planned, capital expenditures during the fourth quarter were higher than the third quarter as the result of
timing delays caused by COVID-19, and interest was paid, as payments customarily occur in the second and fourth
quarters. Further, a working capital outflow occurred due to the timing delays of collection of recoverable indirect tax
credits, payments associated with prepaid expenditures and advances, and an inventory buildup due to production
exceeding sales that will normalize in 2021. The Company's next scheduled debt repayment is in 2022 which is expected
to be repaid in full rather than refinanced.
30
Yamana Gold
•
Increased gold mineral reserves and mineral resources, with further details as follows:
◦ Replacement of mineral reserve depletion on a consolidated basis for Yamana Mines
▪
▪
▪
▪
Jacobina added approximately 300,000 ounces of mineral reserves, net of depletion. Average mineral
reserve grade has modestly decreased as a result of parallel reefs at lower grades that are considered
economical to mine. Operational costs will consequently not be affected by the change in reserve grade.
At Canadian Malartic, an optimized design of the Barnat pit resulted in an increase in gold mineral
reserves, which significantly reduced depletion resulting from production. On a 50% basis, while
325,000 ounces of mineral reserves were depleted through production, the optimized pit design
resulted in an increase of approximately 150,000 ounces. This, combined with other small additions,
resulted in net depletion of only 175,000 ounces. This allows for approximately half a year of additional
mine life from the open pit operation.
For El Peñón, the mineral reserve increase more than offset depletion for the third consecutive year.
Mineral resources are comprised of multiple veins at different grades. The Company plans to draw into
inventory higher conviction mineral resources from veins which are at mineral reserve grade and close
to the existing mine. The Company notes an increase in mineral reserve grade from 2019, highlighting
that new ounces are being converted to mineral reserves at higher than average mineral reserve grade.
At Cerro Moro, mineral reserves changed due to 2020 depletion and adjustments to the geological
models. Higher grade intercepts at depth at Zoe and Escondida late in the year are not included in the
year-end mineral reserves and mineral resources but will be followed up with drilling in 2021, along with
targets that can add to a potential heap leach inventory.
◦
Significant increase in mineral resources
▪ Notable increase in East Gouldie at Canadian Malartic of 1.84 million ounces (at 50%) of inferred
mineral resources.
◦
◦
Further, through the acquisition of the Wasamac property, discussed in Strategic Developments, the Company
has been able to increase its mineral reserves and mineral resources at a very advantageous purchase price.
Lastly, the Company's proportionate interest in the MARA Project inventory, which has generally been shown
outside of the Company's subtotals, has been added to inventory as at December 31, 2020, given its advanced
stage and the completion of the integration of the Agua Rica project and Minera Alumbrera plant and
infrastructure.
•
Following impressive technical study results obtained in early February of 2021, the Company and its partner made a
positive construction decision of the Odyssey project at Canadian Malartic, with first production from the Odyssey South
deposit expected in 2023. The technical study outlined robust economics, a significant increase in mineral resources, and
a mine life extension to at least 2039. Whereas the Company had originally considered a production platform
conservatively in the range of 450,000 ounces per year, the mine now supports an expected increased annual gold
production of 500,000 to 600,000 ounces on a 100% basis. Further extension of the mine life beyond 2039 provides
additional upside, with several opportunities under evaluation. A NI 43-101 technical report for the Canadian Malartic
operation is expected to be filed in March 2021 and will include a summary of the Odyssey underground project. Please
refer to Strategic Developments, Construction Developments and Advanced Stage Projects for further details.
• Combined with modest near to mid-term capital requirements for the Company, the substantive improvement in financial
position has provided the flexibility to continue returning capital to shareholders through measured and sustainable
dividend increases. As such, On October 7, 2020, the Company increased its annual dividend by a further 50% to $0.105
per share, for shareholders of record at the close of business on December 31, 2020. At the new rate, the dividend will
be 425% higher than the rate just 18 months ago. The Company had previously established a policy of representing the
dividend on a per GEO basis, with the objective of maintaining the dividend of between $50 to $100 per GEO, and this
increase positions the dividend at the high end of the range, at $100 per ounce. In the quarter, the Company modified its
dividend policy such that it will no longer provide a range for its dividend on a per GEO basis, with future dividend
increases above the new floor of $100 per GEO based entirely on the cash flow and cash generation capacity of the
Company. As its cash flows and cash balances increase, its dividend will rise correspondingly as a percentage of cash
flows and commensurate with increasing cash balances from cash flows and sources that supplement cash flows. With
current levels of cash on hand, the Company would have sufficient available funds to fund its business and pay the new
current dividend for several years independently of gold price. For further information on the Company's approach to
maximizing cash returns to shareholders, refer to Section 2: Core Business, Strategy and Outlook.
Annual Report 2020
31
• On October 23, 2020, the outstanding $100.0 million of the Company's $750.0 million credit facility was repaid, following
strong third quarter operational results, and increased liquidity and financial flexibility. This follows the repayment of the
initial $100.0 million in June, of the $200.0 million drawn during the first quarter of 2020 as a precaution due to the
uncertainty around COVID-19.
• During the fourth quarter, the Company announced a further 50% increase to its annual dividend to $0.105 per share,
driven by strong free cash flow generation.
•
•
The Company balances two additional capital allocation priorities in addition to paying, maintaining and increasing
dividends, which are financial management and pursuing and funding growth. In the context of growth, the Company
pursues growth that is measured and consistent with the Company’s size, scale and financial resources. Opportunities
for growth should meet the Company's minimum requirements that they should be funded through internal resources,
meet minimum return levels that well exceed cost of capital and be of a specific size. In terms of size, opportunities should
have mineral reserves and resources of at least 1.5 million ounces, which the Company considers large enough to support
a mine plan with annual gold production of approximately 150,000 ounces for at least eight years. The Company does
not categorize opportunities based on their size alone nor tier assets into various categories. The objective is to deliver
robust returns, significant cash flows and accelerated payback. While the Company has a large portfolio of prospective
and advancing exploration and development opportunities that will provide it with measured growth, as an extension of
the strategy, the Company will consider the acquisition of earlier stage exploration and development opportunities,
particularly where the Company can provide added value either through its regional presence, expertise or both. For full
details on the Company's investment strategy, please refer to Section 2: Core Business, Strategy and Outlook.
As a continuation of Yamana’s climate change actions, the Company has formally adopted a climate strategy, approved
by the Board of Directors, to demonstrate the Company’s commitment to the transition to a low-carbon future. The strategy
is underpinned by adoption of two targets: a 2°C science-based target (“SBT”) and an aspirational net-zero 2050 target.
The targets are supported by foundational work to be performed in 2021 to establish a multi-disciplinary Climate Working
Group, determine our emissions baseline, develop the Greenhouse Gas (“GHG”) abatement pathways required to
achieve the 2°C SBT and establish preliminary, operations-specific roadmaps that describe abatement projects, estimated
costs and schedules. These actions will help ensure that our long-range GHG reduction efforts are supported by practical
and operationally focused short, medium and long-term actions to achieve the targets.
Other Financial Updates
•
Significant events having a non-cash accounting impact during the fourth quarter, that are not reflective of ongoing
operations, include a positive impact related to a gross net impairment reversal of $191.0 million before tax, or $37.6
million after tax. The Company believes that its overall net asset value is also further enhanced by the acquisition of
Wasamac and by the MARA Project, both discussed under the Strategic Development section of this MD&A. The impact
of the aforementioned net impairment reversal is as follows (Refer to Section 3: Review of Financial Results of this MD&A
for additional details):
◦
◦
An impairment reversal of $560.0 million in respect of El Peñón, which generated a $173.7 million deferred income
tax expense, for a total net gain of 386.3 million.
An impairment of $369.0 million in respect of Cerro Moro, which generated a $20.0 million deferred income tax
recovery, for a total net loss of $348.7 million.
Strategic Developments, Construction Developments and Advanced Stage Projects:
• MARA Project Integration
◦ On December 17, 2020, the Company completed the project integration with Glencore International AG and
Newmont Corporation and a new partnership was formed to manage, develop and operate the project. The
development will be pursuant to the plan contemplated in the agreement and by the partners, and the Agua Rica
project will be developed and operated using the existing infrastructure and facilities of Alumbrera in the Catamarca
Province of Argentina. Going forward, the integrated project will be known as the MARA Project.
◦ Under the agreement, Yamana, as the sole owner of Agua Rica, and the partners of Alumbrera have created a
new Joint Venture pursuant to which Yamana holds a controlling ownership interest in the MARA Project at 56.25%.
Glencore holds a 25.00% interest and Newmont holds an 18.75% interest. Yamana will be the operator of the Joint
32
Yamana Gold
◦
Venture and will continue to lead the engagement with local, provincial, and national stakeholders, and completion
of the Feasibility Study and Environmental Impact Assessment for the MARA Project.
A MARA Project Joint Venture Technical Committee ("Technical Committee") has been formed and is comprised
of representatives of the three companies. The Technical Committee is now advancing a full Feasibility Study of
the Integrated Project, with updated mineral reserve, production and project cost estimates. COVID-19 introduced
uncertainty into the timeline relating to the completion of the Feasibility Study, mainly due to environmental permit
approvals and field work, although as the permit process is well advanced, work preparation has begun in
anticipation of receiving necessary authorizations in normal course. Despite the aforementioned delays, Feasibility
Study work is ongoing and key technical results are expected during 2021. While the Company continues to
advance the Feasibility Study, it notes that a considerable amount of information in the Pre-Feasibility Study is
already at Feasibility Study level mostly as a result of the Integration Transaction. The full Feasibility report and
EIA completion are expected in 2022.
• Acquisition of Wasamac Property and Camflo Property and Mill (Acquisition of Monarch Gold)
◦ On January 21, 2021 the Company completed the acquisition of the Wasamac property and the Camflo property
and mill through the acquisition of all of the outstanding shares of Monarch Gold not owned by Yamana. Yamana
previously announced that it had entered into a definitive agreement with Monarch Gold on November 2, 2020 to
acquire the properties under a plan of arrangement. In connection with the plan of arrangement, Monarch
completed a spin-out to its shareholders, through a newly-formed company, of its other mineral properties and
certain other assets and liabilities of Monarch.
◦
◦ Under the terms of the Transaction, Monarch shareholders received the following per Monarch share: 0.0376 of a
Yamana share; C$0.192 in cash; and 0.2 of a share of Monarch Mining. Yamana issued 11,608,195 Yamana
Shares and paid approximately C$59.3 million in cash, for total consideration of approximately C$136.1 million.
Yamana’s consideration on close represented a value paid for the Wasamac asset of under $67 per ounce of
mineral reserves and under $42 per ounce of mineral resources, based on mineral reserves and mineral resources
in the feasibility study noted below and net of Yamana’s existing Monarch interest in Wasamac.
The Wasamac project further solidifies the Company’s long-term growth profile with a top-tier gold project in
Quebec’s Abitibi region, where Yamana has deep operational and technical expertise and experience. The
geological characteristics of the Wasamac ore body suggest it holds the potential to be an underground mine with
the same scale, grade, production, and costs as Yamana’s successful Jacobina mine, and possesses many
parallels to the underground project at Canadian Malartic. The Wasamac project consists of a single, continuous
shear zone with a consistent grade distribution and wide mining widths, making it amenable to simple, productive,
and cost efficient underground bulk mining methods. The deposit has existing proven and probable mineral
reserves of 1.8 million ounces of gold at 2.56 grams per tonne. Mineral resources and mineral reserves are
supported by a Feasibility Study completed by Monarch in 2018 which outlined a 6,000 tonnes per day ("tpd")
operation with average gold production of 160,000 ounces per year. Costs are expected to be at the lower end of
the Company’s profile, providing an improvement to consolidated costs.
There remains excellent potential for significant future exploration success and mineral resource conversion, with
the Wasamac deposit remaining open at depth and along strike. The Company will target increasing the mineral
inventory and perform optimizations to further enhance the project’s value, advance engineering, and de-risk
execution. Yamana plans to commence an exploration and infill drilling campaign and other studies to refine and
expand upon the potential of Wasamac and its development alternatives, with an update on these plans to be
provided by the third quarter of 2021.
Prior to closing the acquisition of Wasamac, in late 2020 the Company began the process of opening a regional
office in the Abitibi region, and hiring personnel to manage the permitting process and related studies to update
the feasibility study.
◦
◦
•
Jacobina Optimization Project
◦
◦
The Phase 1 optimization project, whose objective was to stabilize throughput at a sustainable 6,500 tpd, was
completed in June of 2020 and the project has exceeded expectations. The Company has identified opportunities
to further optimize the results and recoveries achieved in Phase 1 with a modest investment. Consequently, works
commenced in the third quarter for the expansion of the gravity concentration circuit, with commissioning scheduled
for mid-2021, with an objective to optimize gold recovery at the higher throughput rate.
In addition to the incremental optimization of Phase 1, the Company is advancing the Phase 2 expansion at
Jacobina, for an increase in throughput to 8,500 tpd. The Company is currently in the engineering phase, with
permitting underway. Included in the mine's expansionary budget in 2021 of $29.0 million, is approximately $18.0
Annual Report 2020
33
million for the procurement of long-lead items and expansionary development to support the higher throughput to
the mill. The throughput increase will be achieved through the installation of an additional grinding line and
incremental upgrades to the crushing and gravity circuits. The Phase 2 expansion is expected to increase annual
gold production to approximately 230,000 ounces per year, representing a 28% increase from current levels,
reduce costs, and generate significantly more cash flow and attractive returns. The Company expects to provide
an update regarding capex and development schedule in mid-2021 once studies are finalized to conclude
permitting. The Company anticipates that the updated capital costs will not exceed the previously estimated and
disclosed $57 million, and it has already begun to incur these costs for long-lead time items. The estimated capital
costs of $57 million had been based on an assumed BRL:USD rate of 4.0. The BRL:USD foreign exchange rates
are currently higher at over 5.0, and consequently, the Company anticipates that the weaker rates will provide
capital cost and operating cost benefits.
Separately, Jacobina is studying the installation of a backfill plant to allow up to 2,000 tpd of tailings to be deposited
in underground voids. Preliminary results indicate that the project has the potential to improve the way in which
the Company manages the environment and environmental impact, extend the life of the existing tailings storage
facility consequently decreasing future capital investment intensity, and improve mining recovery resulting in an
increased conversion of mineral resources to mineral reserves. The placement of backfill in empty stopes would
allow for greater recovery of mineralized pillars that otherwise would have been left behind to ensure ground
stability. Backfill in strategic higher grade zones would increase mineral reserves with the recovery of those
mineralized pillars. The Company is advancing the backfill project to a feasibility study, to be completed in early
2021.
Lastly, the Company has also begun a conceptual study on a Phase 3 expansion, which would increase throughput
to 10,000 tpd, utilize the third grinding line, while expanding crushing and leaching circuits and adding additional
mining equipment and infrastructure.
◦
◦
• Canadian Malartic Underground Construction Decision
◦
◦ During the fourth quarter, the Company continued to advance studies related to the underground project at
Canadian Malartic, which consists of the East Gouldie, Odyssey, and East Malartic zones (collectively known as
the Odyssey project).
Following impressive technical study results obtained in early February of 2021, the Company and its partner made
a positive construction decision of the Odyssey project at Canadian Malartic, with first production from the Odyssey
South deposit expected in 2023. The technical study outlined robust economics, a significant increase in mineral
resources, and a mine life extension to at least 2039. Whereas the Company had originally considered a production
platform conservatively in the range of 450,000 ounces per year, the mine now supports an expected increased
annual gold production of 500,000 to 600,000 ounces on a 100% basis. Further extension of the mine life beyond
2039 provides additional upside, with several opportunities under evaluation. A NI 43-101 technical report for the
Canadian Malartic operation is expected to be filed in March 2021 and will include a summary of the Odyssey
underground project.
◦ On a 100% basis, initial expansionary capital of $1.14 billion is expected to be spent over a period of eight years,
with capital requirements in any given year manageable and fully funded using the Company's cash on hand and
free cash flow generation. Additionally, other growth capital expenditures and modest sustaining capital during the
construction period total $191.4 million. Gold production during the 2021 to 2028 construction period is expected
at 932,000 ounces (on a 100% basis) at cash costs of $800 per ounce. The net proceeds from the sale of these
ounces would significantly reduce the external cash requirements for the construction of the project which,
assuming the gold price used in the financial analysis for the project, would reduce the projected capital
requirements in half. On a 100% basis, average annual payable production is expected to be approximately
545,400 ounces from 2029 to 2039 with total cash costs per ounce of approximately $630 per ounce. Sustaining
capital from 2029 to 2039 is expected to average approximately $55.8 million per year.
◦ Construction of surface infrastructure and the portal in preparation for development of the ramp started in August
of 2020. The Company and its partner completed the construction of the mine office and surface facilities in the
fourth quarter, to support the development, and further advanced the development of the exploration ramp into
Odyssey and East Malartic. The exploration ramp is designed with the purpose of mining their respective upper
zones and providing further exploration access to allow tighter drill spacing to further define the mineral resource
base, along with headframe construction and shaft sinking. The new ramp will also provide the ability to carry out
bulk sampling of 40,000 tonnes of mineralization. The budget for the ramp is C$15.25 million for 2021 on a 50%
basis. Development of the exploration ramp is anticipated to take approximately two years to complete, with the
first drilling platform will be established in the third quarter of 2021.
34
Yamana Gold
◦
A 2.3 kilometre geotechnical hole in the shaft area has been completed, and detailed engineering has begun in
relation to the shaft and headframe. The shaft is envisioned as a 6.4-metre diameter, 1.8 kilometre deep shaft with
a hoisting capacity of approximately 20,000 tpd. As noted, the Company’s current expectation is that production
from Odyssey South will begin in 2023 from the ramp, while the Company sinks the shaft to East Gouldie, with a
goal to start production from East Gouldie in 2027.
For full details on the aforementioned updates, please refer to Section 5: Construction, Development and Other Initiatives.
(i)
(ii)
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Included in the year ended December 31, 2020 gold production includes 18,929 of pre-commercial production, related to the Company's 50% interest in the
Canadian Malartic mine's Barnat deposit. Pre-commercial production ounces are excluded from sales figures, although pre-commercial production ounces
that were sold during their respective period of production had their corresponding revenues and costs of sales capitalized to mineral properties.
OPERATING
Fourth quarter GEO production of 255,361 ounces exceeded plan and was comparable to prior year production of 256,288 ounces.
Catalysts included standout gold production performances from Jacobina and Minera Florida and strong silver production
performance from El Peñón, all of which exceeded plan. Production was on plan until changes to COVID-19 restrictions imposed
in Argentina near the end of the year, and in particular in the second half of December, impacted production at Cerro Moro. Cerro
Moro production was impacted by the ongoing mobilization challenges. GEO assumes gold ounces plus the gold equivalent of
silver ounces using a ratio of 76.82 for the three months ended December 31, 2020, and 85.54 for the three months ended
December 31, 2019. GEO calculations are based on an average realized gold to silver price ratio for the relevant period.
Fourth quarter unitary total cost of sales and cash costs(iii) were $1,131 and $675 respectively, relatively consistent with $1,117
and $656 in the comparative 2019 period. AISC(iii) for the three months ended December 31, 2020 were $1,076 per GEO sold,
compared to $1,011 per GEO sold in the comparative period.
Fourth quarter costs were predominantly impacted by lower production, as a result of COVID-19 challenges primarily at Cerro
Moro, due to safety-related measures in place at the mine during December, which reduced production compared to expectation
and caused cost inefficiencies. Furthermore, fourth quarter consolidated sustaining capital increased as expected as the result of
timing delays caused by COVID-19, and represented roughly one third of the total annual spend, which resulted in an increase in
AISC(iii). The higher planned capital expenditures per ounce were partially offset by strong performances from Jacobina and Minera
Florida. Further, costs were positively impacted by foreign exchange as a result of the Brazilian Real, Argentina Peso, and Chilean
Peso being weaker against the US Dollar during the three months ended December 31, 2020, compared to the same quarter of
2019.
Full year GEO production was 901,155, following strong gold production performances from Malartic, Jacobina and Minera Florida,
and silver production performance from El Peñón which greatly exceeded plan. GEO assumes gold ounces plus the gold equivalent
of silver ounces using a ratio of 88.86 for the year ended December 31, 2020, and 86.02 for the year ended December 31, 2019.
GEO calculations are based on an average realized gold to silver price ratio for the relevant period.
Full year unitary total cost of sales, cash costs(iii) and AISC(iii) were $1,151, $701 and $1,080 respectively, mostly impacted by lower
production at Cerro Moro, resulting from the re-imposition of national safety measures in Argentina in December. The Company
had also anticipated that more production from Barnat at Canadian Malartic would be classified as commercial production, and as
costs for such production were expected to be lower than the Company's average, overall costs would have been positively
impacted. With more pre-commercial production from Barnat, costs were not positively impacted, but the margin generated from
Barnat’s pre-commercial production was treated as a reduction to expansionary capital. This significant cash flow benefit resulted
in the reduction of expansionary capital for the year by a further $14 million compared with plan. The net results of the modestly
higher costs and lower expansionary capital was neutral, and consequently had little impact to overall generation of cash flows for
the year.
Annual Report 2020
35
GEO
Production (i)(ii)
Sales (i)(ii)
Per GEO sold data (ii)(iii)
Total cost of sales (iv)
Cash costs (iii)
AISC (iii)
Gold and silver production for the quarter was as follows:
Gold
Production (ounces) (i)(ii)
Sales (ounces) (i)(ii)
Per ounce data
Revenue
Average Realized Price (iii)(v)
Average market price (vi)
Silver
Production (ounces)
Sales (ounces) (vii)
Per ounce data
Revenue
Average Realized Price (iii)(v)
Average market price (vi)
For the three months ended December 31,
2019
2020
For the year ended December 31,
2020
2019
255,361
246,955
256,288
257,904
901,155
876,520
1,131
675
1,076
$
$
$
1,117
656
1,011
$
$
$
1,151
701
1,080
$
$
$
972,143
990,005
1,143
679
999
For the three months ended December 31,
2019
2020
For the year ended December 31,
2020
2019
221,659
213,439
1,875
1,875
1,873
2,586,662
2,563,166
24.02
24.02
24.39
$
$
$
$
$
$
221,595
223,593
1,486
1,484
1,480
2,967,867
2,935,673
17.55
17.50
17.31
$
$
$
$
$
$
779,810
754,970
848,029
862,130
1,777
1,777
1,770
10,365,662
10,382,086
21.11
20.93
20.51
$
$
$
$
$
$
1,392
1,387
1,392
10,640,156
11,009,552
16.39
16.26
16.20
$
$
$
$
$
$
$
$
$
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Included in the gold production figure for the year ended December 31, 2020 is 18,929 of pre-commercial production ounces (3,137 pre-commercial
production ounces are included in the three months and year ended December 31, 2019), related to the Company's 50% interest in the Canadian Malartic
mine's Barnat pit which achieved commercial production on September 30, 2020. Pre-commercial production ounces are excluded from sales figures,
although pre-commercial production ounces that were sold during their respective period of production had their corresponding revenues and costs of sales
capitalized to mineral properties, captured as expansionary capital expenditures.
Comparative period GEO and gold figures exclude contributions from the Chapada mine, which was divested in July 2019. Production for the year ended
December 31, 2019 excludes 52,311 ounces. Sales figures for the three months and year ended December 31, 2019 exclude (161) and 49,578 ounces,
respectively, net of quantity adjustments.
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Cost of sales consists of the sum of 'cost of sales excluding Depletion, Depreciation and Amortization' ("DDA") plus DDA.
Realized prices based on gross sales compared to market prices for metals may vary due to the timing of the sales.
Source of information: Bloomberg.
Included in the three months and year ended December 31, 2020 silver sales ounces are 268,620 and 1,001,135 ounces, respectively, delivered under the
silver streaming arrangement (2019: 300,000 and 844,200, respectively).
HEALTH, SAFETY, ENVIRONMENT AND CORPORATE RESPONSIBILITY
Health, safety, environment and community relations ("HSEC") programs are integrated into all our operations, development
projects, and exploration programs. Yamana recognizes the importance of striving to meet and exceed its HSEC responsibility the
objectives and the role these efforts have in delivering on the overall objective of creating value for all stakeholders.
The Company has actively responded to the global COVID-19 pandemic, demonstrating the Company's commitment to
environment, social and governance ("ESG") excellence in action and resilience. Consistent with its mission to mine precious
metals profitably and responsibly, the Company is prepared to forego production as a way to safeguard its efforts to promote
health, safety and well-being of its workforce and host communities.
36
Yamana Gold
The Company activated its crisis response team in the early phases of the COVID-19 outbreak, the members of which are the
senior executives and operational leaders, to ensure it was in a position to take quick and decisive action in what remains a fluid
and fast-moving environment. Some of the decisions and actions undertaken include:
• Restricting all employee travel and shifting to remote work arrangements at corporate and regional offices.
• Restricting visitors to the Company's mines.
•
Increased screening procedures, including questionnaires, temperature checks and the use of COVID testing
methodologies, for anyone seeking entry into a mine.
• Mandatory social distancing, including staggered meal times and shift changeovers to minimize the flow of people and
facilitate rigorous social distancing.
Increased cleaning and disinfecting procedures at all mines and offices.
Increased support staff at on-site medical clinics at the Company's mines as a precautionary measure.
•
•
• Regular communications with medical experts and government authorities in every country where Yamana operates to
ensure the proper precautions are in place to protect the health and safety of its employees, families, and host
communities.
• Regular and active discussions with employees and union representatives to ensure they have input into health and
safety precautions being implemented and that these measures and the reasons for them are well understood.
• Development of a detailed plan for a phased return to the Corporate and Regional offices.
• Working with host communities to develop and implement local crisis management plans.
Although the Company responded rapidly to the COVID-19 pandemic and has been successful in limiting the spread of COVID-
19, there have been confirmed employee cases at site and in the communities surrounding the Company's operations. However,
with the implementation of monitoring, testing, quarantine and contact tracing protocols, the Company has been able to isolate
incidents of infection and limit their spread. The protocols implemented by the Company included contact tracing which allow each
operation to rapidly identify any persons who may have come into contact with an individual who may have been infected, and to
isolate and quarantine those persons, thereby limiting the spread of the infection. The individuals and those who have been in
contact with the confirmed cases are then placed in in self-isolation. If at any point the Company determines that continuing
operations poses an increased risk to its workforce or host communities, the Company will reduce operational activities up to and
including care and maintenance and management of critical safety and environmental activities and systems. While the number of
persons in quarantine has not been significant, representing only a small portion of the workforce as aforementioned, everyone
initially infected has recovered. In the fourth quarter of 2020, the number of employees infected with COVID-19 rose, primarily as
a result of increasing cases globally and in the regions where employees reside.
Yamana has been deeply committed to supporting its host communities throughout the COVID-19 crisis, with a wide range of
initiatives including, but not limited to, the donation of thousands of facemasks, hand sanitizers, medical equipment and other
critical supplies. In Chile and Brazil, the Company has made site medical teams and/or ambulances available to support local
health officials fighting COVID-19 on the front lines. In Argentina, the Company is working with officials to transfer more than 80
beds and other supplies from the Cerro Moro camp to a temporary hospital, which has been established as a contingency for
treating any future local COVID-19 patients. And in Brazil, the Company has worked with local NGOs and small businesses to help
shift their production from clothing to production of masks for employees and local community members. In Canada, Yamana has
donated $150,000 to St. Joseph’s Hospital for their COVID-19 efforts, as well as $20,000 to each of Foodbanks Canada and
Conquer COVID-19 Canada. In addition, Canadian Malartic has donated a sum of $30,000 to various community organizations
focusing on food aid and other support services for community members. These are just a few examples of the efforts that the
Company and its operations are making to support the communities where it operates, with hundreds of thousands of dollars being
allocated to the setting up of support funds for communities in the coming weeks and months. Overall, the Company has contributed
more than $1 million dollars to community-related COVID initiatives.
As a continuation of Yamana’s climate change actions, the Company has formally adopted a climate strategy, approved by the
Board of Directors, to demonstrate the Company’s commitment to the transition to a low-carbon future. The strategy is underpinned
by adoption of two targets: a 2°C science-based target (“SBT”) and an aspirational net-zero 2050 target. The targets are supported
by foundational work to be performed in 2021 to establish a multi-disciplinary Climate Working Group, determine our emissions
baseline, develop the Greenhouse Gas (“GHG”) abatement pathways required to achieve the 2°C SBT and establish preliminary,
operations-specific roadmaps that describe abatement projects, estimated costs and schedules. These actions will help ensure
that our long-range GHG reduction efforts are supported by practical and operationally focused short, medium and long-term
actions to achieve the targets.
Annual Report 2020
37
Other recent highlights relating to HSEC are as follows:
•
The Company's Total Recordable Injury Rate was 0.49(i) for the full year 2020, representing a 14% decrease from the
2019 result.
• Canadian Malartic installed a third-party COVID-19 testing lab, allowing the site to test employees and contractors prior
•
•
•
to their entry. The lab is staffed by trained individuals and is fully operational 7 days a week.
The Company’s Jacobina operation was named “Mining Company of the Year” in the Precious Metals category by Brasil
Mineral Magazine.
The Company successfully completed its Year 1 implementation objectives associated with the World Gold Council’s
Responsible Gold Mining Principles.
The Company successfully completed its the Year 1 implementation objectives associated with the Mining Association of
Canada’s Towards Sustainable Mining Framework.
(i)
Calculated on 200,000 exposure hours basis including employees and contractors.
FINANCIAL
For the three months ended December 31, 2020
Net earnings for the three months ended December 31, 2020 were $103.0 million or $0.11 per share basic and diluted, compared
to net earnings of $14.6 million or $0.02 per share basic and diluted for the three months ended December 31, 2019. Earnings for
the three months ended December 31, 2020 were negatively impacted by $4.7 million of items that management believes may not
be reflective of current and ongoing operations and which may be used to adjust or reconcile input models in consensus estimates.
Significant and unusual adjusting items in the quarter include:
•
•
•
•
•
•
A $191.0 million pre-tax gain due to net impairment reversals at the Company's mining properties as of December 31,
2020;
A $3.0 million gain on the partial sale of an investment in an associate;
A $21.9 million loss on the revaluation of the Company's monetary assets and liabilities, owing to movements in local
currencies in multiple jurisdictions where the Company operates;
A $3.4 million loss on the mark-to-market of the Company's outstanding equity instruments related to share-based
payments in association with Performance Share Units and Deferred Share Units, resulting from an increase in share
price;
A $9.2 million expense, representing costs incurred by the Company as a result of COVID-19-related temporary
suspensions, standby or reductions at certain operations, and direct incremental costs associated with operating under
COVID-19 related restrictions. Costs were incurred predominantly at Cerro Moro due to government imposed restrictions
on activity, and also in Chile and Brazil due to health authority regulations for temporary workforce reductions, and/or to
promote social distancing;
$1.8 million of non-cash tax losses on unrealized foreign exchange gains and $163.9 million of tax losses on non-routine
transactions and adjustments, including on the aforementioned net impairment reversals.
For a full listing of reconciling items between net earnings and adjusted net earnings for the current and comparative period, refer
to Section 3: Review of Financial Results.
The aforementioned $9.2 million in COVID-19 related costs can be divided into two major categories:
•
Temporary suspension and standby costs, including those associated with placing certain mines in care and maintenance
and subsequent ramp-up of those operations, and the underutilization of labour and contractors in relation to the pre-
COVID mine plans, and
• Other incremental costs resulting from COVID-19 including community support, additional personal protective equipment
acquisitions, higher transportation costs and overtime costs resulting from lower headcount levels on site to accommodate
social distancing.
38
Yamana Gold
COVID-19 costs are disclosed as part of mine operating earnings as temporary suspension, standby and other incremental COVID-
19 costs. The Company anticipates that suspension and standby costs will be minimized prospectively. With increasing numbers
of the population receiving the vaccine, we would expect to see increasing immunity and decreasing caseloads, allowing for gradual
easing our COVID-related controls, associated costs toward the second half of 2021. The breakdown of the expenditures incurred
during the quarter are as follows:
For the three months ended December 31, 2020
(In millions of US Dollars; unless otherwise noted)
Canadian Malartic
Jacobina
Cerro Moro
El Peñón
Minera Florida
Total
Temporary
suspension and
standby costs
Other incremental
COVID-19 costs
$
$
— $
—
1.2
0.3
0.7
2.2
$
0.8 $
0.5 $
3.5 $
1.7 $
0.5 $
7.0 $
Total
0.8
0.5
4.7
2.0
1.2
9.2
Despite the aforementioned temporary suspension, standby, and other incremental COVID-19 costs, mine operating earnings
increased by $268.9 million or 282% in the three months ended December 31, 2020 compared to the same quarter last year,
primarily due to a net impairment reversal of $191.0 million, combined with a strong precious metal price environment and the
strong operating performances from Jacobina and Minera Florida. Excluding the net impairment reversal, mine operating earnings
increased by $77.9 million. For detailed analysis on individual mines refer to Section 4: Operating Segments Performance.
For the year ended December 31, 2020
Net earnings for the year ended December 31, 2020 were $203.7 million or $0.21 per share basic and diluted, compared to net
earnings of $225.6 million or $0.24 per share basic and diluted for the year ended December 31, 2019.
Earnings for the year ended December 31, 2020 were negatively impacted by $107.6 million of items that management believes
may not be reflective of current and ongoing operations and which may be used to adjust or reconcile input models in consensus
estimates. Significant adjusting items in the year ended December 31, 2020 include:
•
•
•
•
•
•
•
A $191.0 million pre-tax gain due to net impairment reversals at the Company's mining properties;
A $21.3 million gain recorded on the discontinuation of the equity method upon the Leagold-Equinox merger;
A $1.4 million gain on the Company's investments;
A $21.6 million loss on the revaluation of the Company's monetary assets and liabilities, owing to movements in local
currencies in multiple jurisdictions where the Company operates;
A $31.5 million loss on the mark-to-market of the Company's outstanding equity instruments related to share-based
payments;
A $40.5 million expense, representing costs incurred by the Company as a result of COVID-19 related temporary
suspension or reductions at certain operations, and direct incremental costs associated with operating under COVID-19
related restrictions. Costs were incurred predominantly at Cerro Moro and Canadian Malartic due to government imposed
restrictions on activity, and also in Chile and Brazil due to health authority regulations for temporary workforce reductions,
and/or to promote social distancing;
$52.8 million of non-cash tax losses on unrealized foreign exchange losses and $183.6 million of tax losses on non-
routine transactions and adjustments, including on the aforementioned net impairment reversals.
For a full listing of reconciling items between net earnings and adjusted net earnings for the current and comparative period, refer
to Section 3: Review of Financial Results.
Annual Report 2020
39
COVID-19 costs are disclosed as part of mine operating earnings as temporary suspension, standby and other incremental COVID-
19 costs. The Company anticipates that suspension and standby costs will be minimized prospectively. With increasing numbers
of the population receiving the vaccine, we would expect to see increasing immunity and decreasing caseloads, allowing for gradual
easing our COVID-related controls, associated costs toward the second half of 2021. The breakdown of the expenditures incurred
during the year ended December 31, 2020 are as follows:
For the year ended December 31, 2020
(In millions of US Dollars; unless otherwise noted)
Canadian Malartic
Jacobina
Cerro Moro
El Peñón
Minera Florida
Other Regional Costs
Total
Temporary
suspension and
standby costs
Other incremental
COVID-19 costs
$
$
$
1.9
0.4
10.4
1.6
4.1
—
2.6 $
1.6 $
8.8 $
5.4 $
3.6 $
0.1 $
18.4
$
22.1 $
Total
4.5
2.0
19.2
7.0
7.7
0.1
40.5
Mine operating earnings for the year ended December 31, 2020 were $702.4 million, representing an increase of $344.7 million or
96% over the same period in 2019, primarily due to a gross net impairment reversal of $191.0 million, combined with the strong
performances from Jacobina, El Peñón, Canadian Malartic and Florida, and strong precious metal prices, despite the
aforementioned temporary suspension, standby, and other incremental COVID-19 costs. Additionally the comparative period had
a contribution of $104.2 million from Chapada (divested in July 2019). For detailed analysis on individual mines please refer to
Section 4: Operating Segments Performance.
40
Yamana Gold
Summary of Financial Results
(In millions of US Dollars; unless otherwise noted)
Revenue
Cost of sales excluding DDA
Gross margin excluding DDA
Depletion, depreciation and amortization ("DDA")
Net Impairment reversal of mining properties
Temporary suspension, standby and other incremental
COVID-19 costs
Mine operating earnings
General and administrative
Exploration and evaluation
Share of loss of associates
Other operating (expenses) income, net
Operating earnings
Finance costs
Other costs, net
Net earnings before income taxes
Income tax expense, net
Net earnings
Per share data
Earnings per share - basic and diluted
Dividends declared per share
Dividends paid per share
Weighted average number of common shares
outstanding (thousands)
Basic
Diluted
Cash flows (i)
Cash flows from operating activities
Cash flows from operating activities before net change in
working capital (ii)
Cash flows from (used in) investing activities
Cash flows used in financing activities
Net free cash flow (ii)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
For the three months ended December 31,
For the year ended December 31,
2020
461.8 $
(166.8)
295.0 $
(112.5)
191.0
(9.2)
364.3 $
(23.4)
(6.0)
—
(1.5)
333.4 $
(19.3)
(21.6)
292.5 $
(189.5)
103.0 $
0.11 $
0.0263 $
0.0175 $
2019
383.8 $
(169.4)
214.4 $
(119.0)
—
—
95.4 $
(19.3)
(3.3)
(0.3)
(5.6)
66.9 $
(21.6)
(3.5)
41.9 $
(27.3)
14.6 $
0.02 $
0.0100 $
0.0100 $
2020
1,561.0 $
(614.1)
946.9 $
(395.0)
191.0
(40.5)
702.4 $
(85.9)
(15.1)
(1.0)
(14.6)
585.8 $
(77.0)
(18.7)
490.1 $
(286.5)
203.6 $
0.21 $
0.072 $
0.056 $
2019
1,612.2
(782.8)
829.4
(471.7)
—
—
357.7
(79.4)
(10.3)
(16.3)
222.4
474.1
(144.2)
(19.6)
310.3
(84.7)
225.6
0.24
0.030
0.025
952,435
954,565
950,433
952,315
951,818
953,846
950,266
951,924
181.5 $
207.4 $
136.3 $
(141.0) $
118.9 $
201.7 $
176.6 $
(96.4) $
(46.9) $
123.2 $
617.8 $
688.7 $
51.4 $
(175.9) $
455.7 $
521.8
590.5
432.0
(892.5)
321.5
(i)
(ii)
For further information on the Company's liquidity and cash flow position, refer to Section 8: Financial Condition and Liquidity.
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Balance Sheet and Liquidity
As at December 31, 2020, the Company had cash and cash equivalents of $651.2 million and available credit of $750.0 million,
for total available liquidity of $1,401.2 million. Cash balances include cash acquired on the integration of the Agua Rica project with
the Minera Alumbrera plant and infrastructure in the fourth quarter of 2020, with a December 31, 2020 balance of $223.1 million.
As at,
(In millions of US Dollars)
Total assets
Total long-term liabilities
Total equity
Working capital (i)
Cash and cash equivalents
Debt (current and long-term)
Net debt (ii)
$
$
$
$
$
$
$
December 31, 2020 December 31, 2019
7,117.2
8,422.9 $
2,808.6 $
5,172.2 $
476.2 $
651.2 $
993.8 $
565.7 $
2,489.0
4,219.9
(6.7)
158.8
1,047.9
889.1
(i)
(ii)
Working capital is defined as the excess of current assets over current liabilities, which includes assets and liabilities classified as held for sale when
applicable.
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Annual Report 2020
41
2020
2019
2020
2019
2020
2019
Capital Expenditures
For the three months ended December 31,
(In millions of US Dollars)
Canadian Malartic (i)
Jacobina
Cerro Moro
El Peñón
Minera Florida
Other (ii)
Total
2019
2020
Sustaining and
other
Expansionary
$
18.6 $
5.4
9.0
9.9
4.4
0.5
13.5 $
8.2
11.9
7.6
3.7
1.7
5.1 $
4.8
4.4
0.5
9.1
2.5
9.8 $
6.9
2.6
0.3
2.9
2.8
$
47.8 $
46.6 $
26.4 $
25.3 $
For the year ended December 31,
2020
2019
2020
2019
(In millions of US Dollars)
Canadian Malartic (i)
Jacobina
Cerro Moro
El Peñón
Minera Florida
Other (ii)
$
21.6
29.5
31.4
12.6
1.7
Sustaining and
other
52.5 $
Expansionary
12.2 $
15.8
6.9
0.5
19.9
11.5
36.5 $
30.7
3.7
0.8
11.7
21.2
45.1 $
24.5
23.5
30.8
13.1
29.7
$ 149.3 $ 166.7 $
66.8 $ 104.6 $
Exploration
7.0 $
0.1 $
2.7 $
2.0
3.8 $
3.5
2.8 $
4.7
2.3 $
1.8
2.0
2.2 $
21.0 $ 13.9 $
Total
30.7 $
12.2 $
16.9 $
15.1 $
15.3 $
5.0 $
23.4
17.8
18.3
10.7
8.9
6.7
95.2 $
85.8
82.6
2019
2020
Total
2019
74.8 $
43.4 $
2020
Exploration
10.1 $
6.0
12.5
15.9
7.0
6.1
60.0
57.6 $ 60.4 $ 273.7 $ 331.7
1.0 $
6.5 $
16.2 $
18.1 $
9.5 $
9.1 $
47.8 $
19.3 $
39.5 $
48.9 $
61.7
34.3
49.7
43.4
(i)
(ii)
Canadian Malartic's Barnat pit had pre-commercial production ounce revenues and costs of sales capitalized to mineral properties against expansionary
capital expenditures for the 2020 and 2019 periods.
Included in Other for the comparative period are capital expenditures relating to Chapada, which was disclosed separately in the comparative period.
The margin generated from Barnat’s pre-commercial production was treated as a reduction to expansionary capital. This significant
cash flow benefit resulted in the reduction of expansionary capital for the year by a further $14 million compared with plan.
2.
CORE BUSINESS, STRATEGY AND OUTLOOK
Yamana Gold Inc. (“Yamana” or the “Company”) is a Canadian-based precious metals producer with significant gold and silver
production, development stage properties, exploration properties, and land positions throughout the Americas, including Canada,
Brazil, Chile and Argentina. Yamana plans to continue to build on this base through expansion and optimization initiatives at existing
operating mines, development of new mines, the advancement of its exploration properties and, at times, by targeting other
consolidation opportunities with a primary focus in the Americas. Yamana has a strong 10-year base case outlook with a
sustainable production platform of 1 million GEO per year through 2030. Production will be underpinned by continued operational
success at the Company’s existing operations, which have consistently replaced mineral reserves above depletion. For further
details please refer to the 10-Year Outlook section.
The Company is listed on the Toronto Stock Exchange (trading symbol "YRI"), the New York Stock Exchange (trading symbol
"AUY"), and the London Stock Exchange (trading symbol "AUY").
The Company’s principal mining properties comprise the Jacobina mine in Brazil, the Canadian Malartic mine (50% interest) in
Canada, the El Peñón and Minera Florida mines in Chile and the Cerro Moro mine in Argentina. On January 21, 2021 the Company
completed the acquisition of the Wasamac property, a high-quality project with a significant mineral reserve and mineral resource
base and excellent potential for further expansion, adding to Yamana’s pipeline of organic opportunities, significantly enhancing
the Company’s future growth prospects. Following the finalization of the integration agreement in the fourth quarter of 2020, the
Company also owns a 56.25% interest in the MARA Project, a large-scale copper, gold, silver and molybdenum project located in
the province of Catamarca, Argentina. For full details on the MARA Project integration agreement, please refer to Section 5:
Construction, Development and Other Initiatives.
42
Yamana Gold
Over the years, the Company has grown and generated value through strategic acquisitions and portfolio optimizations, and by
pursuing organic growth to increase cash flows and unlock value at existing mines and development assets. Looking ahead, the
Company’s primary objectives include the following:
• Continued focus on the Company’s operational excellence program, advancing near-term and ongoing optimizations
related to production, operating costs, and key performance objectives in Health, Safety, Environment and Community
Relations and Development or ESG. Underpinning this performance is our "One Team, One Goal: Zero" vision, which
reflects the Company's commitment to zero harm to employees, the environment and host communities near its
operations.
•
Increasing mine life at the Company’s existing operating mines through exploration targeted on the most prospective
properties. The Company does not rely exclusively on proven and probable mineral reserves at any point to determine
mine life as that would undervalue and misrepresent the potential of its operations. Similarly, the Company does not rely
solely on a reserve life index to the exclusion of other measures to determine mine life, as the Company believes there
are other factors that determine mine life. Where possible, the Company endeavours to increase mineral reserves early
on, although the Company recognizes that often it is more cost effective and technically efficient to progressively extend
mine life as, and when, mine development is advancing. This is particularly true for underground mines and prospects.
The Company believes that to rely exclusively at any given point on proven and probable mineral reserves does not give
sufficient allowance for discovery of new mineral resources, history of conversion of mineral resources to mineral reserves
and exploration potential. This is particularly true for El Peñón and Minera Florida for which the Company gives
considerable allowance for mine life that is well in excess of mineral reserves, given the aforementioned factors of new
discovery of mineral resources, historical conversion of mineral resources to mineral reserves and significant exploration
potential. This will likely be true for the underground at Canadian Malartic, which today carries substantial mineral
resources and not mineral reserves. Additionally, the underground at Canadian Malartic has significant potential to extend
its mine life considerably.
• Maximizing the overall value of the Company as an enterprise, cash flows and free cash flows, and cash returns on
invested capital, first on producing and then non-producing assets:
◦ Within the producing portfolio, attention remains focused on per share measures related to the growth and quality
of mineral reserves and mineral resources for mine life extensions and scope for throughput increases, metal grade
and recovery improvements, and cost reductions that are expected to improve margins and cash flows.
• Maximizing cash returns to shareholders through sustainable dividends, which will also be reported as dividends per GEO
produced, resulting from disciplined management of financial resources and capital allocation:
◦
◦
The Company has employed a gradual and progressive approach to dividend increases as the Company’s cash
balances continue to increase from free cash flow, and successful and continuing initiatives to monetize its portfolio
of non-producing assets and financial instruments;
The Company modified its dividend policy such that it will no longer provide a range for its dividend on a per GEO
basis, with future dividend increases above the new floor of $100 per GEO based entirely on the cash flow and
cash generation capacity of the Company. As its cash flows and cash balances increase, its dividend will rise
correspondingly as a percentage of cash flows and commensurate with increasing cash balances from cash flows
and sources that supplement cash flows;
◦ Consistent with its dividend policy and sustainability objectives, the Company has sufficient cash reserves on hand
to support payment of the dividend at the increased level for three years. The cash reserve fund provides the
Company with the flexibility to pay the dividend at the new floor for an extended period even in a bottom of cycle
gold price environment;
The Company will continue to engage regularly with investors to ensure it is maintaining an optimal balance
between the amount payable and dividend sustainability;
Following the Company's initial capital spending and development phase from 2003 to 2006, the Company has
consistently paid dividends since 2007. As of the date of this MD&A, dividends have aggregated to nearly $1 billion
paid over 13 years.
◦
◦
Annual Report 2020
43
• Consistently optimize the Company's financial position to create financial flexibility, allowing the Company to execute on
its business plan and increase shareholder value. The Company successfully improved its financial flexibility with the
repayment of:
◦
◦
◦
2020: $56.0 million in senior notes issued in March 2012;
2019: $415.0 million in senior notes issued in March 2012 and June 2013 on a pro rata basis and indebtedness
under the Company’s senior notes issued in June 2014 and December 2017; and
2019: $385.0 million of indebtedness under the revolving credit facility.
•
Advancing the Company’s generative exploration program for the next generation of Yamana Mines:
◦
◦
◦
Advance the Company’s most advanced exploration projects;
Pursue exploration and drilling programs at highly-prospective, early stage projects in the Company’s existing
portfolio.
Expand the Company’s exploration portfolio through evaluations and targeted land acquisition
•
•
For strategic assets in the portfolio, the focus is to assess the best path for creation of value for shareholders, including
advancing the projects through exploration, technical/financial reviews, studies and optimizations, permitting and
community engagement, and/or considering strategic alternatives to realize returns from the these strategic assets. This
may include developing the assets through a joint venture or other strategic arrangements, or through monetization, such
as the recently accomplished successful sale of the royalty portfolio and subsequent partial sale of Nomad shares, the
sale of Equinox shares, and the JV for its Suyai Project in Argentina.
Advancement of the MARA Project, and along with our partners, determining the merits of the advancement of the Suyai
Project. Please refer to Section 5: Construction, Development and Other Initiatives for further details on the status and
advancement plans for these assets.
Investment and Exploration Strategy
A further primary objective of the Company, although one with an intermediate to longer-term time horizon, is the advancement of
its generative exploration program. The Company has an extensive exploration portfolio with well-defined exploration prospects
and organic growth opportunities in all jurisdictions, with more advanced opportunities in Canada and Brazil. The objective of the
generative exploration program is to advance at least one project to achieve mineral reserve and mineral resource inventories of
at least 1.5 million ounces which the Company considers large enough to support a mine plan with annual gold production of
approximately 150,000 ounces for at least eight years.
The Company is continuously reviewing its capital allocation strategy, and exploring options for funding such projects that do not
draw on free cash flows. Funding strategies include, but are not limited to, proceeds from the monetization of non-cash producing
assets or non-core assets that do not meet the Company's precious metal and scale requirements and, where applicable, flow-
through funding arrangements. Funds are allocated to develop promising internal opportunities for organic growth through
exploration and provide long term growth.
To assess these opportunities, the Company relies on an experienced local exploration team that operates in its established
jurisdictions and other favourable districts in North and South America.
Every project in the generative exploration program has had some drilling, with some projects more advanced than others. At Lavra
Velha in Brazil and Monument Bay in Canada, the Company has identified mineral resources in various categories. In the case of
Monument Bay, the Company is further advancing the project with internal technical and economic assessments considering the
project as an underground mine rather than an open pit mine. While resources would be reduced from current levels, this would
be an economically attractive alternative with lower required capital investment (due to the higher investment required to develop
a large tonnage, low grade, open pit mine), a reduced environmental footprint and significant exploration potential for increases in
mineral resources down plunge and in satellite surface areas. A new high- grade geological model is being evaluated while several
well-defined high-grade zones along a 4 kilometre strike length of the deposit have been identified. An expansion drill program on
these targets is planned to begin this year and extend into next year. For more details, please refer to Section 7: Exploration.
The Company will also, from time to time, make investments in prospective advancing exploration and more advanced prospects
where it can provide value-added guidance either from the Company's exploration or technical services groups.
44
Yamana Gold
As a complement to the advancement of the internal exploration opportunities, the Company will consider the acquisition of earlier
stage development assets or companies that align with Yamana's objectives for capital allocation and financial results, jurisdiction,
geology and operational expertise. Such opportunities should be funded through internal resources, meet minimum return levels
that well exceed cost of capital and would meet the Company's minimum requirements to achieve mineral reserve and mineral
resource inventories, mine life and per year production rate. Furthermore, preference would be given to geological and operational
characteristics where the Company has an identified expertise and excellent opportunities for value enhancement. Such
opportunities would also extend an existing regional presence or lead to that longer-term objective. Although the Company has an
established portfolio of early-to-later-stage organic growth projects, the Company also considers it prudent to consider
opportunities to extend regional presences in quality jurisdictions that offer geological and operational synergies and similarities to
its current portfolio of assets.
10-Year Outlook
Robust exploration results are expected to drive incremental production growth at Minera Florida, which has a low-cost opportunity
to increase capacity at its existing processing plant. The long-term strategy at Minera Florida is to increase monthly throughput
from 74,500 tonnes per month ("tpm") to 100,000 tpm with a corresponding production increase of up to 120,000 ounces of gold
per year at AISC below $1,000 per ounce.
At El Peñón, which recently completed its twenty-first year of production, the Company has a high degree of confidence that it will
continue to replace mineral reserves through new discoveries and infill drilling on several major veins, thereby maintaining mine
life visibility for at least another 10 years. The operation is targeting annual production of 260,000 GEO at AISC below $900 per
GEO, with the production increase to be supported by the mine’s existing processing capacity of up to 4,200 tpd and no additional
capital spending required. The mine's outlook is fully supported by mineral reserves and mineral resources. Mineral resources are
comprised of multiple veins at different grades. The Company plans to draw into inventory higher conviction mineral resources
from veins which are at mineral reserve grade and close to the existing mine. The Company notes an increase in mineral reserve
grade from 2019, highlighting that new ounces being converted to mineral reserves are higher than average mineral reserve grade.
Moreover, the Company continues to make new discoveries of mineral inferred ounces that are also at better grades, as noted by
an increase in mineral resource grade.
The base case assumes continuing exploration success at Cerro Moro, which will support a mine life extension and heap leaching
operation. The Company is investing in exploration drilling on its large mine property and surrounding area, which together exceed
300,000 hectares, with efforts currently focusing on both the core mine area and new mineralized zones close to existing mineral
reserves. Significant mineralization has been identified at below current mineral reserve cut-off grades that could potentially be
mined economically using lower-cost heap leach processing that would occur in parallel with the existing processing plant.
The base case also includes the Canadian Malartic underground project, which represents the next evolution for Canada’s largest
gold mine. First production is expected in 2023 from the Odyssey South zone with the Upper East Gouldie zone expected to come
online in 2027. The most recent underground mineral resource for the project, which was published in February 2020, showed
more than 10 million ounces of gold (100% basis), including 9,596,000 ounces of inferred mineral resources (100% basis) and
830,000 ounces of indicated mineral resources (100% basis). In the interim, exploration results have been exceptional, improving
economics and increasing confidence that the underground project will be a multi-hundred thousand ounce annual producer for
decades. Following positive preliminary economic assessment results, obtained in early February of 2021, the Company and its
partner made a construction decision of the Odyssey project at Canadian Malartic, with first production from the Odyssey South
deposit expected in 2023.
The base case scenario also includes the Jacobina Phase 2 expansion, which will increase throughput to 8,500 tpd and raise
annual production to 230,000 ounces, a 28% increase from current levels. In addition, the Company plans to implement a Phase
3 expansion at Jacobina which, for a modest cost, would increase throughput to 10,000 tpd without the need for additional grinding
capacity and raise annual production to 270,000 ounces by approximately 2027.
The Company is well-positioned to fund all exploration, expansions, projects and opportunities identified in its guidance and
decade-long outlook using available cash and cash flow from operations. Based on current forecasts, annual expansionary capital
expenditures are expected to be in the range of $100 million and $125 million, on average, over the next four years, the result of
which is that the Company will be well-positioned to manage all its capital allocation priorities, objectives and plans, including
payment and increases in dividends. The Company forecasts that it should be able to sustain its dividend at the current rate even
if the price of gold were to decline to significantly lower levels, and should be able to support and increase its dividend at the current
Annual Report 2020
45
price of gold as its cash balances increase. The Company notes that in addition to its cash balances and cash flows, it also has
interests in securities, instruments and assets that can and, over time, will likely be monetized, which will further increase cash
balances for redeployment to the Company’s capital allocation priorities, objectives and plans.
Upside Case
The Company’s upside case is for annual production to trend above 1 million GEO by mid-decade, reaching 1.2 million GEO by
approximately 2028. The upside case is underpinned primarily by the newly acquired Wasamac project—a future underground
mine located in Quebec’s Abitibi region just 100 kilometres away from Canadian Malartic. The project, which is expected to enter
production in 2025, currently has a mineral reserve base of 1.8 million ounces of gold. Based on the 2018 Feasibility Study
conducted by Wasamac’s previous owner, Monarch Gold, production is projected at 160,000 ounces of gold per year. Costs are
expected to be at the lower end of the Company’s profile, providing an improvement to consolidated costs. Yamana believes there
is considerable upside for future exploration success and mineral resource conversion, with the deposit remaining open at depth
and along strike. The Company will target increasing the mineral inventory and perform optimizations to enhance the project’s
value, advance engineering, and de-risk execution, leveraging the Company’s technical expertise and adhering to its disciplined
capital approach.
Additional Long-Term Upside
The Company has a number of compelling development and exploration stage projects in its pipeline with the potential to drive
significant long-term production upside towards the end of the current decade and beyond. These include the MARA Project, one
of the largest copper-gold projects in the world; the Suyai Project, a large gold project in Chubut Province, Argentina, that is
projected to reach production of up to 250,000 ounces annually in its first eight years; and a number of advanced exploration
projects in the Company’s generative exploration program, including Lavra Velha, Monument Bay, Jacobina Norte, and Borborema.
Assuming just two of these projects, MARA Project and Suyai, are constructed within the next 10 years, annual production would
almost double.
2021 - 2023 Production Guidance
The following table presents the Company's total gold, silver and gold equivalent ounces ("GEO") production expectations in 2021,
2022 and 2023. Actual production for the year-ended December 31, 2020 includes comparative operations, which comprise those
mines in the Company's portfolio as of December 31, 2020. The Company notes that it guides on GEO production and costs based
on a particular assumption of gold and silver prices. Although underlying gold and silver production does not change with the
fluctuation in gold and silver prices, the change in the GEO ratio from such fluctuations may result in a different GEO production
than that guided.
The production profile for 2021 to 2023 shows sequential growth in gold production. Several growth opportunities are available,
and in the near and medium-term the Company remains focused on optimizing the existing portfolio of five operating mines while
also advancing studies for various expansion projects and longer term development assets.
Production guidance for 2021 is slightly below the Company's guidance for 2021 from last year, entirely related to Cerro Moro. A
more conservative production risk adjustment has been applied to Cerro Moro during 2021 to reflect the continued impact of Covid-
19 related restrictions, as experienced in December. Costs for the mine have also been commensurately risk-adjusted.
The Company expects to continue its established trend of delivering stronger production in the second half of the year, with
approximately 53% of production slated for the second half, along with quarterly sequential increases in production.
46
Yamana Gold
The Company looks at production within a normal range of +/- 3%, and the guidance values reflect both the mid-point and the
range for the 2021-2023 period. With improved mine plans, the Company is also providing its maiden three-year guidance by mine
as follows:
(000's ounces)
2020 Actual
2021 Guidance
2022 Guidance
2023 Guidance
Total gold production (i)(ii)
Total silver production
Total GEO production (i)(ii)
780
10,366
901
Mid-Point
Range
Mid-Point
862
10,000
1,000
836 - 888
9,700 - 10,300
970 - 1,030
870
9,400
1,000
Range
844 - 896
9,118 - 9,682
970 - 1,030
Mid-Point
Range
889
8,000
1,000
862 - 916
7,760 - 8,240
970 - 1,030
(i)
(ii)
Included in full year 2020 production figures are 18,929 gold ounces of pre-commercial production, related to the Company's 50% interest in the Canadian
Malartic mine's Barnat deposit.
GEO assumes gold ounces plus the equivalent of silver ounces using a ratio of 88.86 for 2020, and a ratio of 72.00 for 2021, 2022 and 2023.
The following table presents mine-by-mine production results for Yamana Mines for 2020 and updates guidance provided on
January 25, 2021, as the Company is now providing mine-by-mine guidance for the next three years:
(000's ounces)
2020 Actual
2021 Guidance
2022 Guidance
2023 Guidance
Gold
Canadian Malartic (50%) (i)
Jacobina
Cerro Moro
El Peñón
Minera Florida
Total
284
178
67
161
90
780
Mid-Point
350
175
90
160
87
862
Range
340 - 361
170 - 180
87 - 93
155 - 165
84 - 90
836 - 889
Range
320 - 340
175 - 186
97 - 103
160 - 170
92 - 98
844 - 897
Mid-Point
350
185
90
165
99
889
Range
340 - 361
179 - 191
87 - 93
160 - 170
96 - 102
862 - 916
Mid-Point
330
180
100
165
95
870
Silver
(000's ounces)
Cerro Moro
El Peñón
Total
2020 Actual
2021 Guidance
2022 Guidance
2023 Guidance
5,449
4,917
10,366
Mid-Point
5,500
4,500
10,000
Range
5,335 - 5,665
4,365 - 4,635
9,700 - 10,300
Mid-Point
5,000
4,400
9,400
Range
4,850 - 5,150
4,268 - 4,532
9,118 - 9,682
Mid-Point
3,500
4,500
8,000
Range
3,395 - 3,605
4,365 - 4,635
7,760 - 8,240
GEO
(000's ounces)
2020 Actual
2021 Guidance
2022 Guidance
2023 Guidance
Canadian Malartic (50%) (i)
Jacobina
Cerro Moro
El Peñón
Minera Florida
Total
284
178
132
217
90
901
Mid-Point
350
175
166
222
87
Range
340 - 361
170 - 180
161 - 171
215 - 229
84 - 90
Mid-Point
330
180
169
226
95
1,000
970 - 1,030
1,000
Range
320 - 340
175 - 186
164 - 174
219 - 233
92 - 98
970 - 1,030
Mid-Point
350
185
138
228
99
1,000
Range
340 - 361
179 - 191
134 - 142
221 - 235
96 - 102
970 - 1,030
Cost Outlook
The Company anticipates that it will continue to incur some costs in relation to COVID-19 in the near future. Current expectation
of pandemic related costs is that those costs will continue to be incurred during the first half of the year and begin to decrease in
the second half of the year with a rollout of vaccinations expected in most countries in which the Company operates. With increasing
numbers of the population receiving the vaccine, we would expect to see increasing immunity and decreasing caseloads, allowing
for gradual easing of our COVID related controls and associated costs toward the second half of 2021 as noted. Total costs are
expected to not exceed approximately $20 million for the year. Similar to 2020, COVID-19 costs are disclosed as part of mine
Annual Report 2020
47
operating earnings as temporary suspension, standby and other incremental COVID-19 costs and are excluded from cash costs
and AISC.
The expected decline in COVID-19 costs throughout the upcoming year also corresponds to the Company’s customary lower
second half of the year costs, associated with higher production levels.
The following table presents cost of sales, cash costs and AISC results in 2020 and guidance ranges for 2021.
(In US Dollars)
Canadian Malartic (50%) (i)
Jacobina
Cerro Moro
El Peñón
Minera Florida
Total
(i)
Total cost of sales per GEO sold
Cash costs per GEO sold (ii)
AISC per GEO sold (ii) (iii)
2020 Actual
2021 Guidance
2020 Actual
2021 Guidance
2020 Actual
2021 Guidance
$
$
$
$
$
$
1,207 $
844 $
1,513 $
980 $
1,366 $
1,151 $
1,100-1,145
850-885
1,450-1,510
1,140-1,180
1,170-1,220
1,140-1,190
$
$
$
$
$
$
702
544
868
657
862
701
$
$
$
$
$
$
635-675 $
565-600 $
790-835 $
620-660 $
740-785 $
655-695 $
945
746
1,280
922
1,152
1,080
$
$
$
$
$
$
850-885
735-765
1,175-1,225
835-870
1,065-1,105
980-1,020
Included in full year 2020 production figures are 18,929 gold ounces of pre-commercial production, related to the Company's 50% interest in the Canadian
Malartic mine's Barnat deposit. Pre-commercial production ounces are excluded from sales figures, although pre-commercial production ounces that were
sold during their respective period of production had the corresponding revenues and cost of sales capitalized to mineral properties.
A cautionary note regarding non-GAAP financial measures and additional subtotals in financial statements are included in Section 12: Non-GAAP
Performance Measures of this MD&A.
Mine site AISC includes cash costs, mine site general and administrative expense, sustaining capital, capitalized exploration and expensed exploration.
Consolidated AISC incorporates additional non-mine site costs including corporate general and administrative expense.
(ii)
(iii)
The following table presents expansionary capital, sustaining capital, and total exploration spend results for 2020 and expectations
by mine for 2021:
(In millions of US Dollars)
Canadian Malartic (50%) (i)
Jacobina
Cerro Moro
El Peñón
Minera Florida
MARA
Wasamac
Other capital
Generative exploration (expensed)
Other exploration and overhead
Total
(i)
Expansionary capital
2020 Actual 2021 Guidance
$
12.2 $
15.8
6.9
0.5
19.9
8.0
—
3.5
—
—
$
63.0
29.0
1.0
1.0
17.0
15.0
5.0
1.0
—
—
21.6
29.5
31.4
12.6
—
—
1.7
—
—
Sustaining capital
Total exploration
2020 Actual 2021 Guidance
$
52.5
73.0 $
19.0
40.0
31.0
19.0
—
—
1.0
—
—
183.0 $
2020 Actual 2021 Guidance
10.1
$
6.0
12.5
15.9
7.0
—
—
—
15.1
6.1
15.0
12.0
18.0
18.0
11.0
—
11.0
—
18.0
7.0
72.7
$
110.0
2021 guided Expansionary Capital has been revised to reflect the positive construction decision on Odyssey at Canadian Malartic.
$
66.8 $
132.0
$
149.3
$
Approximately 70% of the Company’s expected exploration spend is capital in nature.
Capital expenditure values for 2021 do not include the cost to add to long-term ore stockpile balances at Canadian Malartic. These
costs are estimated at $15.0 million for 2021 compared to $5.9 million for 2020, both on a 50% basis.
48
Yamana Gold
The following table presents other expenditure results in 2020 and expectations for 2021:
(In millions of US Dollars)
Total DDA
Cash based G&A
Cash income taxes paid (i)
2020 Actual
2021 Guidance
395.0
65.8
99.3
$
$
$
470.0-500.0
72.0
180.0-200.0
$
$
$
(i)
2021 guidance is based on $1,800 gold price and $25.00 silver price as per guidance assumption table below
.
Cash taxes paid consider payments made in relation to withholding tax and prior years, as in certain jurisdictions, final payments
related to a fiscal year’s taxes are settled in the next fiscal year.
Guidance Assumptions
Key assumptions, in relation to the above guidance, are presented in the table below.
GEO Ratio
Gold
Silver
USD-CAD
USD-BRL
USD-CLP
USD-ARS
2020 Actual (i)
2021 Guidance
$
$
$
$
88.86
1,770
20.51
1.34
5.16
792.17
70.65
72.00
1,800
25.00
1.28
5.25
725.00
108.00
(i)
Metal prices and exchange rates shown in the table above are the average metal prices and exchange rates for the year ended December 31, 2020.
MINE BY MINE NEAR-TERM OUTLOOK
Canadian Malartic (50%)
Canadian Malartic exceeded its revised 2020 guidance, producing 284,317 ounces of gold. Production last year was impacted by
COVID-19 related restrictions on mining in Quebec and is forecast to increase in 2021 to 350,000 ounces, with AISC projected to
decline to $850-$885 per ounce from $945 per ounce in 2020. Mining is transitioning from the Canadian Malartic pit to the Barnat
pit, which is now in commercial production, and 70% of the total tonnes mined in 2021 are expected to come from Barnat. The
Canadian Malartic pit will be depleted in the first half of 2023, and waste rock and tailings will be deposited into the pit beginning
in 2023.
The operation continues to advance the underground project, which consists of the East Gouldie, Odyssey, and East Malartic
zones, (collectively known as the Odyssey project). Key development milestones over the next three years include the development
of a ramp into the Odyssey, East Malartic, and East Gouldie zones, which will allow for tighter definition drilling to further expand
the mineral resource base, along with headframe construction and shaft sinking. First production from Odyssey is expected in
2023. These milestones are included in the production and cost outlooks provided above.
Jacobina
The Jacobina mine continues to be a standout performer, consistently exceeding expectations. Production in 2021 is forecast to
be in a similar range to the all-time high recorded in 2020 at low AISC of $735-$765 per ounce. The operation exceeded the
targeted throughput rate of 6,500 tpd for the Phase 1 expansion, and it continues to identify and implement additional processing
plant optimizations to further increase throughput, improve recoveries, and reduce costs. Beyond further optimizations, the
Feasibility Study for Jacobina’s Phase 2 expansion plans to increase throughput to 8,500 tpd and raise annual production to
230,000 ounces remains on track for mid-2021.
In a separate initiative, Jacobina is evaluating the installation of a backfill plant that would allow up to 2,000 tpd of tailings to be
deposited in underground voids. In addition to reducing the mine’s environmental footprint, a backfill plant would extend the life of
the mine’s existing tailings storage facility and improve mining recovery, resulting in increased conversion of mineral resources to
mineral reserves.
Annual Report 2020
49
El Peñón
Overall GEO production in 2021 is forecast to be in line with production in 2020, but improvements to cost structure are expected
to be realized in 2021, with cash costs expected to range between $620-$660 per GEO and AISC(1) forecast at between $835-
$870 per GEO. The mine’s current production rate—the result of the right-sizing of the operation initiated in late 2016—increased
cash flow while ensuring the long-term sustainability of the mine. Exploration successes over the last two years has resulted in an
increase in mineral reserves, unlocking opportunities to incrementally increase production by leveraging excess processing
capacity at El Peñón. The operation can process approximately 4,200 tpd, which represents upside of 20-30% above currently
budgeted levels, with no additional capital expenditures required.
Minera Florida
Minera Florida exceeded its full year production guidance. Gold production is forecast to be at a similar level in 2021. The strategy
at Minera Florida is to extend mine life and unlock opportunities for increased annual gold production following an approach similar
to the approach taken at Jacobina. This includes focusing on mineral reserve development and generating an inventory of prepared
mining areas to increase operational flexibility. The short-term focus is to achieve consistent throughput of 74,500 tpm from the
underground mine while continuing improvements in the mine that will increase feed grade to align with mineral reserve grade and
set the stage for further expansions.
Cerro Moro
Production and costs in 2020 at Cerro Moro were significantly impacted by COVID-19 related restrictions on travel and work
rosters. The mine and processing plant are currently running at full capacity, though COVID-19 continues to present a risk of further
disruptions, particularly during the first half of the year. Exploration drilling and underground capital development were also delayed
by COVID-19 in 2020. Hence, Cerro Moro is planning higher production in 2021, but will ramp-up gradually throughout the year as
it mines new underground levels. Exploration drilling continues in the core mine area at Cerro Moro with positive results and
opportunities to convert mineral resources into mineral reserves and generate new high-grade discoveries. The operation is
evaluating construction of a heap leach operation, a lower-cost processing alternative that would allow for the processing of lower-
grade mineral reserves, potentially extending mine life. The evaluation is in the early stages with a preliminary study completed
and metallurgical lab testing currently underway.
3.
REVIEW OF FINANCIAL RESULTS
IMPAIRMENT AND REVERSAL OF IMPAIRMENT
In the fourth quarter of 2020, in accordance with policy, operating mine sites were reviewed for indicators of impairment or reversal.
The Company observed an increase in the recoverable amount of our El Peñón mine in Chile that resulted in a reversal of the
impairment losses recorded in 2015 and 2016, totalling $560.0 million. This reversal was partially offset by an impairment at Cerro
Moro of $369.0 million. No indicators of impairment or impairment reversal were identified for the other operating mine sites,
advanced stage projects, or exploration properties. For the year ended December 31, 2020, the Company ultimately recorded a
net impairment reversal of $191.0 million.
Under IFRS, an impairment loss is recognized when the carrying value of an asset (or cash-generating unit ("CGU")) is above the
recoverable amount, being the higher of ‘fair value less costs of disposal’ or ‘value in use’. When the inverse is true, a reversal of
a previous impairment is recognized. Based on the continuous application of this current fair value principle and updating of
discounted cash flow models for changes in macro-economic and mine specific operational assumptions and triggers, it is more
likely that under IFRS compared to other accounting standards, an asset will be impaired or have an impairment reversal occur
earlier and/or more frequently.
50
Yamana Gold
El Peñón
The Company recorded impairments at the El Peñón mine in 2015 and 2016. The impairment in 2015 was a result of the Company
downward adjusting its macroeconomic assumptions, which negatively impacted future estimated cash flows, and the Company's
updated view on value beyond mineral reserves and mineral resources. During 2016, the Company determined that the
sustainable, long-term optimal production level for the mine was a production expectation of 140,000 ounces of gold and 4,150,000
ounces of silver per annum, which negatively impacted future cash flows.
Following a standout year and solid fourth quarter from El Peñón, where sustained production and costs were in line with an
improved LOM and budget, the mine demonstrated its ability to maintain its current production and cost profile. The Company
considered the following factors to be an indicator of reversal of the previous impairment charge:
•
•
•
Prolonged and sustained high production levels, which have led to significantly higher production than the envisioned
mine plan from 2016 for both gold and silver. This was the result of both plant improvements to increase throughput, and
higher grade ores being mined.
A sustained reduction in costs benefiting from the higher production and continuous cost reduction initiatives carried out
over the past year.
Significant exploration successes throughout the year, which lead to increased mineral resources for December 31, 2020,
which both extended the life of the mine and improved the life of mine models.
The Company concluded that the recoverable amount for the El Peñón Cash Generating Unit ("CGU"), representing the CGU’s
fair value less costs to dispose ("FVLCD"), exceeded the carrying amount. This resulted in a non-cash accounting reversal of the
impairment charges previously recorded in 2015 and 2016 on mineral properties subject to depletion, which was limited to the
carrying amount of the El Peñón CGU that would have been determined had no impairment charge been recognized in prior years,
net of depletion, depreciation and amortization charges, totalling $560.0 million.
Cerro Moro
During 2020, the Cerro Moro mine experienced lower production at higher than expected unit costs, predominantly as a result of
COVID-19. The following considerations were taken into account while developing the new LOM plan:
• Country-specific matters such as the announcement on December 30, 2020 of the change to the export tax in Argentina
•
•
to 4.3%, and its indefinite extension.
Expected lower annual production in comparison with prior year guidance and expectations, particularly for 2021.
A higher cost structure than previously anticipated and consistent with current costs being observed in the operation,
which have exceeded those in the Company’s budget and guidance due to general cost pressures, inefficiencies and
general operational challenges in relation to COVID-19.
• Delays in reaching previously targeted exploration results and mineral reserve and mineral resource additions. Despite
promising recent results in core areas of the mine and newly discovered areas, the Company has been delayed in its
goal of increasing mineral reserves and mineral resources in the operation.
Given the decrease in the overall Cerro Moro CGU profitability as identified in the latest LOM plan, the impact of the LOM plan on
the value of exploration potential and land interest, and the impact of a reduction in reserves and resources, the Company
concluded that these factors represent an indicator of impairment for Cerro Moro as of December 31, 2020. The Company
concluded that the recoverable amount for the Cerro Moro CGU, representing the CGU’s FVLCD, was below the carrying amount.
In consideration of the above, a non-cash accounting impairment of $369.0 million was recognized.
Annual Report 2020
51
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020
Net Earnings
Net earnings for the three months ended December 31, 2020, were $103.0 million or $0.11 per share basic and diluted, compared
to net earnings of $14.6 million or $0.02 per share basic and diluted for the three months ended December 31, 2019. Net earnings
and earnings per share for the three months ended December 31, 2020 and 2019 were affected by the following non-cash and
other items that management believes are not reflective of current and ongoing operations, and which may be used to adjust or
reconcile input models in consensus estimates:
For the three months ended December 31,
(In millions of US Dollars; except per share amounts)
Non-cash unrealized foreign exchange losses
Share-based payments/mark-to-market of deferred share units
Mark-to-market (gains) losses on derivative contracts, investments and other assets and liabilities
Gain on sale of subsidiaries, investments and other assets
Temporary suspension and standby costs
Other incremental COVID-19 costs
Net pre-tax impairment reversal of mining properties
Other provisions, write-downs and adjustments (i)
Non-cash tax on unrealized foreign exchange gains
Income tax effect of adjustments
One-time tax adjustments
Total adjustments - increase (decrease) to earnings
Total adjustments - increase (decrease) to earnings per share
$
$
$
2020
21.9 $
3.4
(5.8)
(3.0)
2.2
7.0
(191.0)
6.7
1.8
(2.4)
163.9
4.7 $
— $
2019
0.6
3.2
(0.9)
—
—
—
—
7.5
(3.9)
(0.2)
5.8
12.1
0.01
(i)
This balance includes, among other things, revisions in estimates and write-downs & provisions, or reversals of provisions, for items such as tax credits and
legal contingencies.
Revenue
In the three months ended December 31, 2020, revenue was $461.8 million compared to $383.8 million in the same period in
2019. The 20% increase was primarily attributable to higher realized prices for gold and silver in the current period. Further,
revenues and inventory levels were impacted by production exceeding sales in the fourth quarter, due to the timing of scheduled
pickups at mine. The higher inventory levels resulted in a working capital build-up as at December 31, 2020, which is expected to
normalize in 2021, predominantly in the first quarter.
For a cautionary note on non-GAAP performance measures and a reconciliation to average realized prices, refer to Section 12:
Non-GAAP Performance Measures.
Cost of Sales Excluding DDA
Cost of sales excluding DDA was consistent with the same quarter in prior year due to similar GEO production levels, decreasing
by $2.6 million or 2%, with insignificant changes across all mine operations.
Depletion, Depreciation and Amortization (DDA)
Total DDA expense decreased $6.5 million or 5% for the three months ended December 31, 2020 when compared to the same
period in 2019, primarily due to lower sales volumes as discussed above, as well as lower DDA at El Peñón resulting from reduced
rates of depletion in the current period due to additions to mineral reserves and resources announced at December 31, 2019.
General and Administrative
General and administrative ("G&A") expenses include expenses related to management of the business that are not part of direct
mine operating costs. In the three months ended December 31, 2020, G&A expenses were $4.1 million or 21% higher than in the
same period in 2019, predominantly due to stock-based compensation expense being comparatively higher by $3.2 million. The
increase is related to stock based-compensation granted in previous years, and in particular related to performance share units.
Due to the significant increase in the Company share price during 2020, as well as its outperformance in relation to certain indexes,
52
Yamana Gold
the expense the Company has had to record in relation to these historical units increased. The Company's cash G&A expenses
were $18.6 million for the three months ended December 31, 2020.
Exploration and Evaluation
Exploration and evaluation expenses of $6.0 million for the three months ended December 31, 2020 were higher than in 2019 due
to increased expenditures resulting from the generative exploration program. The program is focused on advancing projects in
Yamana’s portfolio, while continuing drilling activity at a number of the Company’s highly prospective earlier stage projects. For
more information please refer to Section 7: Exploration.
Share of Earnings/loss of Investments in Associates
The Company's investments in associates at December 31, 2020 comprised of investments in Nomad Royalty Company and
Monarch Gold, with the Company's share of loss of associates in the three months ended December 31, 2020 was nil. For the
same period in 2019, the Company recorded a share of loss of associate of $0.3 million, which represented Yamana's share of its
then associate Leagold's loss for the period. On March 10, 2020, Leagold merged with Equinox and as a result of its reduced
shareholding in the combined entity Yamana ceased to have significant influence in the investee, and therefore, discontinued
equity accounting for the investment using the equity method from this date.
Other Operating Expenses/income
In the three months ended December 31, 2020, the Company recorded other operating expenses of $1.5 million compared to other
operating expenses of $5.6 million for the same period in 2019. Operating expenses are comprised primarily of contributions to
social and infrastructure development causes in jurisdictions where the Company is active, business development related costs,
changes in provisions, and mark-to-market adjustments on financial assets and liabilities.
Finance Costs
Finance costs decreased $2.2 million or 10% in the three months ended December 31, 2020 compared to the same period in
2019. The Company repaid $56.0 million of senior notes in the first quarter of 2020, and as a result, interest expense associated
with long term debt has decreased in 2020.
Other Income/costs
Other costs were $21.6 million in the three months ended December 31, 2020, compared to other costs of $3.5 million in the
comparative period. Other income/costs is comprised primarily of unrealized gains and losses on derivatives and foreign exchange
and, given the nature of these items, is expected to fluctuate from period to period. The loss in the current period was primarily
due to unrealized foreign exchange losses.
Income Tax Expense
The Company recorded an income tax expense of $189.5 million for the three months ended December 31, 2020, as a result of
the reversal of impairment in relation to the comparative quarter's income tax expense of $27.3 million. The income tax provision
further reflects a current income tax expense of $24.4 million and a deferred income tax expense of $165.1 million, compared to a
current income tax expense of $24.0 million and a deferred income tax recovery of $3.4 million for the three months ended
December 31, 2019.
Included in the income tax expense is the non-recognition of deferred tax assets of $52.9 relating to impairments for the three
months ended December 31, 2020 compared to a recognition of deferred tax asset of $28.6 for the three months ended December
31, 2019. Withholding taxes of $1.6 million are included in income tax expense for the three months ended December 31, 2020
compared to withholding taxes of $1.8 million for the same period in 2019. The income tax expense also includes mining taxes of
$8.3 million for the three months ended December 31, 2020, compared to mining taxes of $18.0 million in the three months ended
December 31, 2019.
Annual Report 2020
53
FOR THE YEAR ENDED DECEMBER 31, 2020
Net Earnings
Net earnings for the year ended December 31, 2020, were $203.7 million or $0.21 per share basic and diluted, compared to net
earnings of $225.6 million or $0.24 per share basic and diluted for the year ended December 31, 2019.
Net earnings and earnings per share for the year ended December 31, 2020 and 2019 were affected by the following non-cash and
other items that management believes are not be reflective of current and ongoing operations, and which may be used to adjust
or reconcile input models in consensus estimates:
For the year ended December 31,
(In millions of US Dollars; except per share amounts)
Non-cash unrealized foreign exchange (gains) losses
Share-based payments/mark-to-market of deferred share units
Mark-to-market (gains) losses on derivative contracts, investments and other assets and liabilities
Gain on sale of subsidiaries, investments and other assets
Gain on discontinuation of the equity method of accounting
Temporary suspension and standby costs
Other incremental COVID-19 costs
Share of one-off provision recorded against deferred income tax assets of associate
Net pre-tax impairment reversal of mining properties
Financing costs paid on early note redemption
Other provisions, write-downs and adjustments (i)
Non-cash tax on unrealized foreign exchange losses
Income tax effect of adjustments
One-time tax adjustments
Total adjustments - increase (decrease) to earnings
Total adjustments - increase (decrease) to earnings per share
$
$
$
2020
21.6 $
31.5
(6.9)
(1.4)
(21.3)
18.4
22.1
—
(191.0)
—
17.9
52.8
(19.7)
183.6
2019
29.0
15.0
0.1
(284.6)
—
—
—
13.0
—
35.0
42.0
17.9
(0.5)
26.9
107.6 $
0.11 $
(106.1)
(0.11)
(i)
This balance includes, among other things, revisions in estimates and write-downs & provisions, or reversals of provisions, for items such as tax credits and
legal contingencies.
Revenue
For the year ended December 31, 2020, revenue was $1,561.0 million compared to $1,612.2 million for the year ended December
31, 2019. The difference was primarily attributable to the absence of contributions from the Chapada mine (divested July 5, 2019),
which contributed $226.8 million to revenue in the comparative year, as well as lower sales volumes from the Canadian Malartic
and Cerro Moro mines, which were impacted by their respective temporary demobilization and suspension of operations as a result
of the COVID-19 pandemic, and subsequent ramp up periods. The decreases in sales volumes were partially offset by higher
realized prices for gold and silver in the current year, and by increases in sales volumes at the Jacobina, El Peñón and Minera
Florida mines. Further, revenues and inventory levels were impacted by production exceeding sales in the fourth quarter, due to
the timing of scheduled pickups at mine. The higher inventory levels resulted in a working capital build-up as at December 31,
2020, which is expected to normalize in 2021, predominantly in the first quarter.
For a cautionary note on non-GAAP performance measures and a reconciliation to average realized prices, refer to Section 12:
Non-GAAP Performance Measures.
Cost of sales Excluding DDA
Cost of sales excluding DDA decreased $168.7 million or 22% for the year ended December 31, 2020 compared to the same
period in 2019, primarily due to sales volumes as discussed above, and the absence of cost of sales excluding DDA from Chapada
($111.2 million in the comparative year). Cost of sales excluding DDA was also positively impacted by ongoing operational
efficiencies at El Peñón, improving per unit costs, and the depreciation of certain local currencies against the US Dollar.
54
Yamana Gold
Depletion, Depreciation and Amortization (DDA)
Total DDA expense decreased $76.6 million or 16% for the year ended December 31, 2020 compared to the same period in 2019,
primarily due to sales volumes as discussed above, as well as lower DDA at El Peñón and Jacobina resulting from reduced rates
of depletion in the current period due to additions to mineral reserves and resources at these mines announced at December 31,
2019. The comparative year also included $11.9 million of DDA related to Chapada.
General and Administrative
G&A expenses include costs related to the overall management of the business that are not part of direct mine operating costs. In
the year ended December 31, 2020, G&A expenses increased $6.5 million or 8% compared to the same period in 2019,
predominantly due to stock-based compensation expense being comparatively higher by $9.1 million. The increase is related to
stock based-compensation granted in previous years, and in particular related to performance share units. Due to the significant
increase in the Company share price during 2020, as well as its outperformance in relation to certain indexes, the expense the
Company has had to record in relation to these historical units increased. The Company's cash G&A expenses of $65.8 million for
the year ended December 31, 2020 were in line with that guided.
Exploration and Evaluation
Exploration and evaluation expenses of $15.1 million for the year ended December 31, 2020 were higher than the same period in
2019 due to increased expenditures relating to the ongoing generative exploration program. The program is focused on advancing
projects in Yamana’s portfolio, while continuing drilling activity at a number of the Company’s highly prospective earlier stage
projects. For more information please refer to Section 7: Exploration.
Share of Earnings/loss of Associates
The Company's share of net loss related to its associates totalled $1.0 million for the year ended December 31, 2020, and was
comprised of the Company's share of losses of Leagold prior to Yamana ceasing to have significant influence in Leagold in March
2020, partially offset by the Company's share of net earnings in Nomad Royalty Company and Monarch Gold, both of which were
acquired in the latter half of the second quarter of 2020. In 2019, the Company recorded losses of $16.3 million, being the
Company's share of Leagold's losses for the year, which included the Company recognizing its share of a $63.5 million provision
recorded against Leagold's deferred income tax assets during the year.
Other Operating Expenses/income, Net
In the year ended December 31, 2020, the Company recorded other operating expenses of $14.6 million. In 2019, the Company
recorded other operating income of $222.4 million, which was primarily comprised of the $273.1 million gain recognized upon the
sale of Chapada, partially offset by various other operating expenses. Other operating expenses recorded in the current year
include a $10.9 million mark to market loss on deferred share unit compensation due to the increase in the Company's share price,
contributions to social and infrastructure development causes in jurisdictions where the Company is active, and various other
individually insignificant operating expenses. These expenses were partially offset by a $21.3 million gain recognized upon the
discontinuation of the equity method on the Company's investment in Leagold (now Equinox) in the first quarter of 2020. During
the fourth quarter of 2020, the Company entered into a derivative contract to mitigate the volatility of share price on DSU
compensation, effectively locking in the exposure of the Company for 4.2 million DSUs.
Finance Costs
Finance costs decreased $67.2 million or 47% in the year ended December 31, 2020 compared to the same period in 2019,
primarily attributable to the lower interest expense in the current year, following the repayment of $800.0 million of debt during the
third quarter of 2019. The reduction in the carrying amount of debt has significantly reduced the carrying cost of interest on debt,
freeing up cash for other uses and for the Company to further improve its net debt position. Further, finance costs in the prior year
included a $35.0 million expense relating to the early redemption of certain of the Company's senior notes in connection with the
above mentioned repayment of debt in the third quarter of 2019.
Annual Report 2020
55
Other Costs/income, Net
Other costs were $18.7 million in the year ended December 31, 2020, compared to other costs of $19.6 million in the comparative
year. Other costs/income is comprised primarily of realized and unrealized gains and losses on derivatives and foreign exchange
and, given the nature of these items, is expected to fluctuate from year to year. The loss in the prior year was primarily due to
foreign exchange losses, partially offset by the realized gain on the sale of the Gold Price Instrument obtained as part of the
consideration from the sale of Chapada.
Income Tax Expense
The Company recorded an income tax expense of $286.4 million for the year ended December 31, 2020, compared to an income
tax expense of $84.7 million in 2019. The income tax provision reflects a current income tax expense of $116.2 million and a
deferred income tax expense of $170.3 million compared to a current income tax expense of $95.0 million and a deferred income
tax recovery of $10.3 million for the year ended December 31, 2019.
The effective tax rate is subject to a number of factors including the source of income between different countries, different tax
rates in the various jurisdictions, the non-recognition of tax assets, foreign currency exchange movements, mining taxes, changes
in tax laws and the impact of specific transactions and assessments. The consolidated effective tax rate was 58.4% on the earnings
before tax for the year ended December 31, 2020, compared to an effective tax rate of 27.3% for the prior year.
The following items have the most significant impact on the difference between the Company's Canadian statutory tax rate of
26.5% and our effective rate for the years ended December 31, 2020 and 2019:
• Mining tax in the amount of $28.9 million for the year ended December 31, 2020 and $29.1 million for the year ended
December 31, 2019 was recorded in income tax expense. These taxes are incurred in Chile and Canada and are
calculated based on taxable income and are considered an income tax.
The tax provision was also impacted by the non-recognition of deferred tax assets in the amount of $53.4 million, mainly
relating to impairments, for the year ended December 31, 2020 compared to the recognition of deferred tax assets of
$20.6 million for the year ended December 31, 2019.
•
• Withholding taxes in the amount of $8.4 million are included in the income tax expense for the year ended December 31,
2020 compared to $6.7 million for the year ended December 31, 2019. Withholding taxes are paid on intercompany
interest and dividends.
Permanent differences of $63.2 million reduced the income tax expense for the year ended December 31, 2019, mainly
relating to the sale of Chapada, compared to an increase in income tax expense of $28.1 million in December 31, 2020.
•
The deferred tax liabilities relating to the operating mines will reverse in the future, as the assets are depreciated or depleted. The
capitalized exploration expenditures on non-producing mineral properties will not reverse until the property becomes a mine subject
to depletion, is written off or sold. The deferred income taxes would only be paid on a direct disposition of the asset that may never
occur.
The Company operates in the following tax jurisdictions: Brazil, where the statutory tax rate is 34%; Argentina, where the statutory
tax rate is 30% in 2020, decreasing to 25% in 2021; Chile, where the statutory tax rate is 27%; and Canada, where the federal
statutory tax rate is 15% with varying provincial tax rates. There is a proposal in Argentina to delay the decrease to 25% until 2022,
however, this change will not have a material impact on the current or deferred tax expense if it is passed. The Company does not
anticipate the statutory tax rates to change in the other jurisdictions in the foreseeable future; therefore, there should be no impact
on the calculation of the current or deferred tax expense in the period.
The largest components of the net deferred tax liabilities relate to:
As at December 31, (In millions of US Dollars)
Canadian Malartic
Jacobina
El Peñón
Agua Rica
Exploration potential
56
Yamana Gold
2020
296.6
188.7
234.6
266.0
171.1
2019
318.5
169.1
51.8
266.6
245.9
QUARTERLY FINANCIAL SUMMARY
For the three months ended
(In millions of US Dollars, except per share amounts)
Financial results
Revenue
Net earnings (loss)
Per share - basic and diluted
Dec. 31,
Sep. 30,
2020
2020
Jun. 30, Mar. 31, Dec. 31, Sep. 30,
2019
2019
2020
2020
Jun. 30, Mar. 31,
2019
2019
$ 461.8 $ 439.4 $ 303.4 $ 356.5 $ 383.8 $ 357.8 $ 463.5 $ 407.1
(4.1)
45.0 $
$ 103.0 $
14.1 $
55.6 $
— $
$
0.11 $
0.06 $
— $
0.05 $
0.01 $
—
14.6 $ 201.3 $
0.02 $ 0.21 $
4.
OPERATING SEGMENTS PERFORMANCE
CANADIAN MALARTIC (50% interest), CANADA
Canadian Malartic is an open pit gold mine, located in the Abitibi region of Quebec, Canada. The Company and its partner, Agnico
Eagle Mines Limited ("Agnico"), each own 50% of Canadian Malartic General Partnership (the "Partnership").
Key Performance Information
Operating
Ore mined (tonnes)
Waste mined (tonnes)
Ore processed (tonnes)
GEO (i)
Production (ounces) (ii)
Sales (ounces) (ii)
Feed grade (g/t)
Recovery rate (%)
Total cost of sales per GEO sold
Cash costs per GEO sold (iii)
AISC per GEO sold (iii)
DDA per GEO sold
Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA
Gross margin excluding DDA
DDA
Temporary suspension, standby and other incremental
COVID-19 costs
Mine operating earnings
Capital expenditures (millions of US Dollars)
Sustaining and other
Expansionary (ii)
Exploration
For the three months ended December 31,
For the year ended December 31,
2020
2019
2020
2019
3,285,723
2,718,493
2,868,329
86,371
84,348
1.06
3,589,493
3,274,236
2,720,660
85,042
84,673
1.09
12,012,693
10,649,407
10,399,882
284,317
264,198
0.97
$
$
$
$
$
$
$
$
$
$
88.0
1,126 $
634 $
898 $
493 $
158.4 $
(53.4)
105.0 $
(41.5)
(0.8)
62.7 $
18.6 $
5.1 $
7.0 $
89.1
1,039 $
627 $
828 $
412 $
125.9 $
(53.1)
72.8 $
(34.9)
—
37.9 $
13.5 $
9.8 $
0.1 $
87.4
1,207 $
702 $
945 $
505 $
471.0 $
(185.4)
285.6 $
(133.4)
(4.5)
147.7 $
52.5 $
12.2 $
10.1 $
14,642,808
13,780,384
10,524,531
334,596
330,851
1.12
88.7
1,011
601
782
409
460.5
(198.9)
261.6
(135.4)
—
126.2
45.1
36.5
1.0
(i)
(ii)
(iii)
GEO information relates to gold.
Included in the gold production figure for the year ended December 31, 2020 is 18,929 of pre-commercial production ounces (3,137 pre-commercial
production ounces are included in the three months and year ended December 31, 2019), related to the Company's 50% interest in the Canadian Malartic
mine's Barnat pit which achieved commercial production on September 30, 2020. Pre-commercial production ounces are excluded from sales figures,
although pre-commercial production ounces that were sold during their respective period of production had their corresponding revenues and costs of sales
capitalized to mineral properties, captured as expansionary capital expenditures.
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Canadian Malartic's production for the fourth quarter exceeded the comparative period in 2019 due to higher mill throughput, and
the mine's performance for the year was exceptional, with production exceeding its revised plan. The successful ramp-up of the
Barnat pit during the year resulted in Barnat declaring commercial production on September 30, 2020, and consequently Barnat
pit revenues and costs of production ceased to be capitalized effective October 1, 2020. In addition, DDA associated with the
Annual Report 2020
57
Barnat pit's capitalized costs started being depleted October 1, 2020. Canadian Malartic continued to remove overburden at Barnat
during the fourth quarter with overburden removal expected to be complete by the end of first quarter, and topographic drilling and
blasting expected to be completed by the third quarter of 2021, according to plan.
Unitary costs were lower in the comparative quarter and year-to-date period, a result of the fixed production costs being distributed
over more ounces in the prior year. Current year grades were lower due to sequencing from COVID-19 impacts. Further, the timing
and increase in sustaining capital, as planned, in the current versus comparative periods impacted costs for the period. Unitary
and absolute DDA observed in the fourth quarter was primarily driven by the declaration of commercial production on Barnat, upon
which depletion of the deposit commenced.
The Canadian Malartic mine entered care and maintenance on March 24, 2020, in response to government restrictions related to
COVID-19 that required mining companies to minimize operational activities. During this period, Canadian Malartic developed a
robust plan of preventative measures against COVID-19 to ensure the health and safety of its employees, families, and
communities. On April 14, 2020, following the Government of Quebec’s decision to authorize the resumption of mining activities,
the Partnership announced that the Canadian Malartic would resume operations starting on April 15, 2020. The remobilization
occurred with full attention to the health and safety of returning employees, contractors, and suppliers. These precautionary
measures complied with the recommendations of the Quebec Department of Public Health and the province’s Committee on
Standards, Equity, and Occupational Safety (CNESST) and include enhanced screening of all individuals entering the mine,
including temperature checks; mandatory social distancing; enhanced sanitization and disinfecting; and preparedness planning in
the event of a suspected or confirmed case of COVID-19. The ramp-up progressed faster than expected. Further, in an effort to
improve procedures, protect workers and respond quickly to specific situations, Canadian Malartic installed a COVID-19 screening
test laboratory directly at the site where nursing staff collect samples and anyone entering the site may be required to take a
screening PCR test.
During the fourth quarter, the Company continued to advance studies related to the underground project at Canadian Malartic,
which consists of the East Gouldie, Odyssey, and East Malartic zones (collectively known as the Odyssey project).
Following impressive technical study results obtained in early February of 2021, the Company and its partner made a positive
construction decision of the Odyssey project at Canadian Malartic, with first production from the Odyssey South deposit expected
in 2023. The technical study outlined robust economics, a significant increase in mineral resources, and a mine life extension to at
least 2039. Whereas the Company had originally considered a production platform conservatively in the range of 450,000 ounces
per year, the mine now supports an expected increased annual gold production of 500,000 to 600,000 ounces on a 100% basis.
Further extension of the mine life beyond 2039 provides additional upside, with several opportunities under evaluation. A NI 43-
101 technical report for the Canadian Malartic operation is expected to be filed in March 2021 and will include a summary of the
Odyssey underground project.
On a 100% basis, initial expansionary capital of $1.14 billion is expected to be spent over a period of eight years, with capital
requirements in any given year manageable and fully funded using the Company's cash on hand and free cash flow generation.
Additionally, other growth capital expenditures and modest sustaining capital during the construction period total $191.4 million.
Gold production during the 2021 to 2028 construction period is expected at 932,000 ounces (on a 100% basis) at cash costs of
$800 per ounce. The net proceeds from the sale of these ounces would significantly reduce the external cash requirements for the
construction of the project which, assuming the gold price used in the financial analysis for the project, would reduce the projected
capital requirements in half. On a 100% basis, average annual payable production is expected to be approximately 545,400 ounces
from 2029 to 2039 with total cash costs per ounce of approximately $630 per ounce. Sustaining capital from 2029 to 2039 is
expected to average approximately $55.8 million per year.
Construction of surface infrastructure and the portal in preparation for development of the ramp started in August of 2020. The
Company and its partner completed the construction of the mine office and surface facilities in the fourth quarter, to support the
development, and further advanced the development of the exploration ramp into Odyssey and East Malartic. The exploration
ramp is designed with the purpose of mining their respective upper zones and providing further exploration access to allow tighter
drill spacing to further define the mineral resource base, along with headframe construction and shaft sinking. The new ramp will
also provide the ability to carry out bulk sampling of 40,000 tonnes of mineralization. The budget for the ramp is C$15.25 million
for 2021 on a 50% basis. Development of the exploration ramp is anticipated to take approximately two years to complete, with
the first drilling platform will be established in the third quarter of 2021.
58
Yamana Gold
A 2.3 kilometre geotechnical hole in the shaft area has been completed, and detailed engineering has begun in relation to the shaft
and headframe. The shaft is envisioned as a 6.4-metre diameter, 1.8 kilometre deep shaft with a hoisting capacity of approximately
20,000 tpd. As noted, the Company’s current expectation is that production from Odyssey South will begin in 2023 from the ramp,
while the Company sinks the shaft to East Gouldie, with a goal to start production from East Gouldie in 2027.
For full details on the construction decision, please refer to Section 5: Construction, Development and Other Initiatives.
The main focus of exploration during the fourth quarter was to provide support for an aggressive infill drill program at East Gouldie,
where thirteen diamond drill rigs completed 27,000 metres, bringing the year total to 105,000 metres drilled. Of these, 97,000
metres were drilled on the East Gouldie target with the remainder on East Malartic and Odyssey.
JACOBINA, BRAZIL
Jacobina is a complex of underground gold mines located in Bahia state, Brazil.
Key Performance Information
Operating
Ore mined (tonnes)
Ore processed (tonnes)
GEO (i)
Production
Sales
Feed grade (g/t)
Recovery rate (%)
Total cost of sales per GEO sold
Cash costs per GEO sold (ii)
AISC per GEO sold (ii)
DDA per GEO sold
Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA
Gross margin excluding DDA
DDA
Temporary suspension, standby and other incremental
COVID-19 costs
Mine operating earnings
Capital expenditures (millions of US Dollars)
Sustaining and other
Expansionary
Exploration
For the three months ended December 31,
For the year ended December 31,
2020
2019
2020
2019
610,257
580,287
44,165
42,789
2.44
96.9
907 $
590 $
807 $
317 $
80.7 $
(25.2)
55.5 $
(13.6)
(0.5)
41.4 $
5.4 $
4.8 $
2.0 $
600,048
567,329
41,774
44,293
2.38
96.4
799 $
529 $
827 $
270 $
65.6 $
(23.4)
42.2 $
(12.0)
—
30.2 $
8.2 $
6.9 $
2.7 $
2,470,091
2,425,886
2,298,631
2,254,793
177,830
175,561
2.36
96.5
844 $
544 $
746 $
300 $
312.1 $
(95.5)
216.6 $
(52.6)
(2.0)
162.0 $
21.6 $
15.8 $
6.0 $
159,499
160,142
2.28
96.7
947
593
845
354
224.0
(94.9)
129.1
(56.7)
—
72.4
24.5
30.7
6.5
$
$
$
$
$
$
$
$
$
$
(i)
(ii)
GEO information relates to gold.
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Jacobina continues to be a standout performer, and once again exceeded its quarterly and annual production plan, as well as
comparative period results. Recovery rates and grade for the fourth quarter both exceeded plan, and were higher than the
comparative quarter, which resulted in the higher production. Mill throughput for the quarter was impacted by approximately 6%,
due to a planned maintenance shutdown of one of the ball mills. The shutdown was also opportunely used to implement further
Phase 1 optimization components, and to run tests confirming the design basis of the Phase 2 plant expansion of 8,500 tpd, while
utilizing the availability from the main grinding line. Following the shutdown, the mill resumed processing at an average of 6,800
tpd, resulting from the commissioning of the initial Phase 1 expansion implemented earlier in the year. Given the success of Phase
1, the Company has begun to further optimize Phase 1 with the goal of optimizing gold recovery at 96% to 97% while maintaining
the higher throughput rate. For further information on Phase 1, Phase 2 and a new conceptual study on Phase 3 developments at
Jacobina please refer to Section 5: Construction, Development and Other Initiatives.
Unitary cash costs were better than plan in the fourth quarter of 2020. Planned higher sustaining capital expenditure and exploration
spend associated with deferrals during the year to accommodate the impacts of COVID-19 in the fourth quarter occurred as
Annual Report 2020
59
expected. On a year-to-date basis, unitary costs were lower than plan, and significantly improved over the comparative period as
a result of the increased production in association with higher throughput, and the positive impact as a result of the devaluation of
the Brazilian Real compared to the US Dollar. Underground mine development work is in line with the mine plan at 1,500 metres
per month, to sustain the current production rate of 6,800 tpd with sufficient operational flexibility.
Exploration activities at Jacobina continued as planned during the fourth quarter as COVID related protocols were adhered to in
order to provide a safe and effective working environment. Field activities such as surface mapping and sampling were reduced to
avoid increased travel, however drilling was carried out as planned, with four drills active during the quarter. Drilling activity during
the quarter continued to be weighted toward exploration in response to better than anticipated infill drilling results in previous
quarters.
A total of 5,663 metres of drilling were completed in the fourth quarter at Jacobina, including 898 metres of infill drilling to convert
inferred mineral resources to indicated mineral resources, and 4,765 metres of exploratory drilling dedicated to defining new
inferred mineral resources. The infill program focused on delineation of new indicated resources in higher-grade areas of the mine,
with a total of 7,541 metres completed during 2020. Infill drilling during the fourth quarter included five holes completed at the
Canavieiras Sul and Canavieiras Central connector zone following completion earlier this year of an exploration drift connecting
these two sectors. Assays results are pending but core is visually positive.
Exploration drilling activity at Jacobina in the fourth quarter focused on definition of new inferred resources, was carried out at the
extension of Canavieiras Sul along the connector between Canavieiras Sul and Canavieiras Central and at João Belo Sul, bringing
total exploration drilling in 2020 at Jacobina to 12,644 metres. Exploration drilling carried out at Canavieiras Sul and Central
connector during the quarter continued to return positive results from LVL, LU, MU and Maneira reefs in step-out drilling, confirming
a new high-grade sector along a 300 metre north-south strike length close to existing mine infrastructure. Fourth quarter exploration
drilling at João Belo Sul returned significant results from the LMPC reef, providing confirmation of historical results in this sector..
Generative work during the fourth quarter included 1,591 metres of drilling in three holes testing the João Belo Sul, Morro do
Cuscuz and Morro do Vento Leste targets. Two drill holes totaling 957 metres were completed at the Barrocão Velho target in
Jacobina Norte, with most assay results pending.
60
Yamana Gold
CERRO MORO, ARGENTINA
Cerro Moro is an underground and open pit gold-silver mining operation, located in the province of Santa Cruz, Argentina.
Key Performance Information
Operating
Ore mined (tonnes)
Waste mined (tonnes)
Ore processed (tonnes)
GEO
Production
Sales
Total cost of sales per GEO sold
Cash costs per GEO sold (i)
AISC per GEO sold (i)
DDA per GEO sold
Gold
Production (ounces)
Sales (ounces)
Feed grade (g/t)
Recovery rate (%)
Silver
Production (ounces)
Sales (ounces)
Feed grade (g/t)
Recovery rate (%)
Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA
Gross margin excluding DDA
DDA
Temporary suspension, standby and other incremental
COVID-19 costs
Impairment
Mine operating (loss) earnings
Capital expenditures (millions of US Dollars)
Sustaining and other
Expansionary
Exploration
For the three months ended December 31,
For the year ended December 31,
2020
2019
2020
2019
69,189
817,001
97,096
101,020
1,497,928
99,593
42,943
44,101
1,343 $
768 $
1,139 $
576 $
45,102
45,690
1,456 $
811 $
1,228 $
646 $
21,259
22,194
7.18
94.9
1,663,708
1,674,308
575.94
92.5
26,568
27,088
8.79
94.4
1,584,904
1,588,986
519.43
95.3
81.2 $
(33.8)
47.4 $
(25.4)
(4.7)
(369.0)
(351.7) $
9.0 $
4.4 $
3.5 $
68.5 $
(37.0)
31.5 $
(29.5)
—
—
2.0 $
11.9 $
2.6 $
3.8 $
277,040
3,655,450
320,701
132,415
133,358
1,513 $
868 $
1,280 $
645 $
66,995
68,542
6.91
94.0
5,448,561
5,441,868
565.06
93.5
241.3 $
(115.8)
125.5 $
(86.1)
(19.2)
(369.0)
(348.8) $
29.5 $
6.9 $
12.5 $
352,332
6,640,990
367,334
194,574
213,077
1,293
725
969
571
120,802
135,949
10.81
94.5
6,322,864
6,660,934
568.61
94.8
299.6
(153.8)
145.8
(121.7)
—
—
24.1
23.5
3.7
16.2
$
$
$
$
$
$
$
$
$
$
(i)
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Cerro Moro was significantly impacted by COVID-19 related inter-provincial travel restrictions, which impacted worker availability
for those travelling both from within and out of province, following a temporary suspension of operations due to COVID-19 earlier
in the year. Such restrictions persisted in the fourth quarter, and were particularly stringent in December, affecting mining sequence.
Such mining sequence delays resulted in lower throughput and grade, leading to lower than planned production for the quarter
and for the year. The mine and processing plant are currently running at full capacity, however, COVID-19 continues to present a
risk of further disruptions, particularly during the first half of the year. Silver once again dominated the quarter for Cerro Moro,
resulting from strong silver feed grades, partially offsetting the reduction in gold production. The transition to more mill feed coming
from underground ore, at higher grades than the open pit ore, continued in the quarter and will continue in 2021, with most of the
ore to plant coming from the Escondida Far West, Zoe, Escondida Central and Escondida West underground mines. The transition
to the underground ore will increase mining flexibility, particularly in the second half of 2021, which is expected to account for
higher gold production than the first half. Over the past year, Cerro Moro has optimized the operation of the processing plant to
increase daily throughput to approximately 1,100 tpd. The 2020 average throughput rate was reduced as a result of plant stoppages
due to COVID-19, but plant availability has now returned to normal levels.
Annual Report 2020
61
Unitary costs of sales during the fourth quarter were better than the fourth quarter of 2019, as result of lower absolute costs. Unitary
costs during the year were impacted by the workforce restrictions which reduced production and increased the fixed costs per
GEO produced and sold.
Exploration during the fourth quarter at Cerro Moro continued to be impacted by COVID-19 restrictions, with exploration activities
suspended on November 26th. Despite the challenges, exploration advanced prior to the stoppage during the quarter, with 16,594
metres of drilling completed in 90 drill holes, and significant field activities completed, including geological mapping and surface
sampling, geophysical work and the submission of samples for metallurgical studies in the ongoing evaluation of potential heap
leach targets. Slow assay turnaround times continued to impact the ability of exploration to respond to results, however an onsite
sample preparation lab was constructed and this addition is helping expedite the assay process which will improve going forward.
Drilling during the fourth quarter utilized four rigs split between infill and exploration, with 4,209 metres in 36 infill holes and 8,502
metres in 25 exploration holes completed. In addition, 3,883 metres of scout drilling in 29 holes tested regional targets in the fourth
quarter.
Infill drilling to convert inferred mineral resources to indicated mineral resources was carried out at the Naty, Naty Splay and Martina
targets, where encouraging exploration drilling results were achieved last quarter. Positive results were generated at shallow levels
at the Naty target. Positive results were also received from Martina, with assays pending for drilling completed at Naty Splay.
Exploration drilling in the fourth quarter was mainly focused along the core mine Escondida-Zoe structural corridor, where several
targets remain open for expansion. Exploration drilling was also completed at the Bella Vista and Michelle (Maud) targets. Positive
results from Zoe confirm this deposit remains open at depth down plunge. Drilling at Escondida FW also returned positive
intercepts, defining a new mineral structure (“EFW Splay”), highlighting a significant new target area. Additional drilling results are
pending, with several visually positive intercepts noted.
Several regional targets were advanced during the fourth quarter through geological mapping, soil and rock sampling and
completion of 1,625 metres of scout drilling, generating positive results at Naty Splay and Debora Link. Regional surface work
continued to define the new Selene vein target, in the northern part of the claim area, with soil and rock sampling and detailed
geological mapping. This new target has some promising surface samples and has been traced for over 11 kilometres on surface.
Initial drill testing of the Selene vein was conducted during the fourth quarter with 2,258 metres completed in 26 drill holes. Results
are pending for most drill holes.
The metallurgical program as part of an ongoing evaluation of near-surface, low-sulfide material potentially suitable for low cost
open pit extraction and processing at Michele, Michele Ext, Carlita and Tres Lomas is progressing with positive bottle roll tests
completed and column tests now being conducted at Bureau Vertias labs.
62
Yamana Gold
EL PEÑÓN, CHILE
El Peñón is a gold-silver mine located approximately 160 kilometres southeast of Antofagasta in northern Chile.
Key Performance Information
Operating
Ore mined (tonnes)
Ore processed (tonnes)
GEO
Production
Sales
Total cost of sales per GEO sold
Cash costs per GEO sold (i)
AISC per GEO sold (i)
DDA per GEO sold
Gold
Production (ounces)
Sales (ounces)
Feed grade (g/t)
Recovery rate (%)
Silver
Production (ounces)
Sales (ounces)
Feed grade (g/t)
Recovery rate (%)
Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA
Gross margin excluding DDA
DDA
Temporary suspension, standby and other incremental
COVID-19 costs
Reversal of impairment
Mine operating earnings
Capital expenditures (millions of US Dollars)
Sustaining and other
Expansionary
Exploration
For the three months ended December 31,
For the year ended December 31,
2020
2019
2020
2019
332,247
357,096
315,143
349,086
1,129,036
1,266,829
1,010,081
1,290,239
55,529
51,738
1,023 $
696 $
1,025 $
327 $
43,512
40,129
4.07
93.7
922,954
888,858
92.53
86.8
96.5 $
(36.0)
60.5 $
(16.9)
(2.0)
560.0
601.6 $
9.9 $
0.5 $
4.7 $
64,289
63,552
1,062 $
562 $
775 $
500 $
216,749
215,667
980 $
657 $
922 $
323 $
48,131
47,843
4.52
94.5
1,382,963
1,346,687
143.20
85.9
160,824
158,933
4.22
93.7
4,917,101
4,940,217
138.94
86.7
94.1 $
(35.7)
58.4 $
(31.8)
—
—
26.6 $
7.6 $
0.3 $
2.8 $
381.1 $
(141.8)
239.3 $
(69.6)
(7.0)
560.0
722.7 $
31.4 $
0.5 $
15.9 $
209,857
211,231
1,209
726
1,003
483
159,515
160,484
4.09
94.0
4,317,292
4,348,618
120.65
86.2
297.0
(153.4)
143.6
(102.0)
—
41.6
30.8
0.8
18.1
$
$
$
$
$
$
$
$
$
$
(i)
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
El Peñón had a standout year, with gold production in line with plan and silver production exceeding plan due to mining sectors
with a higher silver to gold grade ratio. Further, the mine exceeded the comparative period production for both gold and silver. El
Peñón produced 43,512 of gold and 922,954 ounces of silver in the quarter. Silver grade and production were higher than plan
due to processing ore from the Al Este sector in the underground mine, which is a high grade silver area. However this higher
silver grade was temporary as a result of mining sequence and is expected to normalize in 2021. Gold feed grade for the fourth
quarter was impacted by mine sequencing and the blending of ore with the low-grade stockpile.
At El Peñón, the higher grade La Paloma and Quebrada Colorada Sur zones will come into production in the second half of the
year, contributing to higher planned production in the third and fourth quarters. Consequently, the Company expects that the second
half of 2021 will account for 60% of gold and silver production at El Peñón, as considered in the 2021 budget and the guidance
provided in Section 2 Core Business, Strategy and Outlook.
Fourth quarter unitary costs were better than the comparative period despite lower production, due to the benefit of cost savings
initiatives during the period which kept absolute costs relatively stable despite higher tonnes being mined and processed. Further,
Annual Report 2020
63
the mine had lower DDA per ounce during the fourth quarter and year, resulting from reduced rates of depletion in the current
period, following the additions to mineral reserves and resources as at December 31, 2019. With the ongoing focus to increase
mine development rates, El Peñón has increased the number of available underground production zones which are expected to
support the current level of mine production and feed grades going forward. Mine development is currently occurring at a rate that
exceeds 3,000 metres per month, and unitary costs have been favourably impacted.
All 2020 year-to-date unitary costs were better than the comparative period as a result of higher production which reduced the
allocation of fixed costs to each ounce of production, and the aforementioned benefit of cost savings initiatives which reduced
unitary costs comparatively.
The El Peñón exploration program saw minimal setbacks due to COVID-19 during the fourth quarter and continued to operate
normally. Approximately 38,063 metres of drilling were completed at El Peñón, including 95 drill holes totaling 26,954 metres of
infill drilling to convert inferred mineral resources to indicated mineral resources, 18 drill holes totaling 7,466 metres of exploratory
drilling dedicated to defining new inferred mineral resources, and 3,643 metres in 14 scout drill holes testing new regional targets.
Infill drilling during the fourth quarter was completed in 12 areas of the mine, with excellent results from six main sectors, including
Colorada Sur, Pampa Campamento, El Valve, Martillo Flat, Dorada and Paloma. Success in the quarter has largely been driven
by testing deeper levels of known main veins and continued success at Colorada Sur, extending the mineralization here a further
100 metres south along strike with infill drilling, with positive results also encountered at La Paloma.
Exploration drilling continued at El Peñón during the fourth quarter, testing 10 sectors. Positive results from El Valle indicate good
potential along strike and down dip at this target, which remains open for further expansion. Additionally, positive results were
returned from the Pampa Campamento and Sorpresa sectors.
District exploration continues to build on previous exploration targets with an additional 2,521 soil and rock samples collected and
approximately 3,643 metres of scout drilling in 14 RC holes completed along the Dominador-Fortuna structure, at Pampa
Providencia and Pampa Augusta Vitoria (PAV). Surface sampling continues to generate new gold and pathfinder soil and rock
anomalies, providing good drill targets for follow-up in 2021.
As previously noted, the continuous positive exploration results, the increase in mineral reserves and mineral resources which
extends the life of the mine, and other operational improvements in 2020, resulted in the Company reversing the impairments
taken in 2015 and 2016.
64
Yamana Gold
MINERA FLORIDA, CHILE
Minera Florida is an underground gold mine located south of Santiago in central Chile.
Key Performance Information
Operating
Ore mined (tonnes)
Ore processed (tonnes)
GEO (i)
Production
Sales
Feed grade (g/t)
Recovery rate (%)
Total cost of sales per GEO sold
Cash costs per GEO sold (ii)
AISC per GEO sold (ii)
DDA per GEO sold
Financial (millions of US Dollars)
Revenue
Cost of sales excluding DDA
Gross margin excluding DDA
DDA
Temporary suspension, standby and other incremental
COVID-19 costs
Mine operating earnings (loss)
Capital expenditures (millions of US Dollars)
Sustaining and other
Expansionary
Exploration
For the three months ended December 31,
For the year ended December 31,
2020
2019
2020
2019
233,374
260,199
26,352
23,979
3.36
93.7
1,279 $
760 $
1,087 $
519 $
44.9 $
(18.2)
26.7 $
(12.5)
(1.3)
12.9 $
4.4 $
9.1 $
1.8 $
187,559
204,138
20,080
19,696
3.34
91.6
1,450 $
1,005 $
1,411 $
445 $
29.2 $
(19.8)
9.4 $
(8.8)
—
0.6 $
3.7 $
2.9 $
2.3 $
810,294
892,286
89,843
87,735
3.37
92.9
1,366 $
862 $
1,152 $
503 $
155.5 $
(75.6)
79.9 $
(44.2)
(7.7)
28.0 $
12.6 $
19.9 $
7.0 $
715,288
745,671
73,617
74,705
3.32
91.9
1,423
945
1,346
478
103.8
(70.6)
33.2
(35.7)
—
(2.5)
13.1
11.7
9.5
$
$
$
$
$
$
$
$
$
$
(i)
(ii)
GEO information relates to gold.
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Minera Florida had a standout fourth quarter, with production well above plan and 31% higher than the comparative prior year
period. For the year ended 2020, the mine also exceeded plan. Positive results were primarily due to increased tonnes processed,
largely as a result of continuing improvements in productivity with contributions from the Pataguas and Don Leopoldo mining zones.
Annual production at Minera Florida was the highest since 2010, and the second highest since entering production in 1986,
excluding gold production from the reclamation of historic tailings. Mine management has recently taken actions to improve
mechanical availability, and the Company is now reactivating and optimizing formerly decommissioned ore passes, with two out of
three now re-established. The final ore pass at Marisol is now scheduled for completion by the mid-2021, and is expected to further
reduce haulage distance and increase operational flexibility as a result of additional haulage routes. Throughput is expected to
stay at this increased level going forward as a result of the 1,200-1,300 meters of monthly development, which is the highest the
mine has maintained in over 2 years. This increased development rate and better block model predictability has provided increased
mine flexibility, is expected to favourably impact future production and unitary costs in 2021 as noted in Section 2: Production
Guidance.
Unitary costs metrics were better than the comparative prior quarter and year, due to higher production which reduced the allocation
of fixed costs to each ounce of production, and the implementation of cost control initiatives which have begun to positively impact
absolute costs, as well as better recovery rates.
Recent improvements made to the processing plant have demonstrated improvements to the recovery rate. Further studies
suggest that with additional improvements to the leaching circuit, expected recovery rates could increase and reach up to 94%.
Additionally, processing rates continue to benefit from mill optimization initiatives.
At Minera Florida, exploration activities continued at near normal levels in the fourth quarter as COVID-19 related restrictions were
effectively managed. 15,779 metres of total drilling in 72 drill holes were completed, testing all planned targets for the year.
Annual Report 2020
65
Approximately 5,554 metres of infill drilling in 33 drill holes was completed at seven targets, including Fantasma, Fantasma Este,
Maqui, Polvorin, VCI-Circular, Don Leopoldo and Patagua Norte, dedicated to converting inferred mineral resources to measured
and indicated mineral resources. High-grade new intercepts were encountered at the Patagua - Don Leopoldo intersection, from
the Fantasma and Fantasma Este, Polvorin and Lazo Polvorin veins.
Exploration drilling in the fourth quarter dedicated to the discovery of new deposits or definition of new inferred mineral resources
included approximately 4,901 metres, completed in 27 drill holes, testing the Fantasma, Fantasma Este, Maqui, Polvorin, VCI-
Circular, Don Leopoldo, Don Leopoldo Sur and Patagua Norte – Queseria veins. High grade intercepts were returned from Don
Leopoldo and Don Leopoldo Sur, developing new targets at depth and to the east of the known zone. At Fantasma Este, drilling
successfully traced high-grade ore shoots to the north at depth, and returned further positive results from the Fantasma, Maqui
Circular and Satelite VCS veins. Exploratory activity continues to be supported by important surface exploration work, generating
new geological interpretations, which was reinitiated during the third quarter following a pause in field activities due to COVID
related restrictions. Exploratory scout drilling completed during the fourth quarter totaled 5,324 metres in 12 drill holes, targeting
the La Flor Oeste Block.
5.
CONSTRUCTION, DEVELOPMENT AND OTHER INITIATIVES
CONSTRUCTION, DEVELOPMENT AND ADVANCED STAGE PROJECTS
The Company has several construction, development and advanced stage projects underway. Notable progress relating to some
of these key initiatives include, but are not limited to the following:
Jacobina, Brazil
The Phase 1 optimization project was completed in June. The project has exceeded expectations, with a higher than planned
steady state of approximately 6,800 tpd achieved in both the second and third quarters. The Company has identified opportunities
to further optimize the results and recoveries achieved in Phase 1 with a modest investment. Consequently, works commenced in
the third quarter for the expansion of the gravity concentration circuit, with commissioning scheduled and on-track for mid-2021
and with an objective to optimize gold recovery at the higher throughput rate.
In addition to the incremental optimization of Phase 1, the Company is advancing the Phase 2 expansion at Jacobina, for an
increase in throughput to 8,500 tpd. The Company is currently in the engineering phase, with permitting underway. Included in the
mine's expansionary budget in 2021 of $29.0 million, is approximately $18.0 million for the procurement of long-lead items and
expansionary development to support the higher throughput to the mill. The throughput increase will be achieved through the
installation of an additional grinding line and incremental upgrades to the crushing and gravity circuits. The Phase 2 expansion is
expected to increase annual gold production to approximately 230,000 ounces per year, representing a 28% increase from current
levels, reduce costs, and generate significantly more cash flow and attractive returns. The Company expects to provide an update
regarding capex and development schedule in mid-2021 once studies are finalized to conclude permitting. The Company
anticipates that the updated capital costs will not exceed the previously estimated and disclosed $57 million, and it has already
begun to incur these costs for long-lead time items. The estimated capital costs of $57 million had been based on an assumed
BRL:USD rate of 4.0. The BRL:USD foreign exchange rates are currently higher at over 5.0, and consequently, the Company
anticipates that the weaker rates will provide capital cost and operating cost benefits.
66
Yamana Gold
Separately, Jacobina is studying the installation of a backfill plant to allow up to 2,000 tpd of tailings to be deposited in underground
voids. A concept study was completed in the second quarter, with preliminary results indicating that the project would improve the
way in which the Company manages the environment and environmental impact, extend the life of the existing tailings storage
facility consequently decreasing future capital investment intensity, and improve mining recovery resulting in an increased
conversion of mineral resources to mineral reserves. The placement of backfill in empty stopes would allow for greater recovery
of mineralized pillars that otherwise would have been left behind to ensure ground stability. Backfill in strategic higher grade zones
would increase mineral reserves with the recovery of those mineralized pillars. In addition, the improvement in ground stability
would have a positive impact on dilution. The current backfill system design includes a tailings classification plant, located close to
the existing processing plant, and two backfill preparation plants at the João Belo and Morro do Vento mines. The Company is
advancing the backfill project to a feasibility study, to be completed by the end of the first quarter of 2021.
Lastly, the Company has also begun a conceptual study on a Phase 3 expansion, which would increase throughput to 10,000 tpd,
utilize the existing grinding line, while expanding crushing and leaching circuits and adding additional mining equipment and
infrastructure.
Canadian Malartic (50% interest), Canada
The successful ramp-up of the deposit resulted in Barnat declaring commercial production on September 30, 2020. Barnat deposit
revenues and costs of production ceased to be capitalized effective October 1, 2020. In addition, DDA associated with the Barnat
deposit's capitalized costs commenced on October 1, 2020. Contributions from Barnat are expected to gradually increase
throughout 2021. The remaining extension work in the first quarter of 2021 is focused on overburden stripping and topographic
excavation continuing according to plan.
During the fourth quarter, the Company continued to advance studies related to the underground project at Canadian Malartic,
which consists of the East Gouldie, Odyssey, and East Malartic zones (collectively known as the Odyssey project).
Following impressive technical study results obtained in early February of 2021, the Company and its partner made a positive
construction decision of the Odyssey project at Canadian Malartic, with first production from the Odyssey South deposit expected
in 2023. The technical study outlined robust economics, a significant increase in mineral resources, and a mine life extension to at
least 2039. Whereas the Company had originally considered a production platform conservatively in the range of 450,000 ounces
per year, the mine now supports an expected increased annual gold production of 500,000 to 600,000 ounces on a 100% basis.
Further extension of the mine life beyond 2039 provides additional upside, with several opportunities under evaluation. A NI 43-
101 technical report for the Canadian Malartic operation is expected to be filed in March 2021 and will include a summary of the
Odyssey underground project.
Construction of surface infrastructure and the portal in preparation for development of the ramp started in August of 2020. The
Company and its partner completed the construction of the mine office and surface facilities in the fourth quarter, to support the
development, and further advanced the development of the exploration ramp into Odyssey and East Malartic. The exploration
ramp is designed with the purpose of mining their respective upper zones and providing further exploration access to allow tighter
drill spacing to further define the mineral resource base, along with headframe construction and shaft sinking. The new ramp will
also provide the ability to carry out bulk sampling of 40,000 tonnes of mineralization. The budget for the ramp is C$15.25 million
for 2021 on a 50% basis. Development of the exploration ramp is anticipated to take approximately two years to complete, with
the first drilling platform will be established in the third quarter of 2021.
A 2.3 kilometre geotechnical hole in the shaft area has been completed, and detailed engineering has begun in relation to the shaft
and headframe. The shaft is envisioned as a 6.4-metre diameter, 1.8 kilometre deep shaft with a hoisting capacity of approximately
20,000 tpd. As noted, the Company’s current expectation is that production from Odyssey South will begin in 2023 from the ramp,
while the Company sinks the shaft to East Gouldie, with a goal to start production from East Gouldie in 2027.
About the Odyssey project
Canadian Malartic has been a prolific mining operation for decades. Since 2011, it has been an open pit mine, but it has also been
a successful underground operation in previous iterations. One of the strategic rationales behind Yamana's decision to jointly
acquire Canadian Malartic from Osisko Mining in 2014 was the potential to significantly extend mine life by transitioning the
operation to a future underground mine. Initial underground exploration drilling generated promising results, with the discovery of
the East Gouldie zone in 2018 confirming the strong potential for a multi-hundred thousand ounce annual production operation
Annual Report 2020
67
with a decades-long mine life. As of year-end 2020, underground mineral resources have grown to approximately 14.4 million
ounces of gold (100% basis) in just six years, including an increase of 4 million ounces from year-end 2019.
The Odyssey project hosts three main underground-mineralized zones, which are East Gouldie, East Malartic, and Odyssey, the
latter of which is sub-divided into the Odyssey North, Odyssey South and Odyssey Internal zones. For the purpose of the technical
study, mineable stope shapes were generated using a gold price of $1,250 per ounce, consistent with the price used for estimating
Canadian Malartic open pit mineral reserves. Mineral resources at East Malartic below 600 metres from surface are not currently
included in the technical study. A breakdown of the mineral resources used in the technical study, after dilution and mining recovery,
is presented in the table below.
Mineral Resources Included in Odyssey Project Technical Study as of December 31, 2020
Zone
East Gouldie
East Malartic
Odyssey
Total
Indicated Mineral Resources
Inferred Mineral Resources
Tonnes
(millions)
—
4.59
1.52
6.18
Grade
(g/t Au)
Contained oz.
(millions)
Tonnes
(millions)
Grade
(g/t Au)
Contained oz.
(millions)
—
2.13
1.89
2.00
—
0.31
0.10
0.41
51.95
7.84
15.19
75.90
3.14
2.15
2.11
2.82
5.24
0.56
1.08
6.88
The shallow mineralized zones located above 600 metres below surface will be mined using a ramp from surface. The deeper
mineralized zones below 600 metres from surface will be mined with a production shaft.
In December 2020, ramp development was started on the Odyssey project in order to facilitate underground conversion drilling in
2021 and provide access to the Odyssey and East Malartic deposits. At year-end 2020, the ramp had progressed 102 metres, and
an additional 2,850 metres of development is planned in 2021, of which 1,500 metres is in the ramp.
The conceptual mine design in the technical study includes a 1.8-kilometre deep production-services shaft equipped with a Blair
hoist for production, a single drum hoist for services, and an auxiliary cage. The hoisting capacity is expected to be approximately
20,000 tpd. The project will also benefit from the existing infrastructure on site such as the tailing storage facilities, the process
plant, and the maintenance facilities.
The preliminary mining concept is based on a sublevel open stoping mining method with paste backfill. Longitudinal retreat and
transverse primary-secondary mining methods will also be used dependent on mineralization geometry and stope design criteria.
The Odyssey project is expected to be one of the most modernized electric underground mines. All major mobile production
equipment (such as trucks, scoop trams, jumbos, bolters, and longhole drill rigs will be electric powered), greatly reducing carbon
footprint. On the two main levels with loading pockets, trucks and hammers would be remotely operated 24 hours a day, 7 days a
week from a surface control room, greatly increasing equipment utilization.
Production via the ramp is expected to begin at Odyssey South in late 2023, increasing to up to 3,500 tpd in 2024. Collaring of the
shaft and installation of the headframe is expected to commence in the second quarter of 2021, with shaft sinking activities
expected to begin in late 2022. The shaft will have an estimated depth of 1,800 metres and the first loading station should be
commissioned in 2027 with modest production from East Gouldie. The East Malartic shallow area and Odyssey North zones are
scheduled to enter production in 2029 and 2030, respectively.
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Yamana Gold
The project is expected to mine 19,000 tpd from the underground from four different mining zones:
•
East Gouldie – 12,500 tpd
▪
▪
▪
Stope production starts in 2027;
Three-year ramp up (2027-2029);
Full stope production in 2030 to 2038.
• Odyssey North – 3,500 tpd
▪
▪
Stope production starts in 2030;
Full stope production in 2031-2038.
• Odyssey South and East Malartic – 3,500 and 3,200 tpd, respectively
▪ Odyssey South stope production starts in 2023;
▪ Odyssey South full stope production in 2024 to 2027 (3,500 tpd);
▪
▪
East Malartic stope production starts in 2028;
East Malartic full stope production in 2030 to 2039 (3,200 tpd).
Run-of–mine ore from the open pit will start to decrease in 2023, as the ore production from the underground starts at a rate of
3,000 tpd. The underground should reach full production of about 19,000 tpd by 2031.
Robust Project Economics
Initial expansionary capital of $1.14 billion is expected to be spent over a period of eight years (100% basis), with capital
requirements in any given year manageable and fully funded using the Company's cash on hand and free cash flow generation.
Additionally, other growth capital expenditures and modest sustainable capital during the construction period total $191.4 million.
Gold production during the 2021 to 2028 construction period is expected at 932,000 ounces (on a 100% basis) at cash costs of
$800 per ounce. The net proceeds from the sale of these ounces would significantly reduce the external cash requirements for the
construction of the project which, assuming the gold price used in the financial analysis for the project, would reduce the projected
capital requirements in half.
Average annual payable production is expected to be approximately 545,400 ounces (100% basis) from 2029 to 2039, with total
cash costs per ounce of approximately $630 per ounce. Sustaining capital is expected to gradually decline from 2029 to 2039, with
an expected average of approximately $55.8 million per year.
The production profile is based on a ramp-up period of six years (2023-2028) followed by 11 years of full production (2029-2039),
for a total of 82.1 million tonnes of underground ore processed (100% basis) at an average gold grade of 2.76 g/t, representing
approximately 50% of the contained mineral resource gold ounces. On this basis, the after-tax net present value (“NPV”) (at a 5%
discount rate) and after-tax internal rate of return (“IRR”) of the Odyssey project are shown at various gold price assumptions in
the table below. The cut-off grade used to estimate the mineable inventory is based on a gold price of $1,250 per ounce, while the
financial model uses a base case gold price assumption of $1,550 per ounce. Costs are estimated using a Canadian to US Dollar
foreign exchange rate assumption of 1.30.
Odyssey Project Technical Study Sensitives to Gold Price (100% Basis)
Gold Price (USD/oz)
NPV 5% (USD millions, after-tax)
IRR (%, after-tax)
$1,085
$82
6%
$1,250
$481
11%
$1,395
$801
14%
$1,550
$1,143
17.5%
$1,705
$1,494
20%
$1,860
$1,853
23%
$2,015
$2,212
26%
These results demonstrate the expected returns of the Odyssey project after the first decade at full production, highlighting
Odyssey as a robust project with significant leverage to higher gold prices and thus supporting the approval for project construction.
The results are not intended to reflect the full value of the Odyssey project and extension of mine life beyond 2039 represents
significant further upside.
Given the strong underground mining experience of the partners and the experience gained from operating the Canadian Malartic
mine since 2014, there is a high degree of confidence in many of the cost assumptions used for the project. While the technical
Annual Report 2020
69
study is considered at a preliminary economic assessment level, the partnership believes that estimates for such things as
underground development and mining costs, processing costs, and equipment procurement are more advanced than what would
typically be estimated in a preliminary economic assessment level study for a project of this scope. The capital allocation and
classification of costs will continue to be refined as the project advances. A preliminary economic assessment is preliminary in
nature and includes inferred mineral resources that are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as mineral reserves and, therefore, there is no certainty
that the preliminary economic assessment will be realized.
The East Gouldie mineralization is the largest and most profitable deposit due to higher grade and tonnage with more than 70%
of the total ounces produced. Exploration drilling at East Gouldie in 2020 totalled 97,000 metres (100% basis), including 25,600
metres in the fourth quarter with multiple mother holes and wedge cuts that resulted in 25 new pierce points in the zone, plus
several more in the Odyssey related zones. The intensive drilling program in 2020 has allowed the partnership to increase the
inferred mineral resource of the East Gouldie zone by 134% to 6.4 million ounces of gold (100% basis), compared to the initial
inferred mineral resource declared at year-end 2019, with an average grade of 3.17 g/t.
The focus of the ongoing diamond drilling campaign from surface is to further define high quality mineral resources by the beginning
of 2023 with a drill hole spacing of 75 metres. Improving the geological confidence of the mineral resources is expected to further
de-risk future production. With further exploration the Company believes that additional mineralization will come into the mine plan
in the coming years.
Odyssey Project Summary
(All numbers are approximate and on a 100% basis)
Estimated Total Production
Average metallurgical recovery
Average annual gold production
2023
2024 to 2026 (average per year)
2027
2028
6,932.0
thousands of gold ounces
~95.2% gold
46,600 oz
81,500 oz
256,200 oz
384,600 oz
(825 k. tonnes, 1.84g/t gold)
(1,344 k. tonnes, 1.98g/t gold)
(2,810 k. tonnes, 2.98g/t gold)
(3,333 k. tonnes, 3.79g/t gold)
2029 to 2039 (average per year)
545,400 oz
(6,463 k. tonnes, 2.76g/t gold)
Minesite costs per tonne
2023
2024 to 2026 (average per year)
2027
2028
2029 to 2039 ( average per year)
$93.0 C$/t
$77.0 C$/t
$79.0 C$/t
$79.0 C$/t
$61.0 C$/t
Average total cash costs on a by-product basis (including royalties and refining costs)
2023 to 2028
2029 to 2039
Royalty
Mine life
Capital Expenditures and Construction Phase Operating Statistics
800 US$/oz
630 US$/oz
5.5% NSR
years
17
Initial Capital Expenditures
Gold production
Sustaining CAPEX
$1,143.7 million US$ (2021 to 2028)
thousands of gold ounces (2021 to 2028)
932.0
$55.8 million US$ (2029 to 2039 average per year)
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Yamana Gold
Breakdown of Capital Expenditures by year
2021
2022
2023
2024 to 2026 (average per year)
2027
2028
Breakdown of Capital Expenditures by category
Shaft & Surface
Mining Equipment
U/G Development & Construction
Subtotal of Initial Capital Expenditures
Other Growth Capital Expenditures
$113.8 million US$
$204.0 million US$
$136.8 million US$
$163.8 million US$
$209.0 million US$
$180.3 million US$
$478.4 million US$
$162.7 million US$
$502.6 million US$
$1,143.7 million US$
$191.4 million US$
Reclamation Costs
$3.9 million US$ for Odyssey Project only
The aforementioned costs do not include any offsetting net proceeds from pre-commercial production. Historically, any net
proceeds from pre-commercial production were deducted from development capital expenditures; however, due to amendments
to the relevant accounting standard that become effective from 2022, this treatment will not be permitted when accounting for the
Odyssey project. Specifically, in May 2020, the IASB issued Property, Plant and Equipment: Proceeds before Intended Use
(Amendments to IAS 16), which prohibits entities from deducting amounts received from selling items produced from the cost of
property, plant and equipment while the Company is preparing the asset for its intended use. Instead, sales proceeds and the cost
of producing these items will be recognized in the consolidated statements of operations.
Permits for Odyssey North and South were granted in 2020 to allow the first phase of the project to begin. At this time, the Certificate
of Authorization (“CofA”) for the shaft has not yet been obtained and the CofA for the waste rock management needs to be modified.
A request for a decree amendment, including permits to develop the East Gouldie and East Malartic zones will be sent to the
Quebec Ministry of Environment and the Fight Against Climate Change in the first quarter of 2021. If there are no serious hurdles,
the project could obtain the necessary approvals from provincial regulators in approximately 12 months. The project team has
received a letter confirming that mining the additional zones at the project does not trigger any additional Federal permitting
requirements.
Facilitating the Transition from Open Pit Mining
Currently, in the open pit, mining is transitioning from the Canadian Malartic pit to the Barnat pit, which is now in commercial
production. Seventy percent of the total tonnes mined in 2021 are expected to come from Barnat. The Canadian Malartic pit will
be depleted in the first half of 2023 and waste rock and tailings will be deposited into the pit beginning in 2023.
The operation will progressively shift from open pit to underground mining between 2023 to 2028. To help facilitate this transition,
the Company optimized the design of the Barnat pit, adding 290,000 ounces to mineral reserves (100% basis), which will help fill
the production gap between 2026 and 2029 as the operation completes the transition to underground mining.
The Partnership is evaluating an additional opportunity to increase production during the transition period by processing low-grade
stockpile that is not currently included in mineral reserves. This stockpile is economic at current gold prices and would add an extra
170,000 ounces to planned production on a 100% basis.
Annual Report 2020
71
MARA Project (Agua Rica and Alumbrera Integration), Argentina
On December 17, 2020, the Company completed the project integration with Glencore International AG and Newmont Corporation
and a new partnership was formed to manage, develop and operate the project. The development will be pursuant to the plan
contemplated in the agreement and by the partners, and the Agua Rica project will be developed and operated using the existing
infrastructure and facilities of Alumbrera in the Catamarca Province of Argentina. Going forward, the integrated project will be
known as the MARA Project.
Under the agreement, Yamana, as the sole owner of Agua Rica, and the partners of Alumbrera have created a new Joint Venture
pursuant to which Yamana holds a controlling ownership interest in the MARA Project at 56.25%. Glencore holds a 25.00% interest
and Newmont holds an 18.75% interest. Yamana will be the operator of the Joint Venture and will continue to lead the engagement
with local, provincial, and national stakeholders, and completion of the Feasibility Study and Environmental Impact Assessment
("EIA") for the MARA Project. A MARA Project Joint Venture Technical Committee has been formed and comprises representatives
of the three companies.
Agua Rica is a large-scale copper, gold, silver and molybdenum deposit located in the province of Catamarca, Argentina, 25
kilometres north of the town of Andalgalá. The project has proven and probable mineral reserves of 11.8 billion pounds of copper
and 7.4 million ounces of gold contained in 1.1 billion tonnes of ore. Mineral resources include 259.9 million tonnes of measured
and indicated mineral resources, containing more than 1.6 billion pounds of copper and 954,000 ounces of gold. Additionally,
inferred mineral resources of 742.9 million tonnes represent significant upside potential to further define an increase mineral
reserves and life of mine.
The integration creates significant synergies by combining existing substantive infrastructure which was formerly used to process
ore from the Alumbrera mine during its mine life, including processing facilities, a fully permitted tailings storage facility, pipeline,
logistical installations, ancillary buildings, and other infrastructure, with the future open pit Agua Rica mine. The result is a
significantly de-risked project with a smaller environmental footprint and improved efficiencies, creating one of the lowest capital
intensity projects in the world as measured by pound of copper produced and in-situ copper mineral reserves.
On July 19, 2019 the Company announced the positive results of a pre-feasibility study ("PFS"), underscoring the Integrated Project
as being long life and low-cost with robust economics and opportunities to realize further value, including converting economic-
grade inferred mineral resources and expanding throughput scenarios aimed to increase metal production and returns, among
other opportunities.
The PFS highlights are:
•
Proven and probable copper mineral reserves increased from year-end 2018 by 21% to 11.8 billion pounds and gold
mineral reserves increased by 13% to 7.4 million ounces
Initial long mine life of 28 years
Annual production for the first 10 full years increased to 533 million pounds of copper equivalent(i) production
•
•
• Cash costs decreased to $1.29 per pound and AISC decreased to $1.52 per pound for the first ten years of production
• NPV increased to $1.935 billion and an increased IRR of 19.7%(ii)
(i)
(ii)
Copper equivalent metal includes copper with gold, molybdenum, and silver converted to copper-equivalent metal based on the following metal price
assumptions: $6,614 per tonne of copper, $1,250 per ounce for gold, $24,250 per tonne for molybdenum, and $18.00 per ounce for silver.
Assuming metal prices of $3.00 per pound of copper, $1,300 per ounce of gold price, $18.00 per ounce of silver, $11.00 per pound of molybdenum and
using an 8% discount rate.
The PFS for the Integrated Project considers the Agua Rica deposit mined via a conventional high tonnage truck and shovel open
pit operation. Average life of mine material moved is expected to be approximately 108 million tonnes per year, with ore feed of 40
million tonnes per year and average life of mine strip ratio of 1.66.
Ore extracted from the mine will be transported from the open pit by truck to the primary crusher area and then transported via a
conventional conveyor to the existing Alumbrera processing plant. To route the overland conveyor system, approximately 5.2
kilometres of tunnel development will be required. The conveyor will extend 35 kilometres to the Alumbrera process plant, where
it will feed the existing stacker conveyor via a new transfer station.
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Yamana Gold
Relatively modest modifications to the circuit are needed to process the Agua Rica ore in order to produce copper and by-products
concentrate, which will then be transported to the port for commercialization. An in-situ blending strategy has been defined to
manage the concentrate quality over certain years of the mine life, which will allow the project to achieve the desired targets.
Further optimizations to this strategy will be studied in the next design phase.
This PFS provides the framework for the preparation and submission of a new EIA to the authorities of the Catamarca Province
and for the continued engagement with local stakeholders and communities. The Companies began the EIA process in 2019, given
the level of significant detail in the PFS.
The Joint Venture Technical Committee advanced optimization studies in late 2019 and early 2020, and is now advancing a full
Feasibility Study on the Integrated Project, with updated mineral reserve, production and project cost estimates. It has also
obtained a provisional Permit for early exploration works from the local authorities to conduct field work for the Feasibility Study
and collect additional information for the Integrated Project EIA. COVID-19 has introduced uncertainty into the timeline relating to
the completion of the Feasibility Study, mainly due to environmental permit approvals and field work, although as the permit process
is well advanced, work preparation has begun in anticipation of receiving necessary authorizations in normal course. Despite the
aforementioned delays, Feasibility Study work is ongoing and key technical results are expected during 2021. While the Company
continues to advance the Feasibility Study, it notes that a considerable amount of information in the PFS is already at Feasibility
Study level mostly as a result of the Integration Transaction. The full Feasibility report and EIA completion are expected in 2022.
The most recent technical studies have confirmed that the processing facility at Alumbrera is capable of processing up to 44.0
million tonnes per year, with minor additional capital expenditures, which represents a significant upside to the PFS results. Further
tests and studies are scheduled for the Feasibility Study stage to confirm and optimize the concentrate transportation capacity of
the pipeline and the mining plan to support higher throughput. In addition, upside opportunities have already been identified by re-
sequencing low grade stockpile, and are expected to provide significant further value for the Integrated Project. The estimated
expenses for the Company to advance the project through the Feasibility Study and EIA are in the range of $20.0 million to $25.0
million for the next three years (Yamana's 56.25% interest), representing a manageable and modest investment in relation to the
value creation of advancing the Integrate Project to the next phases of development.
After a strategic review, the Company has concluded that the MARA Project represents an excellent development and growth
project which the Company intends to continue to advance through the development process through the Company's controlling
interest in the project.
The Company acquired cash and cash equivalents of $222.5 million in the acquisition of Alumbrera.
For further details on the Integration Transaction, critical accounting policies, and critical judgments, please refer to the Company's
consolidated financial statements for the year ended December 31, 2020.
OTHER INITIATIVES - STRATEGIC, OPTIMIZATION AND MONETIZATION
A number of projects are underway with a goal of surfacing value from non-producing assets. Notable progress relating to some
of these initiatives include, but are not limited to the following:
Acquisition of Wasamac property and Camflo property and mill (Monarch Gold Acquisition)
On January 21, 2021, the Company completed its acquisition of the Wasamac property and the Camflo property and mill (the
“Acquisition Properties”) through the acquisition of all of the outstanding shares of Monarch Gold Corporation (“Monarch”) not
owned by Yamana. Yamana previously announced that it had entered into a definitive agreement with Monarch Gold on November
2, 2020, to acquire the properties, under a plan of arrangement. In connection with the plan of arrangement, Monarch complete a
spin-out (the “Spin-Out”) to its shareholders, through a newly-formed company, Monarch Mining Corporation, of its other mineral
properties and certain other assets and liabilities of Monarch (collectively, the “Transaction”).
Under the terms of the Transaction, Monarch shareholders received the following per Monarch share: 0.0376 of a Yamana share;
C$0.192 in cash; and 0.2 of a share of Monarch Mining. Yamana issued 11,608,195 Yamana Shares and paid approximately
C$59.3 million in cash, for total consideration of approximately C$136.1 million. Yamana’s consideration on close represented a
value paid for the Wasamac asset of under $67 per ounce of mineral reserves and under $42 per ounce of mineral resources,
Annual Report 2020
73
based on mineral reserves and mineral resources in the feasibility study noted below and net of Yamana’s existing Monarch interest
in Wasamac.
The addition of the Wasamac project to Yamana’s portfolio further solidifies the Company’s long-term growth profile with a top-tier
gold project in Quebec’s Abitibi region, a prolific mining district where Yamana has deep operational and technical expertise and
experience. The geological characteristics of the Wasamac ore body suggest it holds the potential to be an underground mine with
the potential to achieve the same scale, grade, production, and costs as Yamana’s successful Jacobina mine in Brazil, and it
possesses many parallels to the underground project at Canadian Malartic. The Wasamac project consists of a single, continuous
shear zone with a consistent grade distribution and wide mining widths, making it amenable to simple, productive, and cost efficient
underground bulk mining methods. The deposit has existing proven and probable mineral reserves of 21.45 million tonnes at 2.56
g/t, for total proven and probable mineral reserves of 1.8 million ounces of gold. Mineral resources and proven and probable
mineral reserves are supported by a Feasibility Study previously completed by Monarch in 2018 (the “Wasamac Feasibility Study”).
The Wasamac Feasibility Study outlined a 6,000 tonnes per day operation with average gold production of 160,000 ounces per
year. Costs are expected to be at the lower end of the Company’s profile, providing an improvement to consolidated costs.
There remains excellent potential for significant future exploration success and mineral resource conversion, with the Wasamac
deposit remaining open at depth and along strike. Yamana plans to build on the ongoing permitting and social licensing effort
carried out by Monarch, applying the Company’s strong ESG framework and best practices, and leveraging the Company’s
extensive experience in permitting and proven track record of building strong, respectful, and mutually beneficial relationships with
the communities and governments wherever it operates. The Company will target increasing the mineral inventory and perform
optimizations to further enhance the project’s value, advance engineering, and de-risk execution, leveraging Yamana’s technical
expertise and adhering to the Company’s disciplined capital approach. Building off the work completed to date, Yamana plans to
commence an exploration and infill drilling campaign and other studies to refine and expand upon the potential of Wasamac and
its development alternatives, with an update on these plans to be provided by the third quarter of 2021.
Prior to closing the acquisition of Wasamac, in late 2020 the Company began the process of opening a regional office in the Abitibi
region, and hiring personnel to manage the permitting process and related studies to update the feasibility study.
Furthermore, the acquisition aligns with the Company’s strategy for a balanced approach to capital allocation, as discussed in
Section 2: Core Business, Strategy and Outlook
Leagold-Equinox Merger and Subsequent Partial Disposal
On December 16, 2019, Leagold and Equinox jointly announced that the companies had entered into a definitive agreement to
combine in an at-market merger. On March 10, 2020, the companies announced that the merger had been completed. The
combined company continues as Equinox Gold under the ticker symbol “EQX” on both the Toronto Stock Exchange and the New
York Stock Exchange.
Immediately prior to the completion of the merger, Yamana owned 20.4% of the outstanding common shares of Leagold. Pursuant
to the transaction, Leagold shareholders received 0.331 of an Equinox share for each Leagold share held. This resulted in Yamana
owning approximately 9% of the combined company.
Yamana concluded that, as a result of its reduced shareholding, it no longer had significant influence over the investee, and
therefore, discontinued accounting for the investment using the equity method from the date of the completion of the merger.
Yamana recorded a gain on discontinuation of the equity method of $21.3 million, which is included in other operating income
(expenses) for the three months ended March 31, 2020. The investment in Equinox is accounted for as a financial asset at fair
value through other comprehensive income.
During the year, the Company sold 13,200,000 shares of Equinox for gross proceeds of C$140.5 million. As at December 31, 2020,
Yamana held 6,000,000 Equinox Shares, representing approximately 2.5% of the issued and outstanding Equinox Shares, on a
non-diluted basis.
In association with 12,000,000 shares sold in the second quarter, the Company also wrote 6,000,000 warrants for Equinox shares
owned by Yamana at an exercise price of C$13.50 for a term of 9 months from the date of issue. Subsequent to year end, 405,000
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Yamana Gold
warrants were exercised and the same number shares disposed of at the exercise price of C$13.50 in association with the units
written in the second quarter, for total proceeds of $4.2 million (C$5.5 million), and the remainder of the purchase warrants expired.
Sale of Royalty Portfolio Assets
On May 27, 2020, the Company announced the completion of the sale of its portfolio of royalty interests and the contingent payment
to be received upon declaration of commercial production at the Deep Carbonates Project (“DCP”) at the Gualcamayo gold mine
(together, the “Royalty Portfolio”) to Nomad Royalty Company Ltd. (formerly, Guerrero Ventures Inc.) (“Nomad”) for total
consideration of $64.2 million (the "transaction").
The assets in the Royalty Portfolio sold in the transaction:
•
•
•
•
•
A 1% net smelter return royalty (“NSR”) on gold production and 2% NSR on base metals from the Riacho dos Machados
(“RDM”) gold mine operating in Minas Gerais, Brazil;
A 2% NSR on oxide gold production from the Gualcamayo gold mine operating in San Juan, Argentina, once the operation
produces approximately 275,000 ounces from January 1, 2020;
A 1.5% NSR on production from the DCP at the Gualcamayo gold mine;
A $30.0 million cash payment receivable upon declaration of commercial production at the DCP; and
A 2% NSR on production from the Suruca project in Goiás, Brazil.
The fair value of the consideration at closing of the transaction was as follows:
•
•
•
$10.0 million in cash;
$10.8 million, being the fair value of the $10.0 million deferred cash payment. The deferred cash payment was measured
at fair value due to the convertible nature of the financial instrument and can be converted by the holder into shares of
Nomad at C$0.90 per share over a period of two years; and
$43.4 million in Nomad common shares at a price of C$0.90 per share with a lock-up period of six months from the
transaction date.
Following the completion of the sale of the Royalty Portfolio, Yamana held approximately 13% of the outstanding shares of Nomad.
As Yamana will be represented on Nomad's board of directors, the Company concluded that it has significant influence over
Nomad, and the share position has been accounted for as an investment in associate using the equity method.
On December 11, 2020, Yamana completed the sale of 22,750,000 Nomad shares via secondary offering for gross proceeds of
C$25,025,000. Following the closing of the offering, Yamana holds 43,750,000 Nomad shares, representing approximately 7.75%
of the issued and outstanding Nomad shares on a non-diluted basis. Yamana is deemed to hold an additional 14,148,889 Nomad
shares under the convertible Deferred Cash Payment, which together with the basic shares owned by Yamana represent 10.01%
of the issued and outstanding Nomad shares on a partially-diluted basis.
Suyai, Argentina
On April 28, 2020, the Company announced it entered into a definitive option agreement pursuant to which it granted CAM, a
privately held portfolio management and capital markets company based in Argentina, owned by Messrs. Eduardo Elsztain and
Saul Zang, the right to acquire up to a maximum 40% interest in a joint venture formed to hold the Suyai Project. CAM's portfolio
includes the biggest real estate company in the country, NASDAQ-listed international agricultural companies, along with banking
and mining investments. CAM has successfully led the development of significant construction projects across the country.
An initial amount of $2.0 million was received by the Company to secure the option. CAM will assume responsibility for all ESG
matters, including leading the permitting efforts aimed to advance the project through its different stages of development. As noted,
CAM has the right to earn a maximum 40% interest in the resulting joint venture formed to hold the Suyai Project by fulfilling certain
obligations and achieving certain milestones, mostly relating to ESG matters, and by paying $31.6 million in various installments
in addition to the proportionate expenses, on or before December 31, 2024. The Company believes there is considerable value,
far in excess of cash value, in fulfilling the obligations and achieving the milestones relating to ESG matters which would advance
the Suyai project. Through certain of its holding companies, Yamana would hold the remaining 60% of the joint venture.
Annual Report 2020
75
In the event the project receives approval to proceed, Yamana would oversee its development, applying best industry mining and
ESG practices and its experience in project development and operations in southern Argentina. Development of the project would
occur under the oversight of a board of directors of the holding company that owns the project with CAM nominating two out of five
directors. Yamana would nominate the other directors. The joint venture would entitle each party to its proportion of gold production
from the project.
The Company previously completed studies that in addition to redesigning Suyai as a small scale high-grade underground project,
evaluated different options for ore processing, which provided favourable project economics.
The preferred option calls for the construction of a processing facility for on-site production of gold and silver contained in a high-
grade flotation concentrate, which would be transported by land and by sea to one or more gold smelters world-wide. As only a
flotation concentrate would be produced at Suyai, no cyanide or other deleterious chemicals would be used at site. Gold production
is expected to reach up to 250,000 ounces annually for an initial eight years.
Agua de la Falda, Chile
The Company continues to pursue development and strategic initiatives for the 56.7% held Agua de la Falda joint venture with
Codelco, located in northern Chile, near El Salvador in the Atacama region. While the historical Jeronimo Feasibility Study focused
on maximizing gold production from the sulphide deposits, the Company completed the study of a low capital starter-project based
on the remaining oxide inventory in heap leach pads and open pits with positive results and quick payback. The Company is also
evaluating exploration plans with its partner on the highly prospective claims surrounding the mine, where early-stage targets for
both gold and copper mineralization have been identified. Re-logging of historical holes and exploratory drilling support the potential
to extend the gold oxide mineralization, as well as the potential for copper/gold deposits within the joint venture claims. Agua de la
Falda has processing capacity and infrastructure already installed, and it is in the vicinity of the El Salvador Division of Codelco.
6.
MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES
Mineral reserves and mineral resources are determined in accordance with National Instrument 43-101- Standards of Disclosure
for Mineral Projects, issued by the Canadian Securities Administrators ("NI 43-101"). NI 43-101 sets out the standards of disclosure
for mineral projects including rules relating to the determination of mineral reserves and mineral resources. This includes a
requirement that a “qualified person” (as defined under the NI 43-101) supervises the preparation of the mineral reserves and
mineral resources reports. The Company's mineral reserve and mineral resource reports are reviewed by Sébastien Bernier, P.Geo
(Senior Director, Geology and Mineral Resources), who is an employee of Yamana Gold Inc. and a "Qualified Person" as defined
by NI 43-101.
For details, refer to the mineral reserve and mineral resource tables contained in the Company's 2020 annual report.
For mineral reserve estimation purposes, the gold price assumption for Yamana operating mines of $1,250 is consistent with prior
year. The Company believes that increases in mineral reserves as result of exploration and drilling are a more meaningful
representation of an ore body rather than the reporting of additional mineral reserves resulting from an increase in mineral reserve
estimation gold prices.
The Company's mineral reserves and mineral resources as at December 31, 2020 are summarized in the following tables.
Complete information relating to mineral reserves and mineral resources including a complete listing of metal price assumptions,
tonnage, grade and recoveries is contained in a complete mineral resource and mineral reserve table accompanying the 2020
annual report available on the Company's website, www.yamana.com.
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Yamana Gold
Annual Report 2020
77
(i)
(ii)
On January 21, 2021 the Company completed the acquisition of the Wasamac property and the Camflo property and mill through the acquisition of all of
the outstanding shares of Monarch Gold not owned by Yamana.
On December 17, 2020, the Company completed the MARA Project integration agreement with Glencore International AG and Newmont Corporation. The
2020 mineral reserves and mineral resource estimates for MARA reflect Yamana's 56.25% interest, post-integration.
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Yamana Gold
Mineral Reserves & Mineral Resources Estimates (i)
Proven & probable mineral reserves
Canadian Malartic (50%)
Jacobina
Cerro Moro
El Peñón
Minera Florida
Yamana Operations proven & probable mineral reserves
Jeronimo (57%)
MARA (56.25%) (ii)
Wasamac (iii)
Total proven & probable mineral reserves
Measured & indicated mineral resources
Canadian Malartic (50%)
Jacobina
Cerro Moro
El Peñón
Minera Florida
Yamana Operations measured & indicated mineral resources
Jeronimo (57%)
La Pepa
Suyai
MARA (56.25%) (ii)
Monument Bay
Wasamac (iii)
Total measured & indicated mineral resources
Inferred mineral resources
Canadian Malartic (50%)
Jacobina
Cerro Moro
El Peñón
Minera Florida
Yamana Operations inferred mineral resources
Arco Sul
Jeronimo (57%)
La Pepa
Lavra Velha
MARA (56.25%) (ii)
Monument Bay
Suyai
Wasamac (iii)
Contained Gold
(in 000's ounces)
2020
2019
2,214
2,807
431
921
428
6,802
1,082
4,152
1,767
2,389
2,493
529
916
450
6,777
1,082
4,642
—
13,803
12,501
Contained Silver
(in 000's ounces)
2020
—
—
23,897
29,214
2,979
56,091
—
56,689
—
2019
—
—
30,461
30,238
3,125
63,824
—
56,689
—
112,780 120,513
Contained Copper
(in million pounds)
2020
2019
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,654
—
6,654
7,002
—
7,002
535
3,514
90
765
959
5,862
139
2,760
2,286
1,245
1,787
525
847
3,090
177
658
928
5,700
139
2,760
2,286
1,019
1,787
—
14,604
13,691
6,883
1,494
254
850
755
4,890
1,406
273
735
747
10,235
8,051
615
161
620
543
1,222
1,781
274
263
646
161
620
543
1,266
1,781
274
—
—
—
6,220
25,541
5,279
37,039
—
—
3,523
8,442
—
—
49,004
—
—
8,786
28,138
3,596
40,520
—
—
—
—
21,765
—
575
—
62,859
—
—
13,809
21,911
5,389
41,109
—
—
3,523
8,442
—
—
53,074
—
—
15,542
25,786
3,517
44,845
—
—
—
—
21,765
—
575
—
67,185
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,383
1,176
—
—
—
—
1,383
1,176
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,125
2,136
—
—
—
—
—
—
2,125
2,136
Total inferred mineral resources
15,714
13,342
(i)
(ii)
The assumptions used for mineral reserve and mineral resource estimates as at December 31, 2020 for all operating mines reported in this MD&A were
$1,250 per ounce gold, $18.00 per ounce silver, and $1.25 per pound of zinc. Mineral resources are reported exclusive of mineral reserves, using a cut-off
grade (or cut-off value) 75% of the one used for mineral reserves. The Arco Sul project mineral resource estimate uses $1,250 per ounce of gold. The
Jeronimo project mineral reserve and mineral resource estimates use $900 per ounce of gold. The La Pepa project mineral resource estimate uses $780
per ounce of gold. The Lavra Velha project mineral resource estimate uses $1,300 per ounce of gold, and $3.50 per pound of copper. The Agua Rica project
(MARA) mineral reserve estimate uses $1,250 per ounce of gold, $18.00 per ounce of silver, $11.00 per pound of molybdenum, and $3.00 per pound of
copper. The Agua Rica project (MARA) mineral resource estimate uses $1,600 per ounce of gold, $24.00 per ounce of silver, $11.00 per pound molybdenum,
and $4.00 per pound of copper. The Alumbrera project (MARA) mineral resource estimate uses $1,300 per ounce of gold and $2.83 per pound of copper.
The Monument Bay project mineral resource estimate uses $1,200 per ounce of gold. The Suyai project mineral resource estimate uses a 5.0 g/t gold cut-
off grade assumption. The Wasamac project mineral reserve estimate uses $1,300 per ounce of gold. The Wasamac project mineral resource estimate
uses $1,500 per ounce of gold.
On December 17, 2020, the Company completed the MARA Project integration agreement with Glencore International AG and Newmont Corporation. The
2020 mineral reserves and mineral resource estimates for MARA reflect Yamana's 56.25% interest post-integration. The 2019 mineral reserves and mineral
Annual Report 2020
79
resource estimates for MARA (comprised of both Agua Rica and Alumbrera) have been recast to reflect Yamana's 56.25% post-integration interests. Prior
to integration, Yamana owned 100% and 12.5% of Agua Rica and Alumbrera, respectively.
On January 21, 2021 the Company completed the acquisition of the Wasamac property and the Camflo property and mill through the acquisition of all of
the outstanding shares of Monarch Gold not owned by Yamana.
(iii)
Further information by mine is detailed below.
Canadian Malartic including Odyssey, Canada (50%)
At Canadian Malartic, an optimized design of the Barnat pit resulted in an increase in gold mineral reserves, which significantly
reduced depletion resulting from production. On a 50% basis, while 325,000 ounces of mineral reserves were depleted through
production, the optimized pit design resulted in an increase of approximately 150,000 ounces. This, combined with other small
additions, resulted in net depletion of only 175,000 ounces. This allows for approximately half a year of additional mine life from
the open pit operation. Underground inferred mineral resources at East Gouldie increased by 3.68 million ounces on a 100% basis
as a result of the infill drilling program conducted throughout 2020, while the zone continues to expand at depth. On a 100% basis,
the overall underground project has increased to more than 14,000,000 ounces of gold mineral resources, of which approximately
7,300,000 ounces are included in a Preliminary Economic Assessment completed in February 2021. The remaining mineral
resources, together with the potential extension of East Gouldie at depth, represents further upside to extend mine life beyond
2040. Additional exploration in the underground project is planned for 2020, including the first drill holes from an underground drill
bay off the exploration ramp which commenced in the fourth quarter of 2020.
Jacobina, Brazil
Jacobina replaced 2020 depletion of gold mineral reserves and added approximately 300,000 ounces of additional reserves, based
on positive infill drilling results at all mines and especially at Canavieiras Central, where drilling has added indicated mineral
resources in the high grade LUT reef and lower grade parallel reefs. Average mineral reserve grade has modestly decreased as a
result of such parallel reefs that are considered economical to mine. Operational costs will consequently not be affected by the
change in reserve grade. In the short term, the Company expects to continue processing at a grade higher than average mineral
reserves grade, as reflected in the 2020 average feed grade of 2.36 g/t. These lower grade mineral reserves also provide
opportunities for incremental lower-cost mill feed in excess of the planned throughput rates, in the event that the processing plant
optimizations and expansions exceed targeted throughput rates. Measured and indicated mineral resources and inferred mineral
resources both increased from year end 2019, with total gold mineral resources and mineral reserves increasing by 823,000
ounces. The continued mineral reserve and mineral resource growth establishes Jacobina as a multi-decade operation and
supports the ongoing production growth trend towards 230,000 ounces of gold per year after the implementation of the Phase 2
expansion project. As a result of the exploration success, the Company is now considering further growth opportunities including
a potential Phase 3 expansion to 10,000 tpd.
Cerro Moro, Argentina
At Cerro Moro, mineral reserves changed due to 2020 depletion and adjustments to the geological models, partly offset by new
mineral reserves at Naty. The model adjustments, as an outcome of increased geological understanding gained from mining of the
deposits, together with addition of new lower grade open pit mineral reserves, have resulted in a reduction of average mineral
reserves grade. Higher grade intercepts at depth at Zoe and Escondida late in the year are not included in the year-end mineral
reserves and mineral resources but will be followed up with drilling in 2021. Although COVID-19 related disruptions impacted the
Company’s ability to add new inferred mineral resources in 2020, approximately 56,000 ounces of gold inferred mineral resources
have been added as a potential heap leach inventory. Promising metallurgical testing results and conceptual level engineering
completed in 2020 demonstrate the potential for a parallel heap leach operation to provide supplementary production to the existing
plant and provides a lower cost processing alternative to reduce cut-off grade and convert the expanding inventory of lower grade
mineralization that is sub-economic at the current mineral reserves parameters. Drilling will follow up on heap leach targets in 2021
with an objective to build inferred mineral resources.
El Peñón, Chile
El Peñón's gold mineral reserves replaced 2020 depletion as the result of positive infill drilling. This is the third consecutive year
that El Peñón gold mineral reserves have replaced depletion of mining, increasing from 764,000 ounces in year-end 2017 to
921,000 ounces in year-end 2020. Gold and silver measured and indicated mineral resources increased by 16% and 17%
respectively, compared to the prior year, due to the positive infill drilling results, especially at La Paloma, Pampa Campamento,
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Yamana Gold
and Quebrada Colorada Sur, the latter of which is a new vein discovered in early 2020, converted to inferred and then indicated
mineral resources throughout the year, and incorporated into the mine plan in 2021. Inferred gold mineral resources also increased
by 16%, providing additional targets for infill drilling in 2021. A subset of these inferred mineral resources, subjected to the same
economic and mining parameters as mineral reserves, are included in the Company’s 10-year production outlook for El Peñón.
Although the average mineral resource grade is lower than mineral reserves grade, the subset of mineral resources included in
the mine plan is of similar grades to mineral reserves. This process is demonstrated in the year-end mineral reserves, where the
inferred mineral resources converted to mineral reserves in 2020 are higher than average reserves grade and the new inferred
mineral resources added throughout the year are also higher than average grade. The ongoing exploration success and mineral
reserves replacement at El Peñón continues to extend the mine life of the operation, which is entering its 22nd year of production,
and unlocks opportunities for sustainable production growth with minimal capital investment.
Minera Florida, Chile
At Minera Florida, mineral reserves changed due to depletion from mining, partially offset by additions as a result of positive drilling
results at Pataguas and Don Leopoldo. Indicated and inferred mineral resources increased by 30,000 ounces and 9,000 ounces
of gold respectively. Due to COVID-19 impacts, drilling of several zones that was planned for earlier in the year was postponed to
the fourth quarter and is therefore not included in the year-end mineral resource and mineral reserves statements.
Agua Rica, Argentina
Following the completion of the Integration of the Agua Rica Project and the Alumbrera plant and related infrastructure in December
2020, mineral resources and mineral reserves for the MARA Project are now included in total mineral resources and mineral
reserves on a 56.25% basis. Agua Rica open pit mineral reserves of 6,654 million pounds copper and 4,152,000 ounces gold on
a 56.25% basis are based on the 2020 pre-feasibility study and represent a mine life of 28 years with annual production averaging
533 million pounds of copper equivalent in the first 10 years on a 100% basis. Exclusive mineral resources and exploration potential
presents further upside, including in-pit inferred mineral resources that are currently considered as waste in the mine plan.
Alumbrera mineral resources are constrained to open pit shells as potential pushbacks to the existing Alumbrera and Bajo El
Durazno pits and are currently being assessed as a potential starter project during construction of Agua Rica.
Wasamac, Canada
The Wasamac project is included in the Company’s mineral resource and mineral reserves statement for the first time, following
the acquisition of the project on January 21, 2021. Mineral reserves are unchanged from the feasibility study conducted by Monarch
Gold in 2018 and are based on an underground long hole stoping mining method using a gold price assumption of $1,300 per
ounce. The gold mineral reserves of 1.8 million ounces supports a planned production rate of approximately 160,000 ounces of
gold per year over a mine life of 11 years. Mineral resources are also unchanged from those reported in the 2018 feasibility study,
except mineral resources are now reported exclusive of mineral reserves, consistent with the Company’s reporting methodology.
The Company is reviewing mineral resources and mineral reserves as part of the feasibility study update, planned for completion
in the third quarter of 2021.
7.
EXPLORATION
Exploration on the most prospective properties is a key to unlocking and creating value for shareholders. The Company has built
significant land positions including projects that are at different stages of advancement in prospective mineral districts in all
countries where it has producing assets, and it is pursuing advancing this portfolio of exploration projects in these countries. This
effort allows for the rapid advancement of the highest value projects, while at the same time moving the most promising early-
stage properties up the exploration pipeline. The following are key elements and objectives of the generative exploration program:
•
•
Target the Company’s most advanced exploration projects while retaining the flexibility to prioritize other projects in the
portfolio as and when merited by drill results.
Add new inferred mineral resources of at least 1.5 million ounces of gold equivalent within the next three years to move
at least one project towards a preliminary economic assessment.
• On a longer term basis, advance at least one project to a mineral inventory that is large enough to support a mine plan
demonstrating positive economics with annual gold production of approximately 150,000 ounces for at least eight years.
Annual Report 2020
81
•
•
Advance both gold-only and copper-gold projects and, in the latter case, consider joint venture agreements aimed at
increasing mineral resource and advancing the project to development while Yamana maintains an economic interest in
the project.
Evaluate the acquisition or investment on prospective exploration opportunities companies that align with Yamana’s
objectives for capital allocation and financial results, jurisdiction quality, geology and operational expertise.
The generative exploration program is first focusing on the most advanced projects in Yamana’s portfolio while continuing drilling
activity at a number of the Company’s highly prospective earlier stage projects. These project stages are categorized and defined
as follows:
•
•
•
Tier One - Projects with well-defined gold mineral resources and opportunities to grow to a potentially economic threshold
in the next three years.
Tier Two - Projects that have achieved significant drill intercepts and whose geology along with other factors support rapid
resource growth.
Tier Three - Highly prospective projects with known mineralization defined with rock and soil geochemistry that warrant
future drill testing.
The Company is confident that its exploration pipeline includes projects that can meet its shorter-term objective of at least one
project achieving 1.5 million ounces of gold in the inferred mineral resource category within three years as well as its longer-term
objective of building at least one gold mineral resource that can support a mine with annual production of approximately 150,000
ounces per year for at least eight years.
The Company is focusing its exploration activities in part on the large land positions held within the Company, including projects
that are at different stages of advancement in prospective mineral districts in all countries where it has producing assets and can
leverage its technical and operational expertise, and it is pursuing advancing this portfolio through exploration projects in these
countries. This effort will allow for the rapid advancement of the highest value projects, while at the same time moving the most
promising early-stage properties up the exploration pipeline. In the current high market valuation environment of high-profile gold
exploration projects, the Company feels it is timely and prudent to advance its in-house exploration assets.
As a complement to the advancement of the internal exploration opportunities, the Company will consider the acquisition of earlier
stage development assets or companies that align with Yamana's objectives for capital allocation and financial results, jurisdiction,
geology and operational expertise. Such opportunities should be funded through internal resources, meet minimum return levels
that well exceed cost of capital and would meet the Company's minimum requirements to achieve mineral reserve and mineral
resource inventories, mine life and per year production rate. Furthermore, preference would be given to geological and operational
characteristics where the Company has an identified expertise and excellent opportunities for value enhancement. Such
opportunities would also extend an existing regional presence or lead to that longer-term objective. Although the Company has an
established portfolio of early-to-later-stage organic growth projects, the Company also considers it prudent to consider
opportunities to extend regional presences in quality jurisdictions that offer geological and operational synergies and similarities to
its current portfolio of assets.
Exploration Expenditures
For exploration updates relating to operating mines during the quarter, refer to Section 4: Operating Segments Performance. The
following is a summary of the exploration and evaluation expenditures for the current and comparative periods:
(In millions of US Dollars)
Exploration and evaluation capitalized (i)
Exploration and evaluation expensed (ii)
Total exploration and evaluation expenditures
For the three months ended December 31,
For the year ended December 31,
$
$
2020
21.0 $
6.0
27.0 $
2019
13.9 $
3.3
17.2 $
2020
57.6 $
15.1
72.7 $
2019
60.4
10.3
70.7
(i)
(ii)
Capitalized exploration and evaluation costs are reflected in property, plant and equipment in the Consolidated Balance Sheets. Details by mine can be
found in the Capital Expenditures table in Section 1: Highlights and Relevant Updates.
Expensed exploration and evaluation costs are reported in the Consolidated Statements of Operations for the respective period.
During the fourth quarter, exploration drilling and other field activities continued to ramp up in most jurisdictions as responses to
COVID-19 restrictions were managed. Drilling activities continued in Brazil at Ivolandia to expand the near surface oxide targets,
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Yamana Gold
and drilling was reinitiated at Lavra Velha and Borborema, as described in more detail below. Exploration drilling was also initiated
at Jacobina Norte during the fourth quarter. Exploration in Chile in the fourth quarter included RC scout drill testing at several early-
stage projects near the El Peñón mine. Exploration in Argentina was limited due to travel restrictions, but drilling in 2021 is planned
to test breccia-related high-sulphidation epithermal gold targets on the Company’s Las Flechas property. At Monument Bay,
Manitoba, an initial Phase I deep drilling program was completed, designed to test the down plunge projections of modeled,
plunging high-grade zones at the Twin Lakes deposit.
Monument Bay, Canada
The Monument Bay deposit is hosted in the Stull Lake Greenstone Belt, comprising three volcanic-sedimentary assemblages
ranging in age from 2.85 to 2.71 billion years. Gold mineralization occurs along the steeply north-dipping, regional-scale Twin
Lakes Shear Zone and the lesser-explored, adjacent AZ Shear Zone.
The focus of the current exploration program is the advancement of the Twin Lakes resource. Beyond the Twin Lakes deposit, the
large Monument Bay land package is largely under-explored. A smaller but important component of the current exploration plan at
Monument Bay is the continued evaluation and advancement of secondary targets on the property.
Exploration at Monument Bay during the fourth quarter continued to advance the evaluation and definition of high-grade ore shoots
at depth at the Twin Lakes resources as part of an assessment considering the project as an underground mine. Approaching the
Twin Lakes deposit as a potential underground project is an economically attractive alternative to the open pit scenario with lower
capital (due to the higher investment required to develop a large tonnage, low grade, open pit mine), reduced environmental
footprint, and clear upside exploration potential. The current drill program is designed to test the depth extent of several well-
defined high-grade zones along a four kilometre strike length of the deposit. Shallow diamond drilling during the first half of 2020
confirmed the continuation and orientation of higher-grade mineralization and provided targets for follow up drilling at depth.
Although startup of the 2020 summer field activity at Monument Bay was impacted by COVID-19 restrictions, the drilling program
testing the depth extension of high-grade shoots at Twin Lakes was initiated in the previous quarter and a COVID-abbreviated 3-
hole Phase I program completed in late fourth quarter. During the quarter two diamond drill holes were completed totaling 1,690
metres. All three Phase I drill holes at Twin Lakes intersected the mineralized zone and associated felsic dyke, however, overall
assays were lower than anticipated. Drilling will continue in early 2021.
Domain, Canada
The Domain project is located near Oxford Lake in northeast Manitoba, comprising a 20,000-hectare property that is 100%-
controlled by the Company. Interpretation of regional airborne magnetics together with government geological survey till
geochemistry support a highly prospective environment for folded iron formation hosted gold. The Company's property surrounds
three claims totaling 576 hectares that are under a joint venture agreement with Capella Minerals Limited, which holds a 29.6%
interest. The joint venture claims cover an area of historic drilling with significant gold intercepts hosted by iron formation that
includes intervals reported by Rolling Rock Resources in 2008 and New Dimension Resources in 2017.
The Company recently signed an exploration agreement with the Bunibonibee Cree Nation (“BCN”) that provides a framework for
a cooperative, mutually respectful agreement supporting the advancement of exploration within the Traditional Territory of the BCN
while providing employment and business opportunities to the BCN. Yamana is in the planning stages of a work program for the
property, and pending conclusion of community consultation and permitting, exploration work is anticipated to begin in early 2021.
Lavra Velha, Brazil
Lavra Velha is a near surface advanced Tier 1 exploration project located in the Lavra Velha district in Brazil’s Bahia state. Surface
work and drilling has defined significant gold mineralization, building on the 2013 inferred mineral resource of 3.93 million tonnes
at 4.29 g/t for 543,000 ounces of gold. The defined Lavra Velha deposit consists of shallowly dipping near surface mineralization
that may be amenable to low capital intensity open pit mining and heap leaching. Metallurgical studies are ongoing. Exploration
has defined numerous additional gold anomalies in soil and rock which will be drill tested as part of the program. There are
significant drill targets on the 55,000-hectare property, and Lavra Velha represents one of the most immediate, shorter-term
opportunities to achieve the Company’s stated exploration goals given the mineral resource to date and drilling following the initial
mineral resource estimate. Further, Lavra Velha is highly prospective to meet the Company’s long-term objectives, as it is a shallow,
Annual Report 2020
83
flat-dipping orebody, making it ideal for open pit mining with a low strip ratio, and oxide mineralization, with potential to be processed
as a heap leach operation. Therefore, the project has potential as a low capital cost, low operating cost operation.
In the fourth quarter, the near surface resource expansion and exploration program continued at the Lavra Velha Sul/SW target.
Drilling in the quarter also tested regional targets, including Carrapicho, Lavra Velha Oeste, Flanco Leste and Mata. In total, 2,482
metres were completed in 20 drill holes, bringing the total drilling in 2020 on the project to 4,820 metres in 39 holes. Four drill holes
totaling 515 metres were completed at Lavra Velha Sul/SW testing extensions and better defining the geometry of the system.
Exploratory drilling tested surface anomalies at Flanco Leste, Mata and a possible eastern extension of the Lavra Velha deposit
with 1,786 metres completed. Surface work included stream sediment sampling to develop new district targets returning positive
results in multiple areas. Drill testing of multiple targets will continue in 2021.
Jacobina Norte, Brazil
The Jacobina Norte project, located in Brazil’s Bahia state just nine kilometres north of the Jacobina mine, is one of Yamana’s
most promising, wholly-owned advancing exploration projects. The Company controls 78,000 hectares that cover over 150
kilometres of strike extent of the Serra do Corrego Formation, which hosts paleoplacer gold mineralization at the Jacobina mine.
Surface exploration along strike has defined mineralization at Jacobina Norte where surface sampling and historic shallow drilling
of mineralized reefs along a 15-kilometre trend have defined significant gold grades.
Historic drill results in a restricted part of the Jacobina Norte area reported four intercepts with grades and widths that indicate a
strong exploration target. Once a mineral resource is identified for Jacobina Norte, the Company will evaluate if the area is best
developed as a standalone mine or as a source of additional mine feed to the existing Jacobina plant. The southernmost section
of Jacobina Norte (the Serra Branca target) is located just nine kilometres north of Canavieiras Norte within the existing Jacobina
mine infrastructure.
The experience at the Jacobina mine leads the Company to conclude that there is a strong possibility over the next decade of a
second Jacobina-type mine along the concession owned by Yamana near the current Jacobina mine. Further, the concessions
extend well beyond the Jacobina mine and Jacobina Norte, which creates excellent opportunities for further prospects.
Surface work in 2020 has defined a 4.3 kilometre trend at Barrocão Velho, a high priority target with surface workings and
exposures of mineralized reefs with very limited drilling tests. Exploratory drilling on this target was initiated late in the third quarter
and continued through the fourth quarter, with two drill holes totaling 957 metres completed. Assays from the first drill hole were
negative with low gold grades, however drill data was used to define possible ore shoot geometry and a second hole is in progress
to test the likely down plunge extent of significant surface mineralization. The drill results to date confirm the continuity of multiple
favourable conglomerate horizons to depth and has encountered reefs with strong oxidation, boxwork and favourable pebble size
distribution. Additional work in the quarter included detailed mapping along the Angicos-Barrocao Velho trend (4.5 kilometre) and
Santa Cruz trends (3.5 kilometre) with paleochannel analyses to better support exploratory drilling. Additionally, 1,786 surface
samples were collected during the fourth quarter.
Borborema, Brazil
The Borborema project is a 25,000-hectare land package in the Borborema district in Brazil’s Pernambuco state. The project is
located in a Proterozoic magmatic arc environment that is similar to the belt hosting the Chapada mine, a large copper-gold mine
developed by Yamana, put into production in 2007 and disposed of in 2019.
Originally explored for narrow high-grade gold veins, exploration at Borborema also identified strong copper–gold anomalies in
both rocks and soils. Initial drill testing of the São Francisco anomaly in 2019 generated very high grade near surface copper (gold)
intercepts from massive sulphide mineralization. Notable drill intercepts, previously reported in the February 20, 2020 press release
'Yamana Gold Provides Update on Its Generative Exploration Program', with greater than 5% copper include: 3.66 metres at 0.58
g/t of gold and 7.14% copper (12.33 g/t gold equivalent) (starting at 90 metres down hole); 2.97 metres at 0.40 g/t of gold and
7.20% copper (12.25 g/t gold equivalent) (starting at 44.18 metres down hole); and 7.50 metres at 0.35 g/t of gold and 6.41%
copper (10.90 g/t gold equivalent) (starting at 70.37 metres down hole). True widths are not interpreted at this time.
COVID-19 related delays limited exploration in early 2020 but exploration drilling was restarted in mid-August and continued in the
fourth quarter. Drilling in the fourth quarter totaled 2,655 metres in 14 drill holes, targeting extensions of the São Francisco target
and regional anomalies in the wider São Francisco area. Assay results are pending for step out drilling at São Francisco, however
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Yamana Gold
massive and disseminated copper sulphides were intersected in drilling up to 1,200 metres east along strike of the main São
Francisco target area, indicating a significant strike extension is available for further exploration.
While the Company will continue to advance Borborema, the project is primarily a high-grade copper deposit with some gold and
zinc. As such, Borborema represents an excellent opportunity for a joint venture pursuant to which Yamana would continue to
benefit and create value while it maintains its focus on its precious metals opportunities. Several other well-defined copper gold
soil and rock anomalies were tested with initial drill holes during the fourth quarter, intersecting significant areas of alteration
associated with anomalous gold and copper values in multiple holes. Drill testing of the São Francisco target and other anomalies
on the property will continue in early 2021.
8.
FINANCIAL CONDITION AND LIQUIDITY
BALANCE SHEET REVIEW
As at, (In millions of US Dollars)
Cash and cash equivalents
Current assets (including cash and cash equivalents)
Non-current assets
Total assets
Current liabilities (excluding current portion of debt)
Non-current liabilities (excluding long-term debt)
Debt (current and long-term)
Total liabilities
Equity attributable to Yamana Gold Inc. equity holders
Non-controlling interests
Total equity
Working capital (i)
Net debt (ii)
$
$
$
$
$
$
December 31, 2020 December 31, 2019
158.8
651.2 $
917.9
7,504.9
8,422.8 $
441.8
1,814.9
993.8
3,250.5 $
4,346.3
826.0
5,172.3 $
476.2 $
565.7 $
401.6
6,715.6
7,117.2
352.2
1,497.2
1,047.9
2,897.3
4,185.2
34.7
4,219.9
(6.7)
889.1
(i)
(ii)
Working capital is defined as the excess of current assets over current liabilities, which includes assets and liabilities classified as held for sale when
applicable.
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Total assets were $8.4 billion as at December 31, 2020, compared to total assets of $7.1 billion as at December 31, 2019. The
Company’s asset base is primarily comprised of non-current assets such as property, plant and equipment and goodwill, reflecting
the capital-intensive nature of the mining business and previous growth through acquisitions. Other significant assets include:
inventories, indirect taxes recoverable (consisting of value added taxes in the jurisdictions in which the Company operates),
advances and deposits, and cash and cash equivalents.
Total liabilities as at December 31, 2020, were $3.3 billion compared to $2.9 billion as at December 31, 2019. The Company's
liability base is primarily comprised of non-current liabilities such as long-term debt, deferred tax liabilities, and decommissioning
and restoration liabilities. Other significant liabilities include: trade payables, current income taxes payable, and provisions.
Cash and Working Capital
Cash and cash equivalents were $651.2 million as at December 31, 2020, compared to $158.8 million as at December 31,
2019. The Company has sufficient cash on hand, available credit and liquidity to fully manage its business. Cash balances include
cash acquired on the integration of the Agua Rica project with the Minera Alumbrera plant and infrastructure in the fourth quarter
of 2020, with a December 31, 2020 balance of $223.1 million. The Company had working capital of $476.2 million as at December
31, 2020, compared to a working capital deficit of $6.7 million at December 31, 2019.
Net change in working capital movement was a cash outflow of $25.9 million for the three months ended December 31, 2020.
Working capital for the quarter was impacted by several items including:
•
A decrease related to the build-up of finished goods inventory in relation to production exceeding sales due to the timing
of scheduled pickups at mines at the end of the fourth quarter. This is expected to normalize in 2021, predominantly in
the first quarter.
Annual Report 2020
85
•
•
•
A decrease related to the normalization of accounts payable balances in the fourth quarter, related to a third quarter
buildup due to the timing of payable runs in relation to September 30, 2020, more than offset by an increase related to
the build-up of year-end accruals.
A decrease related to the timing of collection of indirect tax credit recoverables and payments related to prepaids and
advances.
A decrease related to partial repayments of export credit facilities.
Net change in working capital movement was a cash outflow of $70.9 million for the year ended December 31, 2020. Working
capital for the year was impacted by several items including:
•
•
•
•
A decrease related to the build-up of inventory. Production exceeded sales due to the timing of scheduled pickups at
mines at the end of the fourth quarter. In addition, the Company carries more material and supplies inventory at December
31, 2020 as assurance while operating during the pandemic. The higher inventory levels resulted in a working capital
build-up, of which the component related to increased product inventory is expected to normalize in 2021, predominantly
in the first quarter.
A decrease related to the timing of collection of indirect tax credit recoverables and payments related to prepaids and
advances.
A decrease representing the normalization of payables and accruals that had built up at the end of the fourth quarter of
2019 to levels above those that are considered customary, due to the timing of receipts of certain invoices.
A decrease related to partial repayments of export credit facilities.
Debt and Net Debt(i)
Total debt was $993.8 million as at December 31, 2020, compared to $1,047.9 million as at December 31, 2019, and net debt(i) as
at December 31, 2020, was $565.7 million compared to $889.1 million as at December 31, 2019. The decrease in total debt is
attributable to the repayment of a series of senior notes that became due in March 2020.
Net debt(i) decreased by $53.4 million and $323.4 million during the fourth quarter and year ended 2020 respectively, to $565.7
million, further advancing the Company's objective of achieving a positive net cash(i) position, which is now well ahead of schedule.
Net debt is presented excluding cash acquired on the integration of the Agua Rica project with the Minera Alumbrera plant and
infrastructure in the fourth quarter of 2020, with a December 31, 2020 balance of $223.1 million. The Company has achieved its
financial management objective of a leverage ratio of net debt to EBITDA(i) of below 1.0x when assuming a bottom-of-cycle gold
price of $1,350 per ounce, underscoring the Company’s significant financial flexibility and best-in-class financial position. The
continued potential monetization of various non-producing assets provides further opportunities to reduce debt levels and leverage.
The Company recognizes that there is significant value in such assets, which would be more than the total amount of outstanding
debt, and along with cash flows, the Company has more than sufficient resources to further reduce outstanding debt, thereby
further improving financial flexibility and providing more opportunity for enhanced value and returns for shareholders. The Company
accomplished the sale of the royalty portfolio, the sale of Equinox shares in the second and third quarters of 2020, and the sale of
Nomad shares in the fourth quarter of 2020, with the above objectives in mind.
For a cautionary note on non-GAAP performance measures and a reconciliation from debt to net debt(i), refer to Section 12: Non-
GAAP Performance Measures.
LIQUIDITY
Planned growth, development activities, expenditures and commitments are expected to be sufficiently funded by recent and
potential monetization and financing transactions, future operating cash flows and available credit facilities.
As at December 31, 2020, the financial resources available to the Company for meeting its financial obligations include $750.0
million from its revolving credit facility.
The Company’s near-term financial obligations include financial commitments of $126.6 million. The Company has no pending
scheduled debt repayments.
The Company remains committed to maintaining amongst the strongest financial position in the industry and continues with its
objective of achieving a positive net cash(i) position.
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Yamana Gold
(i)
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
SOURCES AND USES OF CASH
The following table summarizes cash inflows and outflows for the following periods:
For the three months ended December 31,
For the year ended December 31,
(In millions of US Dollars)
Cash flows from operating activities
Cash flows from operating activities before net change in working
capital (i)
Cash flows from (used in) investing activities
Cash flows used in financing activities
Net free cash flow (i)
$
$
$
$
$
2020
181.5 $
207.4 $
136.3 $
(141.0) $
118.9 $
2019
201.7 $
176.6 $
(96.4) $
(46.9) $
123.2 $
2020
617.8 $
688.7 $
51.4 $
(175.9) $
455.7 $
2019
521.8
590.5
432.0
(892.5)
321.5
(i)
A cautionary note regarding non-GAAP performance measures is included in Section 12: Non-GAAP Performance Measures.
Operating Activities
Net cash flows from operating activities before net change in working capital for the three months ended December 31, 2020 were
17% higher than the comparative quarter in 2019, primarily as a result of higher gross margins recognized as a result of increased
metal prices; however, a significant increase in the cash outflow from the net change in working capital compared to the
comparative quarter resulted in lower net cash flows from operating activities in the current quarter.
The increase in net cash flows from operating activities for the year ended December 31, 2020 compared to 2019 is also largely
attributable to higher gross margins recognized on sales as a result of increased metal prices, which more than offset the lower
sales volumes in the period.
Investing Activities
Net cash inflows from investing activities were $136.3 million in the three months to December 31, 2020 compared to net cash
outflows of $96.4 million in the comparative quarter.
Net cash inflows in the current quarter included $222.5 million of cash acquired on the acquisition of Alumbrera pursuant to the
Agua Rica-Alumbrera Integration Transaction, which was partially offset by capital expenditures of $95.2 million during the quarter.
Net cash outflows in the comparative quarter were comprised largely of capital expenditures of $85.8 million. The increase in
capital expenditures from the prior quarter was primarily attributable to work on the exploration program at Canadian Malartic,
where the Company continues to advance studies related to the underground project as discussed in Section 1: Highlights and
Relevant Updates.
For the year ended December 31, 2020, net cash inflows from investing activities were $51.4 million compared to net cash inflows
of $432.0 million in 2019.
Net cash inflows in the current year included the cash acquired on the acquisition of Alumbrera as discussed above, proceeds
from the sale of certain assets, including $102.4 million received on the sale of Equinox Gold shares held by the Company and
$10.0 million, being the cash component of the consideration receivable on the sale of the royalty portfolio assets partially offset
by capital expenditures of $273.7 million, Net cash inflows in the comparative period were primarily derived from $800.0 million in
cash proceeds received on the sale of the Chapada mine, partially offset by capital expenditures of $331.7 million. The decrease
in capital expenditures was largely attributable to the absence of the Chapada mine in the current year,
Details on capital expenditures by mine can be found in Section 1: Highlights and Relevant Updates.
Annual Report 2020
87
Financing Activities
In the three months ended December 31, 2020, cash outflows used in financing activities included the repayment of the final $100.0
million of the $200.0 million draw down on the Company's revolving credit facility during the first quarter, as discussed above, as
well as interest payments on long-term debt of $21.3 million (2019: $22.8 million) and dividend payments of $16.6 million (2019:
$9.4 million). The decrease in interest payments was attributable to a decrease in interest expense in 2020, given the $56.2 million
of senior notes repaid in the first quarter. The increase in dividend payments resulted from the increase in the dividends declared
compared to the comparative period.
In the year ended December 31, 2020, net cash flows used in financing activities included the drawdown and subsequent
repayment of $200.0 million on the revolving credit facility and the repayment of $56.2 million of senior notes that became due in
March 2020. Net cash flows used in financing activities in 2019 included the retirement of $800.0 million in debt in the third quarter
in connection with the sale of the Chapada mine. Other financing activities in the current year included interest payments of $54.9
million (2019: $84.4 million), dividend payments of $53.0 million (2019: $23.7 million) and cash inflows of $7.4 million, being net
proceeds from the issuance of flow-through shares during the third quarter. The increase in dividend payments resulted from the
increase in the dividends declared compared to the comparative period as noted in Section 1: Highlights and Relevant Updates.
Also included in financing activities for the year ended December 31, 2020
Net Free Cash Flow
The Company generated net free cash flow of $118.9 million in the fourth quarter of 2020, comparable to the net free cash flow of
$123.2 million in the fourth quarter of 2019.
The Company generated net free cash flow of $455.7 million in the year ended December 31, 2020, representing a 41.7% increase
compared to net free cash flow of $321.5 million in the same period of 2019. The change is driven largely by strong gross margins
due to favorable metal price increases with stable costs across the operations, despite the challenges encountered during the
period as a result of COVID-19, as well as lower interest and other finance expenses paid in connection with lower debt levels.
For a cautionary note on non-GAAP performance measures and a reconciliation from cash flows from operating activities to net
free cash flow, refer to Section 12: Non-GAAP Performance Measures.
CAPITAL RESOURCES
The capital of the Company consists of items included in shareholders’ equity and debt obligations, net of cash and cash
equivalents, as follows:
As at, (In millions of US Dollars)
Shareholders’ equity
Debt
Less: Cash and cash equivalents
$
$
December 31, 2020 December 31, 2019
4,219.9
5,172.3 $
993.8
6,166.1
(651.2)
5,514.9 $
1,047.9
5,267.8
(158.8)
5,109.0
In order to maintain or adjust its capital structure, the Company may, upon approval from its Board of Directors, issue shares, pay
dividends, or undertake other activities as deemed appropriate under the specific circumstances.
88
Yamana Gold
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
In the normal course of business, the Company enters into contracts that give rise to commitments for future minimum payments.
The following table summarizes the remaining contractual maturities of the Company’s financial liabilities and operating and capital
commitments at December 31, 2020, including the impact of IFRS 16 in capital and other financial commitments, shown on an
undiscounted basis:
(In millions of US Dollars)
Debt
Repayment of principal
Interest
Capital and other financial commitments
Environmental rehabilitation provisions
Total contractual obligations and commitments
Within
1 year
Years
2 and 3
Years
4 and 5
After
5 years
Total (i)
$
— $
431.5
$
50.3
45.2
31.1
78.2
32.7
53.5
$
126.6 $
595.9 $
287.4 $
33.2
6.2
27.8
354.6 $
282.9
$
1,001.8
25.6
—
414.7
187.3
84.1
527.1
723.2 $
1,800.3
(i)
Additionally, as at December 31, 2020, the Company had outstanding letters of credit totalling $66.4 million (C$84.6 million) representing guarantees for
reclamation obligations and road construction relating to the Company’s share of mining interest in Canadian Malartic, $20.1 million and $13.7 million
representing reclamation guarantees related to the Company's Chilean mines and US properties respectively, $21.1 million representing security guarantees
in Brazil and $2.0 million representing guarantees for fuel supply at Cerro Moro. The Company's MARA Project also had outstanding bank guarantees for
reclamation obligations totalling $55.6 million, for which an equivalent amount of cash collateral had been posted.
OUTSTANDING SHARE DATA
The Company is authorized to issue an unlimited number of common shares at no par value and a maximum of eight million first
preference shares. There are no first preference shares issued or outstanding. The table below summarizes the Company's
common shares and securities convertible into common shares as at the following dates:
As at, (thousands of units)
Common shares issued and outstanding
Share options outstanding
Restricted share units
February 5, 2020 December 31, 2020
964,261
256
3,123
952,621
256
2,494
9.
ECONOMIC TRENDS, BUSINESS RISKS AND UNCERTAINTIES
Exploration, development and mining of precious metals involve numerous risks as a result of the inherent nature of the business,
global economic trends, and the influences of local social, political, environmental and economic conditions in the various
geographical areas of operation. As such, the Company is subject to several financial and operational risks that could have a
significant impact on its profitability and levels of operating cash flows.
Below is a summary of the principal financial risks and related uncertainties facing the Company. Readers are also encouraged to
read and consider the risk factors and related uncertainties as described in the Company’s latest available Annual Information
Form. Such risk factors could materially affect the future operating results of the Company and could cause actual events to differ
materially from those described in forward-looking statements. There were no significant changes to those risks or to the
Company's management of exposure during the three months ended December 31, 2020, except as noted below:
METAL PRICE RISK
The Company's profitability and long-term viability depend, in large part, upon the market price of metals that may be produced
from the Company's properties, primarily gold and silver. Market price fluctuations of these precious metals could adversely affect
profitability of operations and lead to impairments of mineral properties. Metal prices fluctuate widely and are affected by numerous
factors beyond the Company's control including but not limited to supply and demand, consumption patterns, macroeconomic
factors (interest, exchange, inflation), banking and political conditions, nature and climate condition risks, and mining specific
factors.
Annual Report 2020
89
The following chart summarizes one-year movements in the US Dollar price of gold (source: LBMA PM gold price):
Gold Price - Market Update
For the quarter ended December 31, 2020, spot gold prices averaged $1,874 per ounce, representing an increase of 27%
compared to $1,481 per ounce in the fourth quarter of 2019. Prices ranged between $1,763 and $1,941 per ounce during the fourth
quarter of 2020. As at December 31, 2020, the closing price was $1,888 per ounce.
Gold prices moved higher at the beginning of the fourth quarter of 2020, before falling precipitously in November with news
surrounding the COVID-19 vaccine. Prices recovered to end the quarter relatively unchanged. Loose monetary policies combined
with many governments facing challenging fiscal situations and elevated levels of debt, along with rising inflation expectations,
should be supportive of gold over the longer term. In the short-term, gold prices are likely be driven by the US Dollar and real
yields, global monetary policy and fiscal stimulus, and financial market volatility.
Central banks continue to be net buyers in 2020. Turkey, India and Russia are notable buyers. Global ETF holdings saw a rise in
total ounces held in the fourth quarter of 2020, reaching an all-time high.
CURRENCY RISK
Currency fluctuations may affect the Company’s capital costs and the costs that the Company incurs at its operations. Gold is sold
throughout the world based principally on a US Dollar price, but a portion of the Company’s operating and capital expenses are
incurred in Brazilian Reais, Argentine Pesos, Chilean Pesos and Canadian Dollars. The appreciation of these foreign currencies
against the US Dollar would increase the costs of production at such mining operations, which could materially and adversely
affect the Company’s earnings and financial condition. The Company may enter into forward contracts or other risk management
strategies, from time to time, to hedge against the risk of an increase in the value of foreign currencies in the jurisdictions in which
the Company operates.
90
Yamana Gold
US Dollar - Market Update
The following chart summarizes one-year movements in key currencies vis-à-vis the US Dollar (source: Bloomberg):
The Brazilian Real, Argentine Peso and the Chilean Peso all weakened against the US Dollar, while the Canadian Dollar
strengthened, during the three months ended December 31, 2020, compared to the same quarter of 2019. In the short term, these
currencies will continue to be impacted by specific regional events and COVID-19 economic impacts. As a flight to safety, the
performance of the US Dollar will be driven by economic and financial market shocks.
Average Exchange Rate
Period-end Exchange Rate
For the three months ended December 31,
For the year ended December 31,
As at
December 31,
2020
1.3030
5.3964
80.081
761.96
2019
1.3200
4.1173
59.387
755.98
% (i)
-1.3 %
31.1 %
34.8 %
0.8 %
2020
1.3412
5.1558
70.6514
792.17
2019
1.3269
3.9451
48.2446
703.25
% (i)
1.1 %
30.7 %
46.4 %
12.6 %
2020
1.2732
5.1967
84.150
710.95
As at
December 31,
2019
1.2988
4.0307
59.890
748.74
% (i)
-2.0 %
28.9 %
40.5 %
-5.0 %
USD-CAD
USD-BRL
USD-ARG
USD-CLP
(i)
Positive variance represents the US Dollar Increase in value to the foreign currency.
As at December 31, 2020, the Company had zero-cost collar contracts, which allow the Company to participate in exchange rate
movements between two strikes, as follows:
Brazilian Real to USD
January 2021 to June 2021
R$ = Brazilian Reais
Evenly split by month.
(i)
(ii)
Average call price (i)
Average put strike price (i)
Total (ii)
R$3.85
R$4.31
R$ 93.0 million
In addition, as at December 31, 2020, the Company had forward contracts as follows:
Brazilian Real to USD
January 2021 to June 2021
R$ = Brazilian Reais
Evenly split by month.
(i)
(ii)
Average forward price (i)
Total (ii)
R$4.07
R$ 93.0 million
Annual Report 2020
91
In January 2021, the Company entered into the following additional derivative contracts to hedge against the risk of increases in
the value of foreign currencies in several jurisdictions:
• Canadian Dollar to USD: Forward contracts with monthly notional maturities of C$20.0 million from February to
December 2021, at an average forward price of C$1.2703 (total notional of C$220.0 million);
• Chilean Peso to USD: Forward contracts with monthly notional maturities of CLP$9.3 billion from February to December
2021, at an average forward price of CLP$736.80 (total notional of CLP$102.3 billion);
• Brazilian Real to USD: Zero-cost collars with monthly notional maturities of R$16.0 million from July 2021 to December
2022 with an average call strike price of R$5.25 and an average put strike price of R$5.71 (total notional of R$288.0
million), and forward contracts with monthly notional maturities of R$16.0 million from July 2021 to December 2022 at an
average forward price of R$5.4925 (total notional of R$288.0 million).
INFECTIOUS DISEASE RISK
Emerging infectious diseases or the threat of outbreaks of viruses or other contagions or epidemic diseases, including the COVID-
19 outbreak, could have a material adverse effect on the Company by causing operational and supply chain delays and disruptions
(including as a result of government regulation and prevention measures), labour shortages and shutdowns, social unrest, breach
of material contracts and customer agreements, government or regulatory actions or inactions, increased insurance premiums,
decreased demand or the inability to sell and deliver precious metals, declines in the price of precious metals, delays in permitting
or approvals, governmental disruptions, capital markets volatility, or other unknown but potentially significant impacts. In addition,
governments may impose strict emergencies measures in response to the threat or existence of an infectious disease. The full
extent and impact of the COVID-19 pandemic is unknown and to date has included extreme volatility in financial markets, a
slowdown in economic activity, extreme volatility in commodity prices (including precious metals) and has raised the prospect of a
global recession. The international response to COVID-19 has led to significant restrictions on travel, temporary business closures,
quarantines, global stock market volatility and a general reduction in global consumer activity. The estimates of management are
considered reasonable at this time, however, the full impact of the effects these conditions on mining operations or financial results
may vary significantly due to uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the
duration of the outbreak, and the length of the travel restrictions and business closures that have been or may be imposed by the
governments of impacted countries. In addition, a significant outbreak of contagious diseases in the human population, such as
COVID-19, could result in a widespread health crisis that could adversely affect the economies and financial markets of many
countries, resulting in an economic downturn that could result in a material adverse effect on commodity prices, demand for metals,
investor confidence, and general financial market liquidity, all of which may adversely affect the Company’s business and the
market price of the Company’s common shares. Accordingly, any outbreak or threat of an outbreak of an epidemic disease or
similar public health emergency, including COVID-19, could have a material adverse effect on the Company’s business, financial
condition and results of operations. It is unknown whether and how the Company may be affected if a pandemic, such as the
COVID-19 outbreak, persists for an extended period of time.
10.
CONTINGENCIES
The Company may be involved in disputes with other parties in the future that may result in litigation. If the Company is unable to
resolve these disputes favourably, it may have a material adverse impact on the Company's financial condition, cash flow and
results of operations.
11.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The Company's consolidated financial statements are prepared in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board ("IFRS"). The significant accounting policies applied are described in Note
3 to the Company's consolidated financial statements for the year ended December 31, 2020.
In preparing the consolidated financial statements in accordance with IFRS, management is required to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Critical accounting estimates represent
estimates that are uncertain and for which changes in those estimates could materially impact the Company's consolidated financial
statements. Actual future outcomes may differ from present estimates. Management reviews its estimates and assumptions on an
ongoing basis using the most current information available.
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Yamana Gold
The critical judgements and key sources of estimation uncertainty in the application of accounting policies during the year ended
December 31, 2020 are disclosed in Note 4 to the Company's consolidated financial statements for the year ended December 31,
2020.
12.
NON-GAAP PERFORMANCE MEASURES
The Company has included certain non-GAAP performance measures to supplement its Consolidated Financial Statements, which
are presented in accordance with IFRS, including the following:
• Cash costs per gold equivalent ounce ("GEO") sold;
All-in sustaining costs ("AISC") per GEO sold;
•
• Net debt;
• Net free cash flow;
•
•
Average realized price per ounce of gold/silver sold; and
Average realized price per pound of copper sold.
The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with
an improved ability to evaluate the underlying performance of the Company. Non-GAAP financial measures do not have any
standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other
companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS. Management's determination of the components of non-GAAP and
additional measures are evaluated on a periodic basis influenced by new items and transactions, a review of investor uses and
new regulations as applicable. Any changes to the measures are duly noted and retrospectively applied as applicable. Subtotals
and per unit measures may not calculate based on amounts presented in the following tables due to rounding.
GEO PRODUCTION AND SALES
Production and sales of silver are treated as a gold equivalent in determining a combined precious metal production or sales unit,
commonly referred to as gold equivalent ounces ("GEO"). Specifically, guidance GEO produced are calculated by converting silver
production to its gold equivalent using relative gold/silver metal prices at an assumed ratio and adding the converted silver
production expressed in gold ounces to the ounces of gold production. Actual GEO production and sales calculations are based
on an average realized gold to silver price ratio for the relevant period.
CASH COSTS AND ALL-IN SUSTAINING COSTS
The Company discloses “cash costs” because it understands that certain investors use this information to determine the
Company’s ability to generate earnings and cash flows for use in investing and other activities. The Company believes that
conventional measures of performance prepared in accordance with IFRS do not fully illustrate the ability of its operating mines to
generate cash flows. The measures, as determined under IFRS, are not necessarily indicative of operating profit or cash flows
from operating activities.
The measure of cash costs and all-in sustaining costs ("AISC"), along with revenue from sales, is considered to be a key indicator
of a company’s ability to generate operating earnings and cash flows from its mining operations. This data is furnished to provide
additional information and is a non-GAAP financial measure. The terms "cash costs per GEO sold" and "AISC per GEO sold" do
not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures
employed by other companies. Non-GAAP financial measures should not be considered in isolation as a substitute for measures
of performance prepared in accordance with IFRS and are not necessarily indicative of operating costs, operating profit or cash
flows presented under IFRS.
Cash costs include mine site operating costs such as mining, processing, administration, production taxes and royalties which are
not based on sales or taxable income calculations, but are exclusive of amortization, reclamation, capital, development and
Annual Report 2020
93
exploration costs. The Company believes that such measure provides useful information about its underlying Cash costs of
operations. Cash costs are computed on a weighted average basis as follows:
• Cash costs per GEO sold - The total costs used as the numerator of the unitary calculation represent cost of sales
excluding DDA, net of treatment and refining charges. The attributable cost is calculated net of by-products by applying
copper and zinc net revenues, which are incidental to the production of precious metals, as a credit to GEO sold, thereby
allowing the Company’s management and stakeholders to assess net costs of precious metal sales. These costs are then
divided by GEO sold.
AISC figures are calculated in accordance with a standard developed by the World Gold Council (“WGC”) (a non-regulatory, market
development organization for the gold industry). Adoption of the standard is voluntary, and the standard is an attempt to create
uniformity and a standard amongst the industry and those that adopt it. Nonetheless, the cost measures presented herein may not
be comparable to other similarly titled measures of other companies.
AISC seeks to represent total sustaining expenditures of producing and selling GEO from current operations. The total costs used
as the numerator of the unitary calculation represent cash costs (as defined above), and includes cost components of mine
sustaining capital expenditures including stripping and underground mine development, corporate and mine-site general and
administrative expense, sustaining mine-site exploration and evaluation expensed and capitalized and accretion and amortization
of reclamation and remediation. AISC do not include capital expenditures attributable to projects or mine expansions, exploration
and evaluation costs attributable to growth projects, income tax payments, borrowing costs and dividend payments. Consequently,
this measure is not representative of all of the Company's cash expenditures. In addition, the calculation of AISC does not include
depletion, depreciation and amortization expense as it does not reflect the impact of expenditures incurred in prior periods. AISC
are computed on a weighted average basis as follows:
• AISC per GEO sold - reflect allocations of the aforementioned cost components on the basis that is consistent with the
nature of each of the cost component to the GEO production and sales activities but net of by-product revenue credits
from sales of copper and zinc.
The following tables provide detailed reconciliations from costs of sales to cash costs and AISC, for the years ended December
31, 2020, and December 31, 2019.
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Yamana Gold
Reconciliation of Cost of Sales to Cash Costs and AISC
Cash Cost & AISC Reconciliation - Total
For the three months ended
December 31, 2020
For the three months ended
December 31, 2019
(In millions of US Dollars except GEO sold and per GEO sold amounts)
Cost of sales excluding DDA (i)
DDA (i)
Total cost of sales
DDA
Total cash costs
AISC adjustments:
General and administrative expenses
Community costs in other operating expenses
Reclamation & remediation - accretion & amortization
Exploration capital expenditures
Exploration and evaluation expenses
Sustaining capital expenditures
Leases (IFRS 16 Adjustment)
Total AISC
GEO sold (ii)(iii)
Cost of sales excl. DDA per GEO sold
DDA per GEO sold
Total cost of sales per GEO sold
Cash costs per GEO sold
AISC per GEO sold
Cash Cost & AISC Reconciliation - Total
(In millions of US Dollars except GEO and per GEO amounts)
Cost of sales excluding DDA (i)
DDA (i)
Total cost of sales
DDA
Treatment and refining charges
Total cash costs
AISC adjustments:
General and administrative expenses
Community costs in other operating expenses
Reclamation & remediation - accretion & amortization
Exploration capital expenditures
Exploration and evaluation expenses
Sustaining capital expenditures
Leases (IFRS 16 Adjustment)
Total AISC
Commercial GEO (ii)(iii)
Cost of sales excl. DDA per GEO sold
DDA per GEO sold
Total cost of sales per GEO sold
Cash costs per GEO sold
AISC per GEO sold
Total
Total
GEO
Non-
Sustaining
Total
Other
Mines &
Non-
Sustaining
0.3
—
0.3
—
0.3
—
—
—
2.2
1.4
—
—
Total
GEO
169.1 $
119.0
288.0 $
(119.0)
169.1 $
19.3
0.9
5.3
11.7
1.9
46.6
6.1
— $ 169.4 $
— 119.0
— $ 288.4 $
— (119.0)
— $ 169.5 $
—
—
—
9.2
2.5
—
—
19.3
0.9
5.3
13.9
3.3
46.6
6.1
$
$
$
$
$
$
260.8
257,904
656
461
1,117
656
1,011
$
166.8 $
166.8 $
112.5
112.5
$
279.3 $
279.3 $
(112.5)
(112.5)
$
166.8 $
166.8 $
23.4
1.9
5.8
21.0
6.0
47.8
4.8
23.4
1.9
5.8
11.8
3.5
47.8
4.8
$
$
$
$
$
$
265.7
246,955
675
455
1,131
675
1,076
For the year ended
December 31, 2020
For the year ended
December 31, 2019
Total
Total
GEO
Non-
sustaining
Total
Other
Mines &
Non-
Sustaining
Total
GEO
$
614.1 $
614.1 $
395.0
395.0
$ 1,009.1 $ 1,009.1 $
(395.0)
(395.0)
—
—
$
614.1 $
614.1 $
85.9
6.4
20.1
57.6
15.1
149.3
20.3
85.9
6.4
20.1
41.2
9.6
149.3
20.3
946.8
876,520
701
451
1,151
701
1,080
$
$
$
$
$
$
111.1
12.0
123.1
(12.0)
—
111.1
7.4
—
3.0
9.6
5.2
25.2
1.2
471.7
459.7
671.7 $
— $ 782.8 $
—
— $ 1,254.4 $ 1,131.4 $
—
—
— $ 783.5 $
672.4 $
(459.7)
(471.7)
0.7
0.7
—
—
—
16.4
5.5
—
—
79.4
5.2
25.6
60.4
10.3
166.7
21.1
72.0
5.2
22.6
50.8
5.1
141.5
19.9
$
989.5
990,005
$
$
$
$
$
678
464
1,143
679
999
Annual Report 2020
95
Cash Cost & AISC Reconciliation - Operating Segments
For the three months ended December 31, 2020
(In millions of US Dollars except GEO sold and per GEO sold amounts)
Cost of sales excluding DDA (i)
DDA (i)
Total cost of sales
DDA
Treatment and refining charges
Total cash costs
AISC adjustments:
General and administrative expenses
Community costs in other operating expenses
Reclamation & remediation - accretion & amortization
Exploration capital expenditures
Exploration and evaluation expenses
Sustaining capital expenditures
Leases (IFRS 16 Adjustment)
Total AISC
GEO sold (ii)
Cost of sales excl. DDA per GEO sold
DDA per GEO sold
Total cost of sales per GEO sold
Cash costs per GEO sold
AISC per GEO sold
Total
Malartic
GEO
Jacobina
GEO
$
$
166.8 $
53.4 $
25.2 $
112.5
41.5
13.6
279.3 $
95.0 $
38.8 $
(112.5)
(41.5)
(13.6)
—
—
—
$
166.8 $
53.4 $
25.2 $
23.4
1.9
5.8
21.0
6.0
47.8
4.8
1.0
0.1
2.4
—
0.1
18.6
0.2
0.2
0.1
0.5
2.0
0.1
5.4
1.0
$
$
$
$
$
$
75.7 $
34.5 $
84,348
42,789
634 $
590 $
493 $
317 $
1,126 $
907 $
634 $
590 $
898 $
807 $
Cerro
Moro
GEO
33.8 $
25.4
59.2 $
(25.4)
—
33.8 $
Minera
Florida
GEO
Corporate
& Non-
Sustaining
El Peñón
GEO
36.0 $
18.2 $
16.9
12.5
52.9 $
30.7 $
(16.9)
(12.5)
—
—
36.0 $
18.2 $
0.3
1.6
0.7
3.5
—
9.0
1.3
50.2 $
0.3
—
0.6
4.7
—
9.9
1.5
0.2
—
1.0
1.8
—
4.4
0.4
53.0 $
26.1
760
23,979
51,738
696 $
44,101
768 $
576 $
1,343 $ 1,023 $ 1,279
768 $
1,139 $ 1,025 $ 1,087
327 $
696 $
760
519
Cash Cost & AISC Reconciliation - Operating Segments
For the three months ended December 31, 2019
Minera
Florida
GEO
Corporate &
Other Mines
& Non-
Sustaining
Total
Malartic
GEO
Jacobina
GEO
$
169.4 $
53.1 $
23.4 $
119.0
34.9
12.0
$
288.4 $
88.0 $
35.4 $
(119.0)
(34.9)
(12.0)
—
—
—
$
169.4 $
53.1 $
23.4 $
Cerro
Moro
GEO
37.0 $
29.5
66.5 $
(29.5)
—
37.0 $
El Peñón
GEO
35.7 $
31.8
67.5 $
(31.8)
—
35.7 $
19.8 $
8.8
28.6 $
(8.8)
—
19.8 $
19.3
0.9
5.3
13.9
3.3
46.6
6.1
0.9
0.1
2.3
0.1
—
13.5
0.1
0.3
—
0.7
2.7
0.1
8.2
1.2
$
$
$
$
$
$
70.1 $
36.6 $
84,673
44,293
627 $
529 $
412 $
270 $
1,039 $
799 $
627 $
529 $
828 $
827 $
0.4
0.8
0.9
3.8
—
11.9
1.3
56.0 $
0.4
—
0.3
2.8
—
7.6
2.4
49.2 $
0.3
—
1.2
2.3
—
3.7
0.5
27.8
19,696
63,552
562 $ 1,005
500 $
45,690
811 $
646 $
1,456 $ 1,062 $ 1,450
562 $ 1,005
811 $
775 $ 1,411
1,228 $
445
(In millions of US Dollars except GEO sold and per GEO sold amounts)
Cost of sales excluding DDA (i)
DDA (i)
Total cost of sales
DDA
Treatment and refining charges
Total cash costs
AISC adjustments:
General and administrative expenses
Community costs in other operating expenses
Reclamation & remediation - accretion & amortization
Exploration capital expenditures
Exploration and evaluation expenses
Sustaining capital expenditures
Leases (IFRS 16 Adjustment)
Total AISC
GEO sold (ii)(iii)
Cost of sales excl. DDA per GEO sold
DDA per GEO sold
Total cost of sales per GEO sold
Cash costs per GEO sold
AISC per GEO sold
96
Yamana Gold
—
2.6
2.6
(2.6)
—
—
21.4
0.1
0.6
9.0
6.0
0.5
0.4
0.4
2.0
2.4
(2.0)
—
0.4
17.0
—
(0.1)
2.2
3.2
1.7
0.6
Cash Cost & AISC Reconciliation - Operating Segments
For the year ended December 31, 2020
(In millions of US Dollars except GEO and per GEO amounts)
Cost of sales excluding DDA (i)
DDA (i)
Total cost of sales
DDA
Treatment and refining charges
Total cash costs
AISC adjustments:
General and administrative expenses
Community costs in other operating expenses
Reclamation & remediation - accretion & amortization
Exploration capital expenditures
Exploration and evaluation expenses
Sustaining capital expenditures
Leases (IFRS 16 Adjustment)
Total AISC
Commercial GEO (ii)
Cost of sales excl. DDA per GEO sold
DDA per GEO sold
Total cost of sales per GEO sold
Cash costs per GEO sold
AISC per GEO sold
Total
Malartic
GEO
Jacobina
GEO
$
614.1 $
185.4 $
95.5 $
395.0
133.4
52.6
$ 1,009.1 $
318.8 $
148.1 $
(395.0)
(133.4)
(52.6)
—
—
— —
$
614.1 $
185.4 $
95.5 $
Cerro
Moro
GEO
El Peñón
GEO
115.8 $ 141.8 $
86.1
69.6
201.8 $ 211.4 $
(69.6)
(86.1)
—
115.8 $ 141.8 $
85.9
6.4
20.1
57.6
15.1
149.3
20.3
2.5
0.3
8.2
—
0.1
52.5
0.7
0.7
0.7
2.2
6.0
0.1
21.6
4.1
$
$
$
$
$
$
249.7 $
130.9 $
264,198
175,561
702 $
544 $
505 $
300 $
1,207 $
844 $
702 $
544 $
945 $
746 $
0.5
4.6
2.8
12.6
—
29.5
5.0
0.5
—
2.2
15.9
—
31.4
7.0
170.7 $ 198.8 $
133,358 215,667
657 $
323 $
980 $
657 $
922 $
868 $
645 $
1,513 $
868 $
1,280 $
Minera
Florida
GEO
Corporate
& Non-
Sustaining
—
9.1
9.1
(9.1)
—
—
81.3
0.8
1.1
16.1
14.9
1.7
1.7
75.6 $
44.2
119.8 $
(44.2)
—
75.6 $
0.4
—
3.6
7.0
—
12.6
1.8
101.1
87,735
862
503
1,366
862
1,152
Cash Cost & AISC Reconciliation - Operating Segments
For the year ended December 31, 2019
(In millions of US Dollars except GEO and per GEO amounts)
Cost of sales excluding DDA (i)
DDA (i)
Total cost of sales
DDA
Treatment and refining charges
Total cash costs
AISC adjustments:
General and administrative expenses
Community costs in other operating expenses
Reclamation & remediation - accretion & amortization
Exploration capital expenditures
Exploration and evaluation expenses
Sustaining capital expenditures
Leases (IFRS 16 Adjustment)
Total AISC
Commercial GEO (ii)(iii)
Cost of sales excl. DDA per GEO sold
DDA per GEO sold
Total cost of sales per GEO sold
Cash costs per GEO sold
AISC per GEO sold
Total
Malartic
GEO
Jacobina
GEO
$
782.8 $
198.9 $
94.9 $
471.7
135.4
56.7
$ 1,254.4 $
334.4 $
151.6 $
(471.7)
(135.4)
(56.7)
13.0
—
—
$
795.8 $
198.9 $
94.9 $
79.4
5.2
25.6
60.4
10.3
166.7
21.1
3.5
0.3
9.0
0.8
0.2
45.1
0.5
1.1
0.2
3.4
6.3
0.2
24.5
4.7
$
$
$
$
$
$
258.6 $
135.3 $
330,851
160,142
601 $
593 $
409 $
354 $
1,011 $
947 $
601 $
593 $
782 $
845 $
Cerro
Moro
GEO
El Peñón
GEO
Corporate &
Other Mines &
Non-
Sustaining
Minera
Florida
GEO
111.2
20.2
131.4
(20.2)
12.3
123.5
73.0
0.5
3.0
9.5
9.9
29.7
2.6
70.6 $
153.8 $ 153.4 $
121.7
102.0
275.5 $ 255.4 $ 106.3 $
(102.0)
(121.7)
—
0.7
(35.7)
35.7
—
154.4 $ 153.4 $
70.6 $
0.5
—
4.6
9.5
—
13.1
0.6
4.2
3.5
16.2
—
23.5
4.2
0.7
—
2.1
18.1
—
30.8
6.8
2.3
206.6 $ 211.9 $ 100.6
74,705
213,077 211,231
726 $
483 $
722 $
571 $
1,293 $ 1,209 $ 1,423
726 $
725 $
969 $ 1,003 $ 1,346
945
478
945
(i)
(ii)
(iii)
Cost of sales excluding DDA includes the impact of the movement in inventory (non-cash item). Information related to GAAP values of cost of sales excluding
DDA, DDA and total cost of sales are derived from the Consolidated Statements of Operations and Note 7: Segment Information to the Company's
Consolidated Financial Statements. Other Mines include Chapada for the comparative period.
GEO assumes gold ounces plus the gold equivalent of silver ounces using a ratio of 76.82 and 88.86 for the three months and year ended December 31,
2020, respectively, and 85.54 and 86.02 for the three months and year ended December 31, 2019, respectively.
Comparative period GEO and gold figures exclude contributions from the Chapada mine, which was divested in July 2019. Sales figures for the three
months and year ended December 31, 2019 exclude (161) and 49,578 ounces, respectively, net of quantity adjustments.
Annual Report 2020
97
NET DEBT
The Company uses the financial measure "net debt ", which is a non-GAAP financial measure, to supplement information in its
consolidated financial statements. The Company believes that in addition to conventional measures prepared in accordance with
IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s performance. The non-
GAAP financial measure of net debt does not have any standardized meaning prescribed under IFRS, and therefore it may not be
comparable to similar measures employed by other companies. The data is intended to provide additional information and should
not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
Net debt is calculated as the sum of the current and non-current portions of long-term debt net of the cash and cash equivalent
balance as at the balance sheet date. Cash related to the MARA Project is added back to the net debt calculation on the basis that
the cash is specific to the MARA Project, and not available to the Company for the purposes of debt reduction.
When the cash and cash equivalent balance exceeds the total debt, the Company is in a "net cash" position. A reconciliation of
net debt is provided below:
As at, (In millions of US Dollars)
Debt
Non-current portion
Current portion
Total debt
Less: Cash and cash equivalents
Add: Cash related to MARA
Net debt
NET FREE CASH FLOW
December 31, 2020 December 31, 2019
$
$
$
993.8 $
—
993.8 $
(651.2)
223.1
565.7 $
991.7
56.2
1,047.9
(158.8)
—
889.1
The Company uses the financial measure "net free cash flow", which is a non-GAAP financial measure, to supplement information
in its consolidated financial statements. Net free cash flow does not have any standardized meaning prescribed under IFRS, and
therefore it may not be comparable to similar measures employed by other companies. The Company believes that in addition to
conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information
to evaluate the Company’s performance with respect to its operating cash flow capacity to meet non-discretionary outflows of cash.
The presentation of net free cash flow is not meant to be a substitute for the cash flow information presented in accordance with
IFRS, but rather should be evaluated in conjunction with such IFRS measures. Net free cash flow is calculated as cash flows from
operating activities adjusted for advance payments received pursuant to metal purchase agreements and other cash flows not
related to current period production, less non-discretionary items such as sustaining capital expenditures, interest paid, payment
of lease liabilities, and cash used in other financing activities.
(In millions of US Dollars)
Cash flows from operating activities
Adjustments to operating cash flows:
Amortization of deferred revenue (i)
Temporary suspension and standby costs
Other incremental COVID-19 costs
Legal contingencies included in other cash payments
Non-discretionary items related to the current period
Sustaining capital expenditures
Interest paid
Payment of lease liabilities
Cash used in other financing activities
Net free cash flow
For the three months ended December 31,
For the year ended December 31,
$
2020
181.5 $
2019
201.7 $
2020
617.8 $
3.8
2.2
7.0
—
(47.8)
(21.3)
(4.2)
(2.3)
$
118.9 $
4.2
—
—
—
(46.6)
(22.8)
(4.8)
(8.5)
123.2 $
16.1
18.4
22.1
8.0
(149.2)
(54.9)
(17.1)
(5.5)
455.7 $
2019
521.8
79.4
—
—
8.3
(166.7)
(84.4)
(16.8)
(20.1)
321.5
98
Yamana Gold
(i)
Adjustments represent non-cash deferred revenue recognized in respect of metal sales agreements, the cash payments for which were received in previous
periods and which were similarly reduced for comparability. Amounts are derived from the Consolidated Statements of Cash Flows and further details on
current deferred revenue balances can be found in Note 27: Other Provisions and Liabilities to the Company's Consolidated Financial Statements.
AVERAGE REALIZED METAL PRICES
The Company uses the financial measures "average realized gold price", "average realized silver price" and "average realized
copper price", which are non-GAAP financial measures, to supplement its consolidated financial statements. Average realized
price does not have any standardized meaning prescribed under IFRS, and therefore may not be comparable to similar measures
employed by other companies. The Company believes that in addition to conventional measures prepared in accordance with
IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s performance vis-à-vis
average market prices of metals for the period. The presentation of average realized metal prices is not meant to be a substitute
for the revenue information presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS
measure.
Average realized metal price represents the sale price of the underlying metal before deducting treatment and refining charges,
and other quotational and pricing adjustments. Average realized prices are calculated as the revenue related to each of the metals
sold, i.e. gold, silver and copper, divided by the quantity of the respective units of metals sold, i.e. gold ounce, silver ounce and
copper pound. Reconciliations of average realized metal prices to revenue are provided below:
For the three months ended December 31,
2020
2019
Gold (i)
Silver
Copper (i)
Revenue
Quantity
sold
213,439 oz $
2,563,166 oz $
—
lbs $
Revenue per
ounce/pound
Revenue
(In millions of
US Dollars)
1,875 $
24.02
—
400.2
61.6
—
$
461.8
Quantity
sold
223,433 oz $
2,935,673 oz $
182,567 lbs $
Revenue per
ounce/pound
Revenue
(In millions of
US Dollars)
1,486 $
332.0
17.55
1.88
51.5
0.3
$
383.8
2019
For the three months ended December 31,
Gold (i)
Silver
Silver subject to metal sales agreement (ii)
Copper (i)
Copper subject to metal sales
agreements (ii)
Gross revenue
(Deduct) add:
Metal price, MTM, and derivative settlement
adjustments
Revenue
2020
Average
Realized
Price
1,875 $
Revenue
(In millions of
US Dollars)
400.2
Quantity
sold
213,439 oz $
2,294,546 oz $
268,620 oz $
2,563,166 oz $
24.32
21.44
24.02
—
lbs $
—
lbs $
—
lbs $
—
—
—
55.8
5.8
—
—
$
461.8
—
$
461.8
Quantity
sold
223,433 oz $
2,635,673 oz $
300,000 oz $
2,935,673 oz $
16,085 lbs $
166,482 lbs $
182,567 lbs $
Average
Realized
Price
Revenue
(In millions of
US Dollars)
1,484 $
331.5
17.39
18.52
17.50
2.70
2.06
2.11
45.8
5.6
0.0
0.3
$
383.2
0.6
$
383.8
(i)
(ii)
Includes payable gold and copper contained in concentrate from the Chapada mine in the comparative period.
Balances represent the metals sold under the metal sales agreements.
Annual Report 2020
99
For the year ended December 31,
2020
2019
Gold (i)
Silver
Copper (i)
Revenue
Quantity
sold
754,970 oz $
Revenue per
ounce/pound
1,777
$
1,341.8
Revenue
(In millions of
US Dollars)
10,382,086 oz $
—
lbs $
21.11
—
219.2
—
$
1,561.0
Quantity
sold
911,708 oz $
11,009,552 oz $
59,887,778 lbs $
Revenue per
ounce/pound
Revenue
(In millions of
US Dollars)
1,268.7
1,392 $
16.39
2.72
180.6
162.9
$
1,612.2
For the year ended December 31,
2020
2019
Gold (i)
Silver
Quantity
sold
754,970 oz $
9,380,951 oz $
Silver subject to metal sales agreement (ii)
1,001,135 oz $
10,382,086 oz $
—
lbs $
—
lbs $
—
lbs $
Copper (i)
Copper subject to metal sales
agreements (ii)
Gross revenue
(Deduct) add:
Treatment and refining charges of gold and
copper concentrate
Metal price, MTM, and derivative settlement
adjustments
Deferred revenue adjustment (iii)
Revenue
Average
Realized
Price
1,777 $
Revenue
(In millions of
US Dollars)
1,341.8
21.04
19.91
20.93
—
—
—
197.4
19.9
—
—
Quantity
sold
911,708 oz $
10,165,352 oz $
844,200 oz $
11,009,552 oz $
37,157,312 lbs $
22,730,466 lbs $
59,887,778 lbs $
Average
Realized
Price
Revenue
(In millions of
US Dollars)
1,387 $
1264.6
163.8
15.2
105.1
66.2
16.11
18.05
16.26
2.83
2.91
2.86
$
1,559.1
$
1,614.9
—
—
1.9
(13.0)
10.3
—
$
1,561.0
$
1,612.2
(i)
(ii)
(iii)
Includes payable gold and copper contained in concentrate.
Balances represent the metals sold under the metal sales agreements and the advanced copper sales program.
Consideration from the Company's metal sales agreement is considered variable. Revenue can be subject to cumulative adjustments when the number of
ounces to be delivered under the agreement changes. During the three months ended March 31, 2020, the Company recognized an adjustment to revenue
and finance costs due to a change in the Company's reserve and resource estimates, and therefore, the number of ounces expected to be delivered under
the life of the agreement.
ADDITIONAL LINE ITEMS OR SUBTOTALS IN FINANCIAL STATEMENTS
The Company uses the following additional line items and subtotals in the consolidated financial statements as contemplated in
IAS 1: Presentation of Financial Statements:
• Gross margin excluding depletion, depreciation and amortization - represents the amount of revenue in excess of
cost of sales excluding depletion, depreciation and amortization. This additional measure represents the cash contribution
from the sales of metals before all other operating expenses and DDA, in the reporting period.
• Mine operating earnings/loss - represents the amount of revenue in excess of cost of sales excluding depletion,
depreciation and amortization, depletion, depreciation and amortization, temporary suspension, standby and other
incremental COVID-19 costs, and net impairment write-downs/reversals.
• Operating earnings/loss - represents the amount of earnings/loss before net finance costs, other income/costs and
income tax expense/recovery. This measure represents the amount of financial contribution, net of all expenses directly
attributable to mining operations and overheads. Finance costs and other income/costs are not classified as expenses
directly attributable to mining operations.
• Cash flows from operating activities before income taxes paid and net change in working capital - excludes the
payments made during the period related to income taxes and tax related payments and the movement from period-to-
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Yamana Gold
period in working capital items including trade and other receivables, other assets, inventories, trade and other payables.
Working capital and income taxes can be volatile due to numerous factors, such as the timing of payment and receipt. As
the Company uses the indirect method prescribed by IFRS in preparing its statement of cash flows, this additional
measure represents the cash flows generated by the mining business to complement the GAAP measure of cash flows
from operating activities, which is adjusted for income taxes paid and tax related payments and the working capital change
during the reporting period.
• Cash flows from operating activities before net change in working capital - excludes the movement from period-to-
period in working capital items including trade and other receivables, other assets, inventories, trade and other payables.
Working capital can be volatile due to numerous factors, such as the timing of payment and receipt. As the Company
uses the indirect method prescribed by IFRS in preparing its statement of cash flows, this additional measure represents
the cash flows generated by the mining business to complement the GAAP measure of cash flows from operating
activities, which is adjusted for the working capital change during the reporting period.
The Company believes that this presentation provides useful information to investors because gross margin excluding depletion,
depreciation and amortization excludes the non-cash operating cost items (i.e. depreciation, depletion and amortization), cash
flows from operating activities before net change in working capital excludes the movement in working capital items, mine operating
earnings excludes expenses not directly associated with commercial production and operating earnings excludes finance and tax
related expenses and income/recoveries. These, in management’s view, provide useful information of the Company’s cash flows
from operating activities and are considered to be meaningful in evaluating the Company’s past financial performance or the future
prospects.
13.
DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and
reported to senior management, including the Company’s President and Chief Executive Officer and Senior Vice President,
Finance and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure. The
Company’s system of disclosure controls and procedures includes, but is not limited to, our Timely Disclosure and Confidentiality
Policy, our Code of Conduct, our Insider Trading Policy, our Corporate Controls Policy, the effective functioning of our Audit
Committee and procedures in place to systematically identify matters warranting consideration of disclosure by the Audit
Committee.
As at the end of the period covered by this Management’s Discussion and Analysis, management of the Company, with the
participation of the President and Chief Executive Officer and the Senior Vice President, Finance and Chief Financial Officer,
evaluated the effectiveness of the Company’s disclosure controls and procedures as required by applicable rules of the Canadian
Securities Administrators (or Canadian securities regulatory authorities) and the U.S. Securities and Exchange Commission (or
the SEC). The evaluation included documentation review, inquiries and other procedures considered by management to be
appropriate in the circumstances. Based on that evaluation, the President and Chief Executive Officer and the Senior Vice
President, Finance and Chief Financial Officer have concluded that, as of the end of the period covered by this Management’s
Discussion and Analysis, the disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934) were effective to provide reasonable assurance that information required to be disclosed in the Company’s annual filings
and interim filings and other reports filed or submitted under applicable securities laws, is recorded, processed, summarized and
reported within time periods specified by those laws and that material information is accumulated and communicated to
management of the Company, including the President and Chief Executive Officer and the Senior Vice President, Finance and
Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Annual Report 2020
101
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and maintaining effective "internal control over financial reporting" as
such term is defined in the rules of the Canadian Securities Administrators and the SEC. The Company’s internal control over
financial reporting is designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting for
external purposes in accordance with IFRS. The Company’s internal control over financial reporting includes:
• Maintaining records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets
•
•
•
of the Company;
Providing reasonable assurance that transactions are recorded as necessary for preparation of our Consolidated
Financial Statements in accordance with generally accepted accounting principles;
Providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of
management and the directors of the Company; and
Providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a
material effect on the Company’s Consolidated Financial Statements would be prevented or detected on a timely basis.
The Company’s internal control over financial reporting may not prevent or detect all misstatements because of inherent
limitations. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate due to changes in conditions or deterioration in the degree of compliance with the Company’s policies and
procedures.
The Company's management, with the participation of its President and Chief Executive Officer, and Senior Vice President,
Finance and Chief Financial Officer, assessed the effectiveness of the Company's internal control over financial reporting. In
making this assessment, management used the criteria set forth in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management and the President
and Chief Executive Officer and Senior Vice President, Finance and Chief Financial Officer, have concluded that, as of December
31, 2020, the Company’s internal control over financial reporting was effective. The effectiveness of the Company’s internal control
over financial reporting as of December 31, 2020 has been audited by Deloitte LLP, the Company’s independent registered public
accounting firm, as stated in their report immediately preceding the Company’s audited consolidated financial statements for the
year ended December 31, 2020.
CHANGES IN INTERNAL CONTROLS
During the year ended December 31, 2020, there has been no change in the Company’s internal control over financial reporting
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
LIMITATIONS OF CONTROLS AND PROCEDURES
The Company’s management, including the President and Chief Executive Officer and the Senior Vice President, Finance and
Chief Financial Officer, believe that any disclosure controls and procedures or internal controls over financial reporting, no matter
how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls
must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute
assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These
inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because
of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by unauthorized override of the control. The design of any systems of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system,
misstatements due to error or fraud may occur and not be detected.
This report provides a discussion and analysis of the financial condition and results of operations (“Management’s Discussion and
Analysis”) to enable a reader to assess material changes in financial condition between December 31, 2020, and December 31,
2019, and results of operations for the periods ended December 31, 2020, and December 31, 2019.
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Yamana Gold
This Management’s Discussion and Analysis has been prepared as of February 11, 2021. The consolidated financial statements
prepared in accordance with IFRS as issued by the IASB follow this Management’s Discussion and Analysis. This Management’s
Discussion and Analysis is intended to supplement and complement the annual audited consolidated financial statements and
notes thereto as at and for the year ended December 31, 2020 (collectively the “Financial Statements”). You are encouraged to
review the Financial Statements in conjunction with your review of this Management’s Discussion and Analysis. This Management’s
Discussion and Analysis should be read in conjunction with both the Financial Statements and the most recent Annual Information
Form for the year ended December 31, 2019 on file with the Securities Commissions of all of the provinces in Canada and which
are included in the 2019 Annual Report on Form 40-F filed with the United States Securities and Exchange Commission. Certain
notes to the Financial Statements are specifically referred to in this Management’s Discussion and Analysis. All Dollar amounts in
the Management’s Discussion and Analysis are in US Dollars, unless otherwise specified.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Management’s Discussion and Analysis contains or incorporates by reference “forward-looking statements” and “forward-
looking information” under applicable Canadian securities legislation and within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking information includes, but is not limited to information with respect to the Company’s
strategy, plans or future financial or operating performance, results of feasibility studies, repayment of debt or updates regarding
mineral reserves and mineral resources. Forward-looking statements are characterized by words such as “plan", “expect”,
“budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events
or conditions “may” or “will” occur. Forward-looking statements are based on the opinions, assumptions and estimates of
management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and
uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those
projected in the forward-looking statements. These factors include the Company’s expectations in connection with the production
and exploration, development and expansion plans at the Company's projects discussed herein being met, the impact of proposed
optimizations at the Company's projects, changes in national and local government legislation, taxation, controls or regulations
and/or change in the administration of laws, policies and practices, and the impact of general business and economic conditions,
global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future
conditions, fluctuating metal prices (such as gold, silver, copper and zinc), currency exchange rates (such as the Canadian Dollar,
the Brazilian Real, the Chilean Peso and the Argentine Peso versus the United States Dollar), the impact of inflation, possible
variations in ore grade or recovery rates, changes in the Company’s hedging program, changes in accounting policies, changes in
mineral resources and mineral reserves, risks related to asset dispositions, risks related to metal purchase agreements, risks
related to acquisitions, changes in project parameters as plans continue to be refined, changes in project development,
construction, production and commissioning time frames, risks associated with infectious diseases, including COVID-19,
unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other consumables contributing to higher costs
and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes
in mine life, final pricing for concentrate sales, unanticipated results of future studies, seasonality and unanticipated weather
changes, costs and timing of the development of new deposits, success of exploration activities, permitting timelines, government
regulation and the risk of government expropriation or nationalization of mining operations, risks related to relying on local advisors
and consultants in foreign jurisdictions, environmental risks, unanticipated reclamation expenses, risks relating to joint venture
operations, title disputes or claims, limitations on insurance coverage, timing and possible outcome of pending and outstanding
litigation and labour disputes, risks related to enforcing legal rights in foreign jurisdictions, as well as those risk factors discussed
or referred to herein and in the Company's Annual Information Form filed with the securities regulatory authorities in all provinces
of Canada and available at www.sedar.com, and the Company’s Annual Report on Form 40-F filed with the United States Securities
and Exchange Commission. Although the Company has attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking statements, there may be other factors that cause
actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The
Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates,
assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance
on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors
in understanding the Company’s expected financial and operational performance and results as at and for the periods ended on
the dates presented in the Company’s plans and objectives and may not be appropriate for other purposes.
Annual Report 2020
103
CAUTIONARY STATEMENT REGARDING MINERAL RESERVES AND MINERAL RESOURCES
Scientific and technical information contained in this Management’s Discussion and Analysis has been reviewed and approved by
Sébastien Bernier, P. Geo (Senior Director, Geology and Mineral Resources). Sébastien Bernier, P. Geo is an employee of Yamana
Gold Inc. and a "Qualified Person" as defined by Canadian Securities Administrators' National Instrument 43-101 - Standards of
Disclosure for Mineral Projects.
Readers should refer to the Annual Information Form of the Company for the year ended December 31, 2019 and other continuous
disclosure documents filed by the Company since January 1, 2020 available at www.sedar.com, for further information on mineral
reserves and mineral resources, which is subject to the qualifications and notes set forth therein.
CAUTIONARY STATEMENT TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF MINERAL RESERVES AND
MINERAL RESOURCES
This Management’s Discussion and Analysis has been prepared in accordance with the requirements of the securities laws in
effect in Canada, which differ in certain material respects from the disclosure requirements promulgated by the Securities and
Exchange Commission (the “SEC”). For example, the terms “mineral reserve”, “proven mineral reserve”, “probable mineral
reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are
Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral
Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) - CIM Definition Standards on
Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions
in the disclosure requirements promulgated by the SEC. Accordingly, information contained in this Management’s Discussion and
Analysis may not be comparable to similar information made public by U.S. companies reporting pursuant to SEC disclosure
requirements.
*************
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Yamana Gold
TABLE OF CONTENTS
Page
Management's Responsibility for Financial Reporting
Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Earnings
Consolidated Statements of Cash Flows
Consolidated Balance Sheets
Consolidated Statements of Changes in Equity
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:
Note 1:
Note 2:
Note 3:
Note 4:
Note 5:
Note 6:
Note 7:
Note 8:
Note 9:
Note 10:
Note 11:
Note 12:
Note 13:
Note 14:
Note 15:
Note 16:
Note 17:
Note 18:
Note 19:
Note 20:
Note 21:
Note 22:
Note 23:
Note 24:
Note 25:
Note 26:
Note 27:
Note 28:
Note 29:
Note 30:
Note 31:
Note 32:
Note 33:
Note 34:
Note 35:
Note 36:
Description of Business and Nature of Operations
Basis of Preparation and Presentation
Significant Accounting Policies
Critical Judgements and Estimation Uncertainties
Recent Accounting Pronouncements
Business Transactions
Segment Information
Revenue
Employee Compensation and Benefits Expenses
Other Operating Expenses (Income), Net
Other Costs, Net
Finance Costs
Impairment and Reversal of Impairment
Income Taxes
Earnings Per Share
Supplementary Cash Flow Information
Financial Instruments
Financial Risk Management
Inventories
Other Financial Assets
Other Assets
Property, Plant and Equipment
Goodwill and Other Intangible Assets
Investment in Associates
Trade and Other Payables
Other Financial Liabilities
Other Provisions and Liabilities
Long-Term Debt and Credit Facility
Environmental Rehabilitation Provision
Share Capital
Share-Based Payments
Non-Controlling Interests
Capital Management
Leases
Commitments and Contingencies
Related Party Transactions
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Annual Report 2020
105
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated financial statements of Yamana Gold Inc. and subsidiaries ("Yamana Gold Inc." or the "Company")
and all the information in this annual report are the responsibility of management and have been approved by the Board of
Directors.
The consolidated financial statements have been prepared by management on a going concern basis in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). When
alternative accounting methods exist, management has chosen those it deems most appropriate in the circumstances. Financial
statements are not exact since they include certain amounts based on estimates and judgements. Management has determined
such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly, in all material respects.
Management has prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent
with that in the consolidated financial statements.
Yamana Gold Inc. maintains systems of internal accounting and administrative controls in order to provide, on a reasonable basis,
assurance that the financial information is relevant, reliable and accurate and that the Company's assets are appropriately
accounted for and adequately safeguarded. The Company's internal control over financial reporting as of December 31, 2020, is
based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately
responsible for reviewing and approving the financial statements. The Board carries out this responsibility principally through its
Audit Committee ("Committee").
The Audit Committee is appointed by the Board, and all of its members are independent directors. The Committee meets at least
four times a year with management, as well as the external auditors, to discuss internal controls over the financial reporting process,
auditing matters and financial reporting issues, to satisfy itself that each party is properly discharging its responsibilities, and to
review the quarterly and the annual reports, the consolidated financial statements and the external auditors' reports. The
Committee reports its findings to the Board for consideration when approving the consolidated financial statements for issuance
to the shareholders. The Committee also considers, for review by the Board and approval by the shareholders, the engagement
or reappointment of the external auditors. The consolidated financial statements have been audited by Deloitte LLP, Chartered
Professional Accountants, Licensed Public Accountants, in accordance with the standards of the Public Company Accounting
Oversight Board (United States) on behalf of the shareholders. Deloitte LLP has full and free access to the Audit Committee.
“Daniel Racine”
“Jason LeBlanc”
President and
Chief Executive Officer
Senior Vice President, Finance and
Chief Financial Officer
February 11, 2021
106
Yamana Gold
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Yamana Gold Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Yamana Gold Inc. and subsidiaries (the "Company") as of
December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive earnings, cash flows and
changes in equity, for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred
to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position
of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for each of the two years in
the period ended December 31, 2020, in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and
our report dated February 11, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.
Mining Properties – Assessment of Whether Indicators of Impairment or Impairment Reversal Exist – Refer to Notes 4, 13
and 22 of the Financial Statements
Critical Audit Matter Description
The Company’s determination of whether an indicator of impairment or impairment reversal exists requires significant management
judgment.
While there are several inputs that are required to determine whether or not an indicator of impairment or impairment reversal
exists, the judgments with the highest degree of subjectivity are future commodity prices (gold and silver), future foreign exchange
rates and the discount rate. Auditing these estimates and inputs required a high degree of subjectivity in applying audit procedures
and in evaluating the results of those procedures. This resulted in an increased extent of audit effort, including the involvement of
a fair value specialist.
Annual Report 2020
107
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to future commodity prices (gold and silver), future foreign exchange rates and the discount rate
considered in the assessment of indicators of impairment or impairment reversal included the following, among others:
•
Evaluated the effectiveness of controls over management’s assessment of indicators of impairment or impairment
reversal, including the determination of future commodity prices (gold and silver), future foreign exchange rates and the
discount rate.
• With the assistance of a fair value specialist;
•
•
•
Evaluated the future commodity prices (gold and silver) by comparing management’s forecasts to third party
forecasts.
Evaluated the reasonableness of the future foreign exchange rates by comparing our independent research of
the forecasted rates to management’s assumed rates.
Evaluated the reasonableness of the change in discount rate by testing the source information underlying the
determination of the discount rate.
Impairment assessment – Canadian Malartic Cash-Generating Unit (CGU) Goodwill, Impairment Loss – Cerro Moro CGU
and Impairment Loss Reversal – El Peñón CGU – Refer to Notes 4, 13, 22 and 23 of the Financial Statements
Critical Audit Matter Description
The Company has goodwill associated with its investment in the Canadian Malartic CGU. The Company performs an annual
assessment of impairment for goodwill, or more frequently if any event or change in circumstances indicates that the carrying value
of a CGU may be above its recoverable amount using the higher of fair value less costs of disposal and value in use. In addition,
at each reporting date, the Company reviews the carrying amounts of its mining properties and plant and equipment at a CGU
level to determine whether there is an indication that these assets might be impaired, or that previously recognized impairment
losses may no longer exist or may have decreased. If any such indicators exist, the recoverable amount of the relevant CGU is
estimated based on the higher of its fair value less costs of disposal and value in use, to determine the extent of the impairment
loss or impairment loss reversal. An indicator of impairment loss was identified for the Cerro Moro CGU and an indicator of
impairment loss reversal was identified for the El Peñón CGU.
While there are several inputs that are required to determine the recoverable amounts for these CGUs, the estimates and
assumptions with the highest degree of subjectivity and judgment uncertainty are forecasts of future revenues (specifically future
gold and silver prices and potential ounces), future foreign exchange rates and discount rate. Performing audit procedures to
evaluate the reasonableness of such estimates and assumptions required a high degree of auditor judgment and an increased
extent of audit effort, including the involvement of a fair value specialist.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecasts of future revenues (specifically future gold and silver prices and potential ounces),
future foreign exchange rates and discount rate used in determining the recoverable value of the CGUs included the following,
among others:
•
Evaluated the effectiveness of controls over management’s determination of the future commodity prices (gold and silver),
in-situ value assigned to the potential ounces, future foreign exchange rates, and the discount rate.
• With the assistance of a fair value specialist;
•
Evaluated the reasonableness of the forecasts of future gold and silver prices and future foreign exchange rates
by comparing management’s forecasts to third party forecasts.
• Obtained third party information surrounding in-situ values to assess the reasonableness of the value assigned
•
to the potential ounces.
Evaluated the reasonableness of the discount rate by testing the source information underlying the determination
of the discount rate and developed a range of independent estimates for the discount rate and compared to the
discount rate selected by management.
108
Yamana Gold
Asset Acquisition – Alumbrera and Agua Rica Integration Transaction — Refer to Notes 4, 5, 6 and 32 of the Financial
Statements
Critical Audit Matter Description
On December 17, 2020, the Company completed an Integration Transaction which resulted in Yamana acquiring control of the
underlying assets of Minera Alumbrera Ltd. (“Alumbrera”) to form Minera Agua Rica Alumbrera Ltd. (the “MARA Project”). The
Integration Transaction was a complex, non-monetary transaction which required significant management judgment.
There are many components embedded in the Integration Transaction that resulted in management making several judgments on
the accounting treatment, in particular (1) evaluating whether the Company exercised control over the MARA Project, (2)
determining whether the acquisition of the Alumbrera assets and liabilities was an asset acquisition or a business combination and
(3) determining the accounting for the non-monetary consideration whereby the Company had to determine the fair value of the
assets acquired and liabilities assumed as the fair value of the assets in Alumbrera were more readily determinable than the assets
being given up in Agua Rica. Management made significant judgments in valuing the property, plant and equipment (“PP&E”) and
Mineral Resources. The method to determine the fair values of the PP&E and Mineral Resources depended on the type of asset
and involved management making significant estimates and assumptions. Auditing these key judgments required a high degree of
subjectivity in applying audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of
audit effort, including the involvement of fair value specialists and professionals in our firm with expertise in business combinations
and consolidation.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s judgments on the accounting treatment of the Integration Transaction, in particular
(1) evaluating whether the Company exercised control over the MARA Project, (2) determining whether the acquisition of the
Alumbrera assets and liabilities was an asset acquisition or business combination and (3) determining the accounting for the non-
monetary consideration and valuation of the acquired PP&E and in-situ value assigned to the Mineral Resources included the
following, among others:
•
Evaluated the effectiveness of controls over management’s accounting treatment, conclusions and recognition of the
Alumbrera assets and liabilities and the MARA Project, including the determination of the fair values of PP&E and Mineral
Resources acquired.
• With the assistance of professionals in our firm with expertise in business combinations and consolidation, evaluated
management’s judgment on the accounting treatment, in particular (1) evaluating whether the Company exercised control
over the MARA Project, (2) determining whether the acquisition of the Alumbrera assets and liabilities was an asset
acquisition, and (3) determining the accounting for the non-monetary consideration by:
•
•
Assessing information in the Integration Transaction agreement to understand and evaluate that all components
were identified.
Evaluating management’s assessments relating to the accounting treatment by analyzing these assessments
against relevant accounting standards, including various aspects of Generally Accepted Accounting Principles,
conceptual frameworks and guidance.
• With the assistance of fair value specialists;
•
Evaluated the reasonableness of the fair value of PP&E by (1) determining the reproduction or replacement cost
by comparing cost estimates to industry data and published cost indices for individual assets, and (2) determining
the useful life by asset class by comparing to published physical deterioration curves and economic useful life
guides, to develop a range of an independent fair value estimate by PP&E asset which were compared to the
fair values determined by management.
• Obtained third party information surrounding in-situ values to assess the reasonableness of the value assigned
to the Mineral Resources.
"/s/ Deloitte LLP”
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
February 11, 2021
We have served as the Company's auditor since 1995.
Annual Report 2020
109
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Yamana Gold Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Yamana Gold Inc. and subsidiaries (the “Company”) as of December
31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated
Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020 of the Company and our report
dated February 11, 2021, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
"/s/ Deloitte LLP”
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
February 11, 2021
110
Yamana Gold
YAMANA GOLD INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
(In millions of US Dollars except for shares and per share amounts)
Revenue (Note 8)
Cost of sales excluding depletion, depreciation and amortization
Gross margin excluding depletion, depreciation and amortization
Depletion, depreciation and amortization
Temporary suspension, standby and other incremental COVID-19 costs (Note 2)
Reversal of impairment of mining properties, net (Note 13)
Mine operating earnings
Expenses
General and administrative
Exploration and evaluation
Share of loss of associates (Note 24)
Other operating (expenses) income, net (Note 10)
Operating earnings
Finance costs (Note 12)
Other costs, net (Note 11)
Earnings before taxes
Current income tax expense (Note 14)
Deferred income tax (expense) recovery (Note 14)
Income tax expense, net
Net earnings
Earnings per share attributable to Yamana Gold Inc. equity holders (Note 15)
Basic and diluted
Weighted average number of shares outstanding (in thousands) (Note 15)
Basic
Diluted
The accompanying notes are an integral part of the consolidated financial statements.
$
$
$
$
$
$
$
$
2020
1,561.0 $
(614.1)
946.9 $
(395.0)
(40.5)
191.0
2019
1,612.2
(782.8)
829.4
(471.7)
—
—
702.4 $
357.7
(85.9)
(15.1)
(1.0)
(14.6)
585.8 $
(77.0)
(18.7)
490.1 $
(116.2)
(170.3)
(286.5) $
203.6 $
(79.4)
(10.3)
(16.3)
222.4
474.1
(144.2)
(19.6)
310.3
(95.0)
10.3
(84.7)
225.6
0.21 $
0.24
951,818
953,846
950,266
951,924
Annual Report 2020
111
YAMANA GOLD INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
(In millions of US Dollars)
Net earnings
Other comprehensive earnings (loss), net of taxes
Items that may be reclassified subsequently to net earnings:
Cash-flow hedges
- Effective portion of changes in fair value of cash flow hedges (Note 17)
- Reclassification of gains recorded in earnings (Note 17)
- Tax Impact on fair value of hedging instruments (Note 14)
- Time value of options contracts excluded from hedge relationship (Note 17)
Investment in associate
- Share of other comprehensive loss from investment in associate (Note 24)
- Reclassification of accumulated other comprehensive losses from investment in associate to net
earnings upon discontinuation of the equity method (Note 6)
Items that will not be reclassified to net earnings:
Changes in the fair value of equity investments at FVOCI
Loss on sale of equity investments at FVOCI (Note 6)
Income tax relating to items that will not be reclassified subsequently to net earnings
Re-measurement of employee benefit plan
Total other comprehensive earnings (loss)
Total comprehensive earnings
The accompanying notes are an integral part of the consolidated financial statements.
$
2020
203.6 $
2019
225.6
(24.0)
16.9
2.0
(0.2)
(1.6)
11.1
4.2 $
21.1
(7.2)
(1.5)
(0.7)
15.9 $
219.5 $
(4.3)
9.3
0.5
(1.3)
(9.4)
—
(5.2)
(1.1)
—
—
1.3
(5.0)
220.6
$
$
$
112
Yamana Gold
YAMANA GOLD INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(In millions of US Dollars)
Operating activities
Earnings before taxes
Adjustments to reconcile earnings before taxes to net operating cash flows:
Depletion, depreciation and amortization
Share-based payments
Other costs, net (Note 11)
Finance costs (Note 12)
Mark-to-market on financial instruments and metal concentrates
Share of loss of associates (Note 24)
Reversal of impairment of mining properties, net (Note 13)
Amortization of deferred revenue (Note 27)
Gain on sale of subsidiaries (Note 10)
Gain on discontinuation of the equity method (Note 6)
Other non-cash expenses, net (Note 16)
Environmental rehabilitation obligations paid (Note 29)
Other cash payments
Cash flows from operating activities before income taxes paid and net change in
working capital
Income taxes paid
Cash flows from operating activities before net change in working capital
Net change in working capital (Note 16)
Cash flows from operating activities
Investing activities
Acquisition of property, plant and equipment
Cash acquired in Agua Rica Alumbrera integration transaction (Note 6)
Net proceeds on disposal of subsidiaries and other assets (Note 6)
Cash used in other investing activities
Cash flows from investing activities
Financing activities
Dividends paid (Note 30)
Interest paid
Financing costs paid on early note redemption (Note 12)
Repayment of revolving credit facility and notes payable (Note 28)
Proceeds from drawdown of revolving credit facility (Note 28)
Payment of lease liabilities
Proceeds from issuance of flow-through shares (Note 30)
Cash contributions from non-controlling interests
Cash used in other financing activities
Cash flows used in financing activities
Effect of foreign exchange of non-US Dollar denominated cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplementary Cash Flow Information (Note 16).
The accompanying notes are an integral part of the consolidated financial statements.
2020
2019
$
490.1 $
310.3
395.0
31.5
18.7
77.0
(6.9)
1.0
(191.0)
(16.1)
—
(21.3)
28.7
(3.2)
(15.5)
788.0
(99.3)
688.7 $
(70.9)
617.8 $
(273.7) $
222.5
137.2
(34.6)
51.4 $
(53.0) $
(54.9)
—
(256.2)
200.0
(17.1)
7.4
3.4
(5.5)
(175.9) $
(0.9)
492.4 $
158.8 $
651.2 $
$
$
$
$
$
$
$
$
$
471.7
15.0
19.6
144.2
(4.7)
16.3
—
(79.4)
(273.1)
—
46.2
(4.3)
(8.3)
653.5
(63.0)
590.5
(68.7)
521.8
(331.7)
—
825.0
(61.3)
432.0
(23.7)
(84.4)
(35.0)
(952.5)
240.0
(16.8)
—
—
(20.1)
(892.5)
(1.0)
60.3
98.5
158.8
Annual Report 2020
113
YAMANA GOLD INC.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,
(In millions of US Dollars)
Assets
Current assets:
Cash and cash equivalents (Note 16)
Trade and other receivables
Inventories (Note 19)
Other financial assets (Note 20)
Other assets (Note 21)
Non-current assets:
Property, plant and equipment (Note 22)
Goodwill and other intangible assets (Note 23)
Investments in associates (Note 24)
Deferred tax assets (Note 14)
Other financial assets (Note 20)
Other assets (Note 21)
Total assets
Liabilities
Current liabilities:
Trade and other payables (Note 25)
Income taxes payable
Other financial liabilities (Note 26)
Other provisions and liabilities (Note 27)
Non-current liabilities:
Long-term debt (Note 28)
Environmental rehabilitation provision (Note 29)
Deferred tax liabilities (Note 14)
Other financial liabilities (Note 26)
Other provisions and liabilities (Note 27)
Total liabilities
Equity
Share capital (Note 30)
Contributed surplus
Accumulated other comprehensive (loss) income
Deficit
Attributable to Yamana Gold Inc. equity holders
Non-controlling interests (Note 32)
Total equity
Total liabilities and equity
Commitments and contingencies (Notes 34 and 35).
Subsequent events (Notes 6 and 17)
The accompanying notes are an integral part of the consolidated financial statements
Approved by the Board
“Peter Marrone”
PETER MARRONE
Director
114
Yamana Gold
“Richard Graff”
RICHARD GRAFF
Director
2020
2019
651.2 $
4.2
152.1
14.3
96.1
917.9 $
6,684.8
396.4
34.3
98.1
88.7
202.6
8,422.8 $
240.4 $
45.0
78.8
77.6
441.8 $
993.8
363.5
1,229.1
109.7
112.6
158.8
3.4
133.4
8.5
97.5
401.6
5,952.9
392.2
120.3
80.8
15.2
154.2
7,117.2
219.5
18.3
131.1
39.5
408.4
991.7
214.7
1,041.4
98.0
143.1
3,250.5 $
2,897.3
7,648.9 $
7,639.9
22.7
(6.5)
(3,318.8)
4,346.3 $
826.0
5,172.3 $
8,422.8 $
21.0
(21.9)
(3,453.8)
4,185.2
34.7
4,219.9
7,117.2
$
$
$
$
$
$
$
$
$
$
YAMANA GOLD INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31,
(In millions of US Dollars)
At December 31, 2018
Impact of adopting IFRS 16
At January 1, 2019 (restated)
Total comprehensive earnings
Net earnings
Other comprehensive loss
Transactions with owners
Issued on vesting of restricted
share units (Note 30)
Vesting restricted share units
Share cancellations (Note 30)
Dividend reinvestment plan
(Note 30)
Dividends (Note 30)
At December 31, 2019
At January 1, 2020
Total comprehensive earnings
Net earnings
Other comprehensive earnings
Transactions with owners
Issued on vesting of restricted
share units (Note 30)
Vesting restricted share units
Issued on exercise of share
options (Note 30)
Flow through share issuance, net
of issue costs (Note 30)
Non-controlling interests arising on
Agua Rica Alumbrera integration
(Note 6)
Cash contributions from non-
controlling interests
Share cancellations and other
adjustments (Note 30)
Dividend reinvestment plan
(Note 30)
Share
capital
7,636.4 $
—
7,636.4 $
—
—
— $
3.4
—
(0.1)
0.2
—
7,639.9 $
7,639.9 $
—
—
— $
$
$
$
$
$
$
3.4
—
0.9
5.3
—
—
(1.1)
0.5
Dividends (Note 30)
At December 31, 2020
—
7,648.9 $
$
Accumulated
other
comprehensive
(loss) income
Contributed
surplus
Deficit
20.4 $
(16.9) $
(3,650.6) $
—
—
(0.3)
20.4 $
(16.9) $
(3,650.9) $
Attributable
to Yamana
Gold Inc.
equity
holders
3,989.3 $
(0.3)
3,989.0 $
Non-
controlling
interests
Total
equity
34.7 $
4,024.0
—
(0.3)
34.7 $
4,023.7
—
—
—
(5.0)
225.6
—
— $
(5.0) $
225.6 $
(3.4)
4.0
—
—
—
—
—
—
—
—
—
—
—
—
(28.8)
21.0 $
21.0 $
(21.9) $
(3,453.8) $
(21.9) $
(3,453.8) $
—
—
—
15.9
203.6
—
— $
15.9 $
203.6 $
225.6
(5.0)
220.6 $
—
4.0
(0.1)
0.2
(28.8)
4,185.2 $
4,185.2 $
203.6
15.9
219.5 $
(3.4)
4.2
(0.2)
—
—
—
1.1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(69.1)
22.7 $
(6.5) $
(3,318.8) $
—
4.2
0.7
5.3
—
—
—
0.5
(69.1)
4,346.3 $
—
—
225.6
(5.0)
— $
220.6
—
—
—
—
—
—
4.0
(0.1)
0.2
(28.8)
34.7 $
4,219.9
34.7 $
4,219.9
—
—
203.6
15.9
— $
219.5
—
—
—
—
—
4.2
0.7
5.3
787.9
787.9
3.4
—
—
—
3.4
—
0.5
(69.1)
826.0 $
5,172.3
The accompanying notes are an integral part of the consolidated financial statements.
Annual Report 2020
115
YAMANA GOLD INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2020 and December 31, 2019
(Tabular amounts in millions of US Dollars, unless otherwise noted)
1.
DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
Yamana Gold Inc. is the ultimate parent company of its consolidated group ("Yamana" or "the Company”). The Company,
incorporated and domiciled in Canada, is a precious metals producer with significant gold and silver production, development stage
properties, and exploration properties and land positions throughout the Americas, including Canada, Brazil, Chile and Argentina.
Yamana plans to continue to build on this base through expansion and optimization initiatives at existing operating mines,
development of new mines, the advancement of its exploration properties and, at times, by targeting other consolidation
opportunities with a primary focus in the Americas.
The Company’s registered office is Royal Bank Plaza, North Tower, Suite 2200 - 200 Bay Street, Toronto, Ontario, M5J 2J3. The
Company is listed on the Toronto Stock Exchange (Symbol: YRI), the New York Stock Exchange (Symbol: AUY) and the London
Stock Exchange (Symbol: AUY).
The Company's principal producing mining properties are comprised of the Canadian Malartic mine in Canada (50% interest); the
Jacobina mine in Brazil; the El Peñón and Minera Florida mines in Chile; and the Cerro Moro mine in Argentina.
On December 17, 2020, the Company, along with partners Glencore International AG ("Glencore") and Newmont Corporation
("Newmont"), completed the integration of the Agua Rica project with the Alumbrera plant and infrastructure, pursuant to which,
Yamana relinquished a non-controlling interest in Agua Rica for an increased interest in Alumbrera. Upon completion of the
integration transaction, Yamana owned 56.25%, with Glencore and Newmont owning 25.00% and 18.75%, respectively, of Minera
Agua Rica Alumbrera Ltd., the legal entity that holds the integrated project - now known as the MARA project. Refer to Note 6 for
further details.
2.
BASIS OF PREPARATION AND PRESENTATION
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board (“IFRS”), effective as of December 31, 2020.
The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and
liabilities (including derivative instruments) measured at fair value as explained in Note 3. Accounting policies are consistently
applied to all years presented, unless otherwise stated.
The functional and presentation currencies of the Company and all its subsidiaries is the United States Dollar ("US Dollar"), and
all values herein are rounded to the nearest million except where otherwise indicated. References to ARS, BRL, C$, and CLP are
to Argentine Pesos, Brazilian Reais, Canadian Dollars and Chilean Pesos, respectively.
The consolidated financial statements were authorized for issuance by the Board of Directors on February 11, 2021.
Impact of COVID-19 Pandemic
The Company continues to actively monitor the impact of the COVID-19 pandemic, including the impact on economic activity and
financial reporting. During the year ended December 31, 2020, the Company has taken a number of measures to safeguard the
health of its employees and their local communities while continuing to operate safely and responsibly. Government-ordered
restrictions resulted in operations at Canadian Malartic and Cerro Moro being temporarily suspended on March 20 and March 24,
2020, respectively. Operations at these mines resumed in April 2020 and the gradual resumption towards full mining activities
occurred over the second and third quarters. As a result of these temporary shutdowns, the Company experienced lower overall
production volumes; however, strong commodity prices and the weakening of certain local currencies relative to the US Dollar
minimized the impact on the Company’s financial results. The Company incurred $40.5 million of temporary suspension, standby
and other incremental COVID-19 costs during 2020. These costs are associated with the temporary shutdowns and subsequent
116
Yamana Gold
ramp-ups at Canadian Malartic and Cerro Moro, and the underutilization of labour and contractors in relation to the pre-COVID-19
mine plans. Other incremental costs resulting from COVID-19 across all mine sites include community support, the acquisition of
additional personal protective equipment, higher transportation costs, and overtime costs resulting from lower headcount levels on
site to accommodate social distancing.
As the pandemic continues to progress and evolve, it is difficult to predict the full extent and duration of resulting operational and
economic impacts for the Company, which are expected to impact a number of reporting periods. This uncertainty impacts
judgements made by the Company, including those relating to determining the recoverable values of the Company’s non-current
assets as discussed in Note 4.
3.
SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used in the preparation of these consolidated financial statements are as follows:
(a)
Basis of Consolidation
These consolidated financial statements include the accounts of the Company and its subsidiaries. Subsidiaries are entities
controlled by the Company. Control exists when the Company has power over an investee, when the Company is exposed, or has
rights, to variable returns from the investee and when the Company has the ability to affect those returns through its power over
the investee. Subsidiaries are included in the consolidated financial statements from the date control is obtained until the date
control ceases. Where the Company’s interest in a subsidiary is less than 100%, the Company recognizes non-controlling interests.
Intercompany assets and liabilities, equity, income, expenses, and cash flows between the Company and its subsidiaries are
eliminated on consolidation.
The principal subsidiaries of the Company as at December 31, 2020 were as follows:
Legal Entity
Minera Meridian Ltda.
Jacobina Mineração e Comércio Ltda.
Estelar Resources S.A. (i)
Minera Florida Ltda.
Minera Agua Rica Alumbrera Ltd.
Suyai del Sur S.A.U.
Agua De La Falda S.A.
(i)
Refer to discussion at Note 32.
Mine/Project
Location
Chile
Brazil
Argentina
Chile
Argentina
Argentina
Chile
Ownership
interest
100.00 %
100.00 %
100.00 %
100.00 %
56.25 %
100.00 %
57.60 %
Mining properties
and projects owned
El Peñón mine
Jacobina mine
Cerro Moro mine
Minera Florida mine
MARA project
Suyai project
Jeronimo project
(b)
Investments in Associates and Joint Arrangements
These consolidated financial statements also include the following joint arrangement and investments in associates:
Associates and
joint arrangements
Location
Ownership
interest
Classification and
accounting method
Mining properties
and projects owned
Canadian Malartic
Canada
50.00 %
Joint operation,
consolidate Yamana's share
Canadian Malartic mine
Nomad Royalty Company (i)
Monarch Gold Corporation
(i)(ii)
(i)
(ii)
Canada
Canada
7.75 %
Associate, equity method
Portfolio of royalty interests
6.92 %
Associate, equity method
Wasamac project and other
exploration properties located in Quebec
Refer to Note 6 for further details regarding the acquisition of these associates in 2020.
On January 21, 2021, Yamana completed the acquisition of all outstanding shares of Monarch Gold Corporation that the Company did not already own.
Refer to Note 6 for further details.
Annual Report 2020
117
A joint arrangement is an arrangement in which two or more parties have joint control. Joint control is the contractually agreed
sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of
the parties sharing the control. A joint operation is classified as either a joint operation or a joint venture, subject to the terms that
govern each investor's rights and obligations in the arrangement. A joint operation is a joint arrangement whereby the parties have
joint control of the arrangement and have rights to the assets and obligations for the liabilities relating to the arrangement. For a
joint operation, the Company recognizes its share of the assets, liabilities, revenues and expenses of the joint arrangement. The
Company's 50% interest in each of Canadian Malartic Corporation and Canadian Malartic GP, the general partnership that holds
the Canadian Malartic mine located in Quebec (collectively "Canadian Malartic"), has been accounted for as a joint operation.
An associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is not control or joint control over those decisions. The Company is
presumed to have significant influence if it holds, directly or indirectly, 20% or more of the voting power of the investee, unless it
can be clearly demonstrated that the Company does not have significant influence.
The Company accounts for its investment in associate using the equity method. Under the equity method, the Company’s
investment in associate is initially recognized at cost and subsequently increased or decreased to recognize the Company's share
of net earnings/loss and other comprehensive earnings/loss of the associate, after any adjustments necessary to give effect to
uniform accounting policies, any other movement in the associate's reserves, and for impairment losses after the initial recognition
date. The total carrying amount of the Company's investment in associate also includes any long-term debt interests which, in
substance, form part of the Company's net investment. The Company’s share of the associate's losses that are in excess of its
investment are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments
on behalf of the associate. The Company's share of earnings or losses of its associate are recognized in net earnings during the
period. Dividends and repayment of capital received from the associate are accounted for as a reduction in the carrying amount of
the Company’s investment. Unrealized gains and losses between the Company and its associate are recognized only to the extent
of unrelated investors’ interests in the associate. Intercompany balances and interest expense and income arising on loans and
borrowings between the Company and its associate are not eliminated.
At the end of each reporting period, the Company assesses whether there is any objective evidence that an investment in an
associate is impaired. Objective evidence includes observable data indicating there is a measurable decrease in the estimated
future cash flows of the investee’s operations. When there is objective evidence that an investment is impaired, the carrying amount
of such investment is compared to its recoverable amount, being the higher of its fair value less costs of disposal ("FVLCD") and
value-in-use ("VIU"). If the recoverable amount of an investment is less than its carrying amount, the carrying amount is reduced
to its recoverable amount and an impairment loss, being the excess of carrying amount over the recoverable amount, is recognized
in the period in which the relevant circumstances are identified. When an impairment loss reverses in a subsequent period, the
carrying amount of the investment is increased to the revised estimate of recoverable amount to the extent that the increased
carrying amount does not exceed the carrying amount that would have been determined had an impairment loss not been
previously recognized. A reversal of an impairment loss is recognized in net earnings/loss in the period in which the reversal occurs.
(c)
Foreign Currency Translation
The functional and presentation currency of the Company and each of its subsidiaries, associate and joint operation is the US
Dollar. In preparing the financial statements of the individual companies, transactions in currencies other than the Company’s
functional currency ("foreign currencies") are recognized at the rates of exchange prevailing on the dates of the transactions.
At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the
rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated. Income statement items denominated in foreign currencies are translated at the average
exchange rates prevailing during the year, with the exception of depletion, depreciation and amortization which is translated at
historical exchange rates. Foreign exchange gains and losses are included in net earnings (loss). Foreign exchange gains and
losses related to income taxes, if any, are reported within the income tax expense line in the Company's consolidated statement
of operations.
118
Yamana Gold
(d)
Business Combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by
the Company, liabilities incurred by the Company to the former owners of the acquiree and the equity interest issued by the
Company in exchange for control of the acquiree. Acquisition-related costs are recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value at the
acquisition date.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-
date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount
of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any),
the excess is recognized immediately in profit or loss as a bargain purchase gain.
When the consideration transferred by the Company in a business combination includes contingent consideration arrangement,
the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in
a business combination. Changes in fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that
arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition
date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not
remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent
consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognized in earnings.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are
adjusted during the measurement period (see above), or additional assets or liabilities are recognized, to reflect new information
obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts
recognized as of that date.
(e)
Goodwill
Goodwill is initially recognized and measured as set out above.
Goodwill is not amortized but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is
allocated to each of the Company’s cash-generating units ("CGUs") expected to benefit from the synergies of the combination.
CGUs to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that
the unit may be impaired. If the recoverable amount of the CGU is less than the carrying amount of the unit, the impairment loss
is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata
on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in
a subsequent period. On disposal of a CGU, the attributable amount of goodwill is included in the determination of the profit or loss
on disposal.
(f)
Impairment and Reversal of Impairment of Non-Current Assets
At each reporting date, the Company reviews the carrying amounts of its mining properties and plant and equipment at the CGU
level to determine whether there is any indication that these assets may be impaired. If any such indication exists, the recoverable
amount of the relevant CGU is estimated in order to determine the extent of the impairment loss (if any). A CGU is the smallest
identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups
of assets. The Company's CGUs are its significant mine sites and significant development projects. In certain circumstances,
where the recoverable amount of an individual asset can be determined, impairment is performed at the individual asset level.
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The recoverable amount of a mine site is the greater of its fair value less costs of disposal ("FVLCD") and value in use ("VIU"). In
the absence of market related comparative information, FVLCD is estimated as the discounted future after-tax cash flows expected
to be derived from a mine site, less an amount for costs to sell estimated based on similar past transactions. When discounting
estimated future after-tax cash flows, the Company uses its after-tax weighted average cost of capital. Estimated cash flows are
based on expected future production, metal selling prices, operating costs and capital expenditures. If the recoverable amount of
a mine site is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. The carrying
amount of each mine site includes the carrying amounts of mining properties, plant and equipment, goodwill (if applicable) and
related deferred income tax balances, net of the mine site environmental rehabilitation provision. In addition, the carrying amounts
of the Company’s corporate assets are allocated to the relevant mine sites for impairment purposes. Impairment losses are
recognized in the statement of operations in the period in which they are incurred. The allocation of an impairment loss, if any, for
a particular mine site to its mining properties and plant and equipment is based on the relative carrying amounts of those assets
at the date of impairment.
At each reporting date an assessment is made to determine whether there is an indication that previously recognized impairment
losses may no longer exist or may have decreased. A previously recognized impairment loss is reversed only if there has been a
change in the assumptions used to determine the CGU’s recoverable amount since the last impairment loss was recognized. This
reversal is recognized in the consolidated statements of operations and is limited to the carrying value that would have been
determined, net of any depreciation, depletion and amortization where applicable, had no impairment charge been recognized in
prior years. When an impairment reversal is undertaken, the recoverable amount is assessed by reference to the higher of VIU
and FVLCD.
(g)
Assets and Liabilities Held for Sale and Discontinued Operations
Non-current assets and disposal groups are classified as held for sale if their carrying value will be recovered principally through
a sale transaction rather than through continuing use. The criteria for held for sale classification is regarded as met only when the
sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Actions required to
complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will
be withdrawn. Management must be committed to the plan to sell the asset or disposal group and the sale expected to be
completed within one year from the date of the classification.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair
value less costs to sell ("FVLCS"). If the FVLCS is lower than the carrying amount, an impairment loss is recognized in the
consolidated statement of operations. Costs to sell are the incremental costs directly attributable to the disposal of an asset or
disposal group, excluding finance costs and income tax expense. Non-current assets are not depreciated or amortized once
classified as held for sale. Assets and liabilities classified as held for sale are presented separately as current items in the
Company's consolidated balance sheet.
A disposal group qualifies as a discontinued operation if it is a component of the Company that either has been disposed of, or is
classified as held for sale, and: (i) represents a separate major line of business or geographical area of operations; (ii) is part of a
single coordinated plan to dispose of a separate major line of business or geographical area of operations; or (iii) is a subsidiary
acquired exclusively with a view to resale. A component of the Company comprises an operation and cash flows that can be clearly
distinguished, operationally and for financial reporting purposes, from the rest of the Company.
Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or
loss after tax from discontinued operations in the consolidated statement of operations.
(h)
Revenue Recognition
Gold and Silver
The Company sells gold and silver in bullion and doré form to customers, which are all major financial institutions.
Revenue is recognized when control of the gold or silver has transferred to the customer. For bullion sales, this is typically at the
point in time when the bullion has been pledged to the customer in writing, which is often at the time it is credited to the metal
account of the customer. For doré sales, this is typically at the point in time when the customer has received all required
confirmations from the Company, which is at the time the doré is shipped from the mine. Following gold or silver being pledged to
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Yamana Gold
a customer or the shipment of doré, the customer has the ability to direct the use of, and obtain substantially all of the remaining
benefits from, the metal.
Revenue is measured at the transaction price agreed under the contract and excludes any amounts collected on behalf of third
parties. Payment of the transaction price is due immediately when the metal is transferred to the customer. A receivable is
recognized when the metal is transferred to the customer, as this is the point in time that the consideration is unconditional because
only the passage of time is required before the payment is due.
Metal Concentrate
Concentrate is sold to independent smelting companies for extraction of the metal contents, which are predominantly copper, with
small quantities of gold and silver.
Revenue from concentrate sales is recognized when control of the concentrate has transferred to the customer, which is typically
upon loading of the concentrate onto the shipping vessel for shipment to the customer. At this point in time, the customer has the
significant risks and rewards of ownership of the concentrate, and is committed to accept and pay for the concentrate. Although
legal title does not pass until receipt of the first provisional payment, the fact that under the contract the customer has the right to
process the concentrate as soon as it is received, indicates that the customer has obtained control of the concentrate prior to the
transfer of title - i.e. the customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the
concentrate.
Concentrate sales include provisional pricing features whereby the price is provisional at the time of sale, with the final sales price
based on the market price at a future specified date and the final physical attributes (i.e. quantity of contained metals) of the
concentrate determined after further processing and assessment. The price adjustments associated with changes in market price
and the physical attributes of the concentrate give rise to variability in the consideration the Company will receive from the customer.
The variability associated with the change in market prices is accounted for separately as a derivative.
At the point in time that control of the concentrate transfers to the customer, the Company recognizes revenue and a receivable
(the latter, because the Company has determined it has an unconditional right to the consideration). Revenue is measured at the
amount the Company expects to be entitled to - being the estimate of the price expected to be received upon final invoice (at the
end of the quotational period) using the most recently determined estimate of metal quantity and the estimated forward price. The
receivable is measured at fair value through profit or loss, and is marked to market through earnings each period prior to final
settlement. The period between provisional and final invoicing is typically three to four months. The Company presents changes
in the fair value of the receivable arising from provisionally priced contracts in the revenue line in the consolidated statement of
operations.
The Company only had metal concentrate sales up to July 2019.
Streaming Arrangements and Advanced Metal Sales
From time to time, the Company enters into arrangements with customers pursuant to which, the Company receives consideration
in advance of the delivery of metals.
Under advanced metal sales, the Company receives advanced consideration against the delivery of a fixed quantity of a specified
metal over a specified period.
Under streaming arrangements, the Company receives advanced consideration against the delivery of a portion of future metal
production referenced to the mine(s) of the Company specified in the contract. In addition to the advanced consideration, the
Company may also receive a cash payment as metals are delivered to the customer.
The Company recognizes the advanced consideration as deferred revenue and recognizes the amounts in revenue as it satisfies
its performance obligations to deliver metal to the customer over the life of the contract. In contracts for the delivery of gold or silver
bullion, this is typically at the point in time when the metal is credited to the metal account of the customer. For copper sales, this
is at the point in time when the copper, in the form of copper warrants, is delivered to the customer. Following the crediting of gold
or silver to a customer’s metal account or the delivery of copper warrants, the customer has legal title to, physical possession of,
and the risks and rewards of ownership of the metal, and therefore, the ability to direct the use of, and obtain substantially all of
the remaining benefits from, the metal.
Annual Report 2020
121
The Company determines the amortization of deferred revenue to the consolidated statement of operations on a per unit basis. In
advanced metal sales arrangements, this is over the fixed number of ounces specified in the contract. In streaming arrangements,
the estimated total quantity of metal expected to be delivered to the customer over the term of the contract is used. Subsequent
changes to expected deliveries result in an adjustment to revenue in the year of change to retroactively adjust for the new number
of ounces or pounds expected to be delivered under the contract.
Where consideration is received in advance of the Company’s performance of its obligation, there is an inherent financing
component in the transaction. When the period between receipt of consideration and revenue recognition is greater than one year,
the Company determines whether the financing component is significant to the contract.
Where a contract is determined to have a significant financing component, the transaction price is adjusted to reflect the financing.
The discount rate used in adjusting the promised amount of consideration is the rate that would be reflected in a separate financing
transaction between the Company and the customer at contract inception. This rate is not subsequently adjusted for any other
changes over the contract term.
The accretion of the interest expense is recognized in the finance expense line in the consolidated statement of operations, unless
capitalized to assets under construction in accordance with the Company’s policy on capitalized borrowing costs.
The Company estimates the current portion of deferred revenue based on quantities anticipated to be delivered over the next
twelve months.
Other Income
Other income arising from the use by others of the Company's assets yielding interest, royalties and dividends are recognized
when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of the
income can be measured reliably, on the following bases:
Interest is recognized using the effective interest method.
•
• Royalties are recognized on an accrual basis in accordance with the substance of the agreement.
• Dividends are recognized when the shareholder's right to receive payment is established.
(i)
Leases
Identifying a Lease
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if
the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess
whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
•
•
•
the contract involves the use of an identified asset - this may be specified explicitly or implicitly, and should be physically
distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive
substitution right, then the asset is not identified;
the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period
of use; and
the Company has the right to direct the use of the asset. The Company has this right when it has the decision-making
rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where all the decisions
about how and for what purpose the asset is used are predetermined, the Company has the right to direct the use of the
asset if either:
◦
◦
the Company has the right to operate the asset; or
the Company has designed the asset in a way that predetermines how and for what purpose it will be used.
At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the
contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of real estate, in which
it is a lessee, the Company has elected not to separate non-lease components and account for the lease and non-lease
components as a single lease component.
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Yamana Gold
The Company as a Lessee
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or
before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of
the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are
determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental
borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise:
•
•
•
•
fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
amounts expected to be payable under a residual value guarantee; and
the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an
optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Company is reasonably certain not to terminate early.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in
future lease payments arising from a change in an index or rate, if there is a change in the Company's estimate of the amount
expected to be payable under a residual value guarantee or if the Company changes its assessment of whether it will exercise a
purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use
asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Company presents right-of-use assets in 'property, plant and equipment' and lease liabilities in 'other financial liabilities' in the
consolidated balance sheet.
The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of
12 months or less and leases of low-value assets, such as certain IT equipment. The Company recognizes the lease payments
associated with these leases as an expense on a straight-line basis over the lease term.
(j)
Financial Instruments
Classification and Measurement of Financial Assets and Financial Liabilities
i)
Financial Assets
On initial recognition, a financial asset is classified as measured at: amortized cost, FVOCI, or FVTPL. The classification of financial
assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.
Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated. Instead,
the hybrid financial instrument as a whole is assessed for classification.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
•
•
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
Annual Report 2020
123
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
•
•
it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent
changes in the investment’s fair value in OCI. This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
A financial asset (unless it is a trade receivable without a significant financing component that is initially measured at the transaction
price) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its
acquisition.
The following accounting policies apply to the subsequent measurement of financial assets:
These assets are subsequently measured at amortized cost using the effective interest
method. The amortized cost is reduced by impairment losses (see b) below). Interest income,
foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain
or loss on derecognition is recognized in profit or loss.
These assets are subsequently measured at fair value. Net gains and losses, including any
interest or dividend income, are recognized in profit or loss. Refer to c) below for derivatives
designated as hedging instruments.
These assets are subsequently measured at fair value. Dividends are recognized as income
in profit or loss unless the dividend clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognized in OCI and are never reclassified to
profit or loss.
These assets are subsequently measured at fair value. Interest income calculated using the
effective interest method, foreign exchange gains and losses and impairment are recognized
in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains
and losses accumulated in OCI are reclassified to profit or loss.
Financial assets at amortized
cost
Financial assets at FVTPL
Equity investments at FVOCI
Debt investments at FVOCI
ii)
Financial Liabilities
Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is
classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are
measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial
liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss. See below
for financial liabilities designated as hedging instruments.
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Yamana Gold
Impairment
Non-Derivative Financial Assets
The Company recognizes a loss allowance for expected credit losses on financial assets that are measured at amortized cost. At
each reporting date, the Company measures the loss allowance for the financial asset at an amount equal to the lifetime expected
credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the
credit risk on the financial asset has not increased significantly since initial recognition, the Company measures the loss allowance
for the financial asset at an amount equal to twelve month expected credit losses. Impairment losses on financial assets carried at
amortized cost are reversed in subsequent periods if the financial asset is no longer credit-impaired and the improvement can be
related objectively to an event occurring after the impairment was recognized (such as an improvement in the counterparty's credit
rating).
For trade receivables that are classified as financial assets at amortized cost, the Company applies the simplified approach
permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.
Derivative Instruments and Hedge Accounting
The Company uses derivative financial instruments to hedge its exposure to exchange rate fluctuations on foreign currency
operating expenses and capital expenditures.
The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management
objectives and strategies for undertaking hedge transactions. This process includes linking all derivative hedging instruments to
forecasted transactions. Hedge effectiveness is assessed based on the degree to which the cash flows from the derivative
contracts are expected to offset the cash flows of the underlying transaction being hedged.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in fair value is recognized in
other comprehensive income, net of tax. For hedged items other than the purchase of non-financial assets, the amounts
accumulated in other comprehensive income are reclassified to the consolidated statements of operations when the underlying
hedged transaction, identified at contract inception, affects profit or loss. When hedging a forecasted transaction that results in the
recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity are transferred
from equity and included in the measurement of the initial carrying amount of the asset or liability.
Any ineffective portion of a hedge relationship is recognized immediately in the consolidated statements of operations. The
Company has elected to exclude the time value component of options and the forward element of forward contracts from the
hedging relationships, with changes in these amounts recorded in other comprehensive income and treated as a cost of hedging.
For hedged items other than the purchase of non-financial assets, the cost of hedging amounts is reclassified to the consolidated
statements of operations when the underlying hedged transaction affects profit or loss. When hedging a forecasted transaction
that results in the recognition of a non-financial asset, the cost of hedging is added to the carrying amount of the non-financial
asset.
When derivative contracts designated as cash flow hedges are terminated, expired, sold or no longer qualify for hedge accounting,
hedge accounting is discontinued prospectively. Any amounts recorded in other comprehensive income up until the time the
contracts do not qualify for hedge accounting remain in other comprehensive income. Amounts recognized in other comprehensive
income are recognized in the consolidated statements of operations in the period in which the underlying hedged transaction is
completed. Gains or losses arising subsequent to the derivative contracts not qualifying for hedge accounting are recognized in
the period incurred in the consolidated statements of operations.
If the forecasted transaction is no longer expected to occur, then the amounts accumulated in other comprehensive income are
reclassified to the consolidated statement of operations immediately.
Annual Report 2020
125
(k)
Share-Based Payments
The fair value of the estimated number of share options and restricted share units ("RSUs") awarded to employees, officers and
directors that will eventually vest, determined as of the date of grant, is recognized as share-based compensation expense within
General and Administrative expenses in the consolidated statements of operations over the vesting period of the share options
and RSUs, with a corresponding increase to equity. The fair value of share options is determined using the Black-Scholes option
pricing model with market related inputs as of the date of grant. The fair value of RSUs is the market value of the underlying shares
as of the date of grant. Share options and RSUs with graded vesting schedules are accounted for as separate grants with different
vesting periods and fair values. Changes to the estimated number of awards that will eventually vest are accounted for
prospectively. The Company's share option plan includes a share appreciation feature. If and when the share options are ultimately
exercised, the applicable amount in the equity reserve is transferred to share capital.
Performance share units ("PSUs") and deferred share units ("DSUs") are settled in cash. PSUs are recognized as share-based
compensation expense within general and administrative expenses in the consolidated statement of operations ("G&A") over the
vesting period, which includes the remeasurement of those PSUs that have partially vested. DSUs are recognized as share-based
compensation expense within G&A on the date of grant, as these instruments vest immediately. Mark to market adjustments on
DSUs subsequent to vesting are recognized as share-based compensation in other operating expenses.
(l)
Income Taxes
Income tax expense or recovery comprises of current and deferred tax. Income tax expense or recovery is recognized in the
consolidated statements of operations except to the extent it relates to items recognized directly in equity or in OCI, in which case
the related taxes are recognized in equity or OCI.
Current income tax is the expected tax payable or receivable on the taxable income or loss for the year, which may differ from
earnings reported in the consolidated statements of operations due to items of income or expenses that are not currently taxable
or deductible for tax purposes, using tax rates substantively enacted at the reporting date, penalties and interest on income taxes,
and any adjustment to tax payable in respect of previous years.
Deferred income tax is recognized based on the balance sheet method in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognized for the following temporary differences:
• Goodwill or the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects
•
neither accounting nor taxable profit or loss, and
Investments in subsidiaries and jointly controlled entities to the extent they can be controlled and that it is probable that
they will not reverse in the foreseeable future.
Deferred income tax is recognized on the movement in foreign exchange rates on non-monetary assets denominated in foreign
currencies. Foreign exchange gains or losses relating to deferred income taxes are included in the deferred income tax expense
in the consolidated statements of operations.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there
is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net
basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
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Yamana Gold
(m)
Inventories
Metal inventories - ore in stockpiles (ore extracted from the mine and available for further processing), work in process (metal in
the processing circuit that has not completed the production process), and product inventories (metal in saleable form) are
measured at the lower of the cost of production and net realizable value. Cost is determined on a weighted average basis and
includes all costs incurred, based on a normal production capacity, in bringing each product to its present location and condition.
Cost of inventories comprises direct labor, materials and contractor expenses, including non-capitalized stripping costs;
depreciation, depletion and amortization including capitalized stripping costs; and an allocation of general and administrative costs.
Costs are added to ore in stockpiles at the current mining cost per tonne. As ore is removed for processing, costs are removed
based on the accumulated average cost per tonne. Net realizable value is calculated as the estimated selling price at the time of
sale based on prevailing and long-term metal prices, less estimated future costs to convert the inventories into saleable form and
estimated costs to sell.
Ore in stockpiles not expected to be processed in the next twelve months is classified as long-term.
Materials and supplies include consumables and other raw materials yet to be used in the production process, as well as spare
parts and other maintenance supplies that are not classified as capital items, and are valued at the lower of cost and net realizable
value. Provisions are recorded to reduce materials and supplies to net realizable value, which is generally calculated by reference
to its salvage or scrap value, when it is determined that the materials or supplies are obsolete. Provisions are reversed to reflect
subsequent recoveries in net realizable value where the inventory is still on hand.
Write downs of inventory and reversals of write downs are reported as a component of current period costs.
(n)
Property, Plant and Equipment
Land, Building, Plant and Equipment
Land, building, plant and equipment are recorded at cost, less accumulated depreciation and accumulated impairment losses. The
cost is comprised of the asset's purchase price, any costs directly attributable to bringing the asset to the location and condition
necessary for it to be capable of operating in the manner intended by management and the estimated environmental rehabilitation
costs associated with the asset.
The depreciable amount of building, plant and equipment is amortized according to either the units of production method or on a
straight-line basis, to the residual value of the asset over the lesser of mine life or estimated useful life of the asset. Each part of
an item of building, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately
if its useful life differs. Useful lives of building, plant and equipment items range from two to thirty years, but do not exceed the
related estimated mine life based on proven and probable mineral reserves and the portion of mineral resources that management
expects to become mineral reserves in the future and be economically extracted.
Building
Machinery and equipment
Vehicles
Furniture and office equipment
Computer equipment and software
Land
Depreciation Method
Straight Line
Straight Line
Straight Line
Straight Line
Straight Line
Not depreciated
Useful Life
4 to 30 years
2 to 7 years
3 to 5 years
2 to 10 years
3 to 5 years
N/A
The Company reviews the useful life, depreciation method, residual value and carrying value of its building, plant and equipment
at least annually. Where the carrying value is estimated to exceed the estimated recoverable amount, which is the higher of the
asset's fair value less costs of disposal or value in use, a provision for impairment is measured and recorded.
Expenditures that extend the useful lives of existing facilities or equipment are capitalized and depreciated over the remaining
useful lives of the assets or useful life of the component (e.g. major overhaul) of an asset. Repairs and maintenance expenditures
are expensed as incurred.
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Exploration and Evaluation Assets, and Depletable Producing Properties
The Company's tangible exploration and evaluation assets are comprised of mineral resources and exploration potential. The value
associated with mineral resources and exploration potential is the value beyond proven and probable mineral reserves.
Exploration and evaluation assets acquired as part of an asset acquisition or a business combination are recorded as tangible
exploration and evaluation assets and are capitalized at cost, which represents the fair value of the assets at the time of acquisition
determined by estimating the fair value of the property's mineral reserves, mineral resources and exploration potential at such
time.
The value of such assets when acquired is primarily a function of the nature and amount of mineralized materials contained in
such properties. Exploration and evaluation stage mineral interests represent interests in properties that potentially contain
mineralized material consisting of measured, indicated and inferred mineral resources; other mine exploration potential such as
inferred mineral resources not immediately adjacent to existing mineral reserves but located around and near mine or project
areas; other mine-related exploration potential that is not part of measured, indicated and inferred mineral resources; and any
acquired right to explore and develop a potential mineral deposit.
Expenditures incurred before the Company has obtained legal rights to explore a specific area of interest are expensed. Costs
incurred for general exploration that are either not-project-specific or do not result in the acquisition of mineral properties are
considered greenfield expenditures and charged to expense. Brownfield expenditures, which typically occur in areas surrounding
known deposits and/or re-exploring older mines using new technologies to determine if greater mineral reserves and mineral
resources exist, are capitalized. Brownfield activities are focused on the discovery of mineral reserves and mineral resources close
to existing operations, including around mine or near-mine, mineral reserve and mineral resource extension and infill drilling.
Exploration expenditures include the costs incurred in either the initial exploration for mineral deposits with economic potential or
in the process of obtaining more information about existing mineral deposits.
Evaluation expenditures include the costs incurred to establish the technical feasibility and commercial viability of developing
mineral deposits identified through exploration activities or by acquisition. Evaluation expenditures include the cost of:
•
•
Acquiring the rights to explore;
Establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an
ore body that is classified as either a mineral resource or a proven and probable mineral reserve;
• Determining the optimal methods of extraction and metallurgical and treatment processes;
•
•
•
Studies related to surveying, transportation and infrastructure requirements;
Permitting activities; and
Economic evaluations to determine whether development of the mineralized material is commercially justified, including
scoping, pre-feasibility and final feasibility studies.
The values assigned to the tangible exploration and evaluation assets (which may include acquired plant and equipment) are
carried at acquired costs until such time as the technical feasibility and commercial viability of extracting mineral resource from the
assets is demonstrated, which occurs when the activities are designated as a development project and advancement of the project
is considered economically feasible. At that time, the property and the related costs are reclassified as part of the development
costs of a producing property not yet subject to depletion, and remain capitalized. Assessment for impairment is conducted before
reclassification.
Depletion commences once a property has reached commercial production. Depletion of mining properties and development costs
are calculated and recorded on a units of production basis over the estimated tonnage or recoverable ounces of proven and
probable mineral reserves of the mine, and the portion of mineral resources expected to be classified as mineral reserves and
economically extracted, which may include mineral resources in each of the measured, indicated and/or inferred mineral resources
categories.
The Company assesses and tests its exploration and evaluation assets and mining properties for impairment, and subsequent
reversal of impairment, at least annually or when events or changes in circumstances indicate that the related carrying amounts
may not be recoverable or that an impairment may be reversed. Costs related to areas of interest abandoned are written off when
the decision of abandonment is made. Refer to (f) Impairment and Reversal of Impairment of Non-Current Assets for details of the
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policy. An impairment assessment of the exploration and evaluation assets is conducted before the reclassification or transfer of
exploration and evaluation assets to depletable producing properties.
Stripping Costs
In open pit mining operations, it is necessary to remove overburden and other waste materials in order to access ore from which
minerals can be extracted economically. The process of mining overburden and waste materials is referred to as stripping.
Stripping costs incurred in order to provide initial access to the ore body (referred to as pre-production stripping) are capitalized as
open pit mine development costs.
During the production phase of a mine, stripping is generally considered to create two distinct benefits: (i) the production of
inventory and (ii) improved access to ore that is expected to be mined in the future. Where the benefits are realized in the form of
inventory produced in the period, the stripping costs are accounted for as part of the cost of producing those inventories. Where
the benefits are realized in the form of improved access to ore to be mined in the future, the costs are recognized as a non-current
asset, referred to as a “stripping activity asset,” if the following criteria are met: (a) future economic benefits (that is, improved
access to the ore body for future extraction) are probable; (b) the component of the ore body for which access will be improved
can be accurately identified; and (c) the costs associated with the improved access can be reliably measured. If any of these
criteria are not met, the production stripping costs are charged to profit or loss as operating costs as they are incurred.
The stripping activity asset is initially measured at cost, which is the accumulation of costs directly incurred to perform the stripping
activity that improves access to the identified component of ore, plus an allocation of directly attributable overhead costs. If
incidental operations occur at the same time as the production stripping activity, but are not necessary for the production stripping
activity to continue as planned, these costs are not included in the cost of the stripping activity asset. If the costs of the inventory
produced and the stripping activity asset are not separately identifiable, a production measure is used to allocate the production
stripping costs between the inventory produced and the stripping activity asset. This production measure is calculated for the
identified component of the ore body, which is based on the specific development phases determined when designing the
development plan for the pit. This measure is then used as a benchmark to identify the extent to which the stripping activities have
created a future benefit. The Company uses the expected volume of waste extracted for a volume of ore production compared
with the actual volume extracted for such volume of ore production to calculate each component. The stripping activity asset is
then accounted for as an addition to, or an enhancement of, the applicable mine asset, and is presented as part of “Mining
properties” in the Company’s consolidated balance sheets.
Assets Under Construction
Assets under construction are capitalized as 'Construction in Progress' until the asset is capable of operating at levels intended by
management. Costs incurred prior to this point, including depreciation of related plant and equipment, are capitalized and proceeds
from sales during this period are offset against costs capitalized. Borrowing costs, including interest, associated with projects that
are actively being prepared for production are capitalized to Construction in Progress. These costs are elements of the historical
cost of acquiring an asset when a period of time is required to bring it to the condition and location necessary for its intended use.
The borrowing costs eligible for capitalization are determined by applying a capitalization rate, which is the weighted average of
the borrowing costs applicable to the borrowings of the Company that are outstanding during the period, to the expenditures on
the asset. Capitalized interest costs are amortized on the same basis as the related qualifying asset.
(o)
Environmental Rehabilitation and Other Provisions
A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Where the effect
of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the liability that have
not been reflected in the estimate of the expenditure. The unwinding of the discount is recognized as a finance expense.
Environmental rehabilitation obligations are a type of provision associated with the retirement of a long-lived asset that the
Company has acquired, constructed, developed and/or used in operations. These include the dismantling and demolition of
infrastructure and the removal of residual materials and remediation of disturbed areas. These estimated obligations are provided
for in the accounting period when the related disturbance occurs, whether during the mine development or production phases at
the present value of estimated future costs to settle the obligations, or when a constructive obligation arises. The costs are
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estimated based on the Company’s mine closure plan. The cost estimates are updated annually during the life of the operation to
reflect known developments, (e.g. revisions to cost estimates and to the estimated lives of operations, or changes in legal or
regulatory requirements), and are subject to review at regular intervals.
Environmental rehabilitation provisions are initially recorded with a corresponding increase to the carrying amounts of property,
plant and equipment, with any subsequent changes to the liability accounted for as changes in the carrying amounts of the related
property, plant and equipment. The capitalized costs are amortized over the life of the mine on a unit-of-production basis.
(p)
Intangible Assets
Intangible assets acquired by way of an asset acquisition or business combination are recognized if the asset is separable or
arises from contractual or legal rights and the fair value can be measured reliably on initial recognition. Intangible assets must be
identifiable, controlled by the Company and with future economic benefits expected to flow from the assets. Intangible assets that
are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and accumulated
impairment losses. Intangible assets with finite useful lives are amortized on a straight-line basis over the lesser of mine life or
estimated useful life of the intangible asset. The Company reviews the useful life, amortization method and carrying value on a
regular basis.
(q)
Flow-Through Shares
Under Canadian income tax legislation, a company is permitted to issue flow-through shares whereby the company agrees to incur
qualifying expenditures and renounce the related income tax deductions to the investors. The Company allocates the proceeds
from the issuance of these shares between the offering of shares and the sale of tax benefits. The allocation is made based on the
difference between the quoted price of the shares and the amount the investors pay for the shares, with a deferred flow-through
premium liability recognized for the difference. The liability is reversed and a tax provision recognized upon filing of the appropriate
renunciation forms with the Canadian taxation authorities for qualifying expenditures previously incurred. The spending also gives
rise to a deferred tax temporary difference between the carrying value and tax value of the qualifying expenditure.
(r)
Asset Acquisitions
Upon the acquisition of an asset or a group of assets and liabilities that does not constitute a business, the Company identifies
and recognizes the individual identifiable assets acquired and liabilities assumed. The cost of the group is allocated to the individual
identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Such a transaction or event does
not give rise to goodwill.
When the acquisition of an asset or a group of assets and liabilities is achieved in stages, the Company’s previously held interests
in the acquired assets and liabilities are not remeasured to their acquisition-date fair values and instead, continue to be measured
at their carrying values.
When the Company acquires a controlling, but less than 100% interest in an entity that does not constitute a business, and the
transaction is therefore, accounted for as the acquisition of an asset or group of assets and liabilities, the Company consolidates
the entity and recognizes a non-controlling interest for the portion of the entity it did not acquire. The Company recognizes non-
controlling interests that arise in an asset acquisition either at fair value or at the non-controlling interests’ proportionate share of
the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition basis.
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4.
CRITICAL JUDGEMENTS AND ESTIMATION UNCERTAINTIES
The preparation of the Company’s consolidated financial statements in accordance with IFRS requires management to make
judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and the
accompanying disclosures. These assumptions, judgements and estimates are based on management’s best knowledge of the
relevant facts and circumstances, having regard to previous experience, but actual results may differ materially from the amounts
included in the consolidated financial statements. Management reviews its estimates and underlying assumptions on an ongoing
basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only
that period, or in the period of revision and future periods if the revision affects both current and future periods.
The most significant judgements and key sources of estimation uncertainty that management believes could have a significant risk
of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are:
Mineral Reserve and Mineral Resource Estimates
Key Sources of Estimation Uncertainty
The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101 Standards
of Disclosure for Mineral Projects, issued by the Canadian Securities Administrators. This National Instrument lays out the
standards of disclosure for mineral projects including rules relating to the determination of mineral reserves and mineral resources.
There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond
the Company's control. Such estimation is a subjective process, and the accuracy of any mineral reserve or mineral resource
estimate is a function of the quantity and quality of available data and of the assumptions made and judgements used in engineering
and geological interpretation. Short-term operating factors relating to the mineral reserves, such as the need for orderly
development of the ore bodies or the processing of new or different ore grades, may cause the mining operation to be unprofitable
in any particular accounting period. Lower market prices, increased production costs, reduced recovery rates and other factors
may result in a revision of its mineral reserve estimates from time to time or may render the Company’s mineral reserves
uneconomic to exploit, which may materially and adversely affect the results of operations or financial condition. Mineral reserve
data are not indicative of future results of operations. Evaluation of mineral resources is conducted from time to time and mineral
resources may change depending on further geological interpretation, drilling results and metal prices. The Company regularly
evaluates its mineral resources and it often determines the merits of increasing the reliability of its overall mineral resources.
Differences between management's assumptions, and actual events including economic assumptions such as metal prices and
market conditions, could have a material effect in the future on the Company's financial position and results of operations.
Estimates of the quantities of proven and probable mineral reserves and mineral resources form the basis for the Company’s LOM
("LOM") plans, which are used for a number of important business and accounting purposes, including: determination of the useful
life of property, plant and equipment and measurement of the depreciation expense, capitalization and amortization of stripping
costs, exploration and evaluation of mineral resources and determination of technical feasibility and commercial viability, and
forecasting the timing of the payments related to the environmental rehabilitation provision. In addition, the underlying LOM plans
are used in the impairment tests for goodwill and non-current assets.
Estimated Recoverable Ounces
Key Sources of Estimation Uncertainty
The carrying amounts of the Company’s mining properties are depleted based on recoverable ounces contained in proven and
probable mineral reserves plus a portion of mineral resources. The Company includes a portion of mineral resources where it is
considered probable that those mineral resources will be economically extracted. Changes to estimates of recoverable ounces
and depletable costs including changes resulting from revisions to the Company’s mine plans and changes in metal price forecasts
can result in a change to future depletion rates.
Economic Recoverability and Probability of Future Economic Benefits of Exploration, Evaluation and Development Costs
Critical Judgements in Applying Accounting Policies
Management has determined that exploration and evaluation costs incurred during the year and costs associated with projects
under construction have future economic benefits and are economically recoverable. In making this judgement, management has
assessed various sources of information including but not limited to the geologic and metallurgic information, history of conversion
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of mineral deposits to proven and probable mineral reserves, scoping and feasibility studies, proximity of operating facilities,
operating management expertise, existing permits and life of mine plans.
Indicators of Impairment and Reversal of Impairment
Critical Judgements in Applying Accounting Policies
The Company considers both external and internal sources of information in assessing whether there are any indications that
CGUs are impaired or reversal of impairment is needed. External sources of information the Company considers include changes
in the market, economic and legal environment in which the Company operates that are not within its control and are expected to
affect the recoverable amount of CGUs. Internal sources of information include the manner in which mining properties and plant
and equipment are being used or are expected to be used and indicators of the economic performance of the assets, historical
exploration and operating results. The primary external factors considered are changes in spot and forecast metal prices, changes
in laws and regulations and the Company’s market capitalization relative to its net asset carrying amount. Primary internal factors
considered are the Company’s current mine performance against expectations, changes in mineral reserves and resources, life of
mine plans and exploration results.
Impairment and Reversal of Impairment
Key Sources of Estimation Uncertainty
In determining the recoverable amounts of the Company’s mining interests and goodwill, management makes estimates of the
discounted future after-tax cash flows expected to be derived from the Company’s mining properties, costs to sell the mining
properties and the appropriate discount rate. The projected cash flows are significantly affected by changes in assumptions related
to metal selling prices, changes in the amount of recoverable reserves, resources, and exploration potential, production cost
estimates, future capital expenditures, discount rates and exchange rates. Significant changes in metal price forecasts, estimated
future costs of production, capital expenditures, the amount of recoverable reserves, resources, and exploration potential, and/or
the impact of changes in current economic conditions may result in an impairment write-down or reversal of a previous impairment
on the carrying amounts of the Company’s mining interests and/or an impairment write-down of goodwill.
During the year ended December 31, 2020, the Company recognized a net impairment reversal of $191.0 million in respect of the
carrying amounts of certain mineral properties. No impairment losses or reversals of previous impairments were recognized during
the year ended December 31, 2019. Refer to Note 13.
Deferral of Stripping Costs
Key Sources of Estimation Uncertainty
In determining whether stripping costs incurred during the production phase of a mining property relate to mineral reserves and
mineral resources that will be mined in a future period and therefore should be capitalized, the Company determines whether it is
probable that future economic benefits associated with the stripping activity over the life of the mineral property will flow to the
Company. Changes in estimated strip ratios can result in a change to the future capitalization of stripping costs incurred. At
December 31, 2020, the carrying amount of stripping costs capitalized and included in mining properties was $37.2 million
(December 31, 2019: $54.2 million).
Environmental Rehabilitation Provision
Key Sources of Estimation Uncertainty
Given the nature of its operations, the Company incurs obligations to close, restore and rehabilitate its sites. Closure and
rehabilitation activities are governed by a combination of legislative requirements and Company policies. The Company’s
environmental rehabilitation provision represents management’s best estimate of the present value of the future cash outflows
required to settle the liabilities, which reflects estimates of future costs, inflation, movements in foreign exchange rates and
assumptions of risks associated with the future cash outflows, and the applicable risk-free interest rates for discounting the future
cash outflows. Changes in the above factors can result in a change to the provision recognized by the Company. The actual future
expenditures may differ from the amounts currently provided if the estimates made are significantly different than actual results or
if there are significant changes in environmental and/or regulatory requirements in the future.
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Revenue Recognition: Application of Variable Consideration Constraint
Key Sources of Estimation Uncertainty
The Company determines the amortization of deferred revenue to the consolidated statement of operations on a per unit basis
using the expected quantity of metal (ounces for gold and silver and pounds for copper) that will be delivered over the term of
the contract, which is based on geological reports and the Company’s LOM plan at contract inception. As subsequent changes
to the expected quantity of metal to be delivered triggers a retrospective adjustment to revenue, management is required to
estimate the ounces or pounds to be included in the denominator that will be sufficient such that subsequent changes are not
expected to result in a significant revenue reversal. Accordingly, management includes reserves and portion of resources,
which management is reasonably confident are transferable to reserves, in the calculation. With this approach, the Company
considers that it is highly probable that changes in subsequent reserve and resource estimates will not result in a significant
revenue reversal of previously recognized revenue.
Deferred Revenue
Critical Judgements in Applying Accounting Policies
Significant judgements are required in determining the appropriate accounting treatment for metal transactions entered into by the
Company. With respect to the Company's current streaming arrangement, management has determined that based on the
agreement, the counterparty assumes significant business risk and rewards associated with the timing and amount of metals being
delivered. As such, the deposits received from the counterparty have been recorded as deferred revenue in the consolidated
balance sheet. Additionally, the Company has determined that the transaction is not a financial liability as; based on the specific
rights and obligations set out in the agreement, under no circumstances will the delivery obligations be satisfied with cash. Refer
to Note 27 for additional information.
Joint Arrangements
Critical Judgements in Applying Accounting Policies
Judgement is required to determine when the Company has joint control of a contractual arrangement, which requires a continuous
assessment of the relevant activities and when the decisions in relation to those activities require unanimous consent. Judgement
is also required to classify a joint arrangement as either a joint operation or a joint venture when the arrangement has been
structured through a separate vehicle. Classifying the arrangement requires the Company to assess its rights and obligations
arising from the arrangement. Specifically, the Company considers the legal form of the separate vehicle, the terms of the
contractual arrangement and other relevant facts and circumstances. This assessment often requires significant judgement, and
a different conclusion on joint control, or whether the arrangement is a joint operation or a joint venture, may have a material impact
on the accounting treatment.
Management evaluated its joint arrangement with Agnico Eagle Mines Limited, whereby both parties acquired 50.0% of the shares
of Osisko (now Canadian Malartic) in accordance with the requirements in IFRS 11 Joint Arrangements. The Company concluded
that the arrangement qualified as a joint operation upon consideration of the following significant factors: (i) The requirement that
the joint operators purchase all output from the investee and investee restrictions on selling the output to any third party; (ii) The
parties to the arrangement are substantially the only source of cash flow contributing to the continuity of the arrangement; and (iii)
If the selling price drops below cost, the joint operators are required to cover any obligations Canadian Malartic cannot satisfy.
Determination of Assets Held for Sale and Discontinued Operations
Critical Judgements in Applying Accounting Policies
Judgement is required in determining whether an asset or disposal group should be classified as held for sale. An asset or disposal
group should be classified as held for sale when it is available for immediate sale in its present condition and its sale is highly
probable. Conditions that support a highly probable sale include the following: an appropriate level of management is committed
to a plan to sell the asset or disposal group, an active program to locate a buyer and complete the plan has been initiated, the
asset or disposal group has been actively marketed for sale at a price that is reasonable in relation to its current fair value, and the
sale of the asset or disposal group is expected to qualify for recognition as a completed sale within one year from the date of
classification as held for sale.
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Management also applies judgement to determine whether a component of the Company that either has been disposed of, or is
classified as held for sale, meets the criteria of a discontinued operation. The key area that involves management judgement in
this determination is whether the component represents a separate major line of business or geographical area of operation. This
determination was applied to the sale of the Chapada mine in 2019. Given that the Company will continue to operate in Brazil after
the disposal of Chapada and following the analysis of other factors, the Company concluded that Chapada was not a separate
major line of business or geographical area of operation, thus it was not considered to be a discontinued operation.
Income Taxes
Key Sources of Estimation Uncertainty
Income taxes and recoverability of deferred tax assets: In assessing the probability of realizing income tax assets recognized,
management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected
timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination
by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence
that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operating activities
and the application of existing tax laws in each jurisdiction. The Company considers relevant tax planning opportunities that are
within the Company's control, are feasible, and within management's ability to implement. Examination by applicable tax authorities
is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence.
Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible
that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes
in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses
unrecognized income tax assets at each reporting period.
Contingencies
Key Sources of Estimation Uncertainty
Due to the size, nature and complexity of the Company’s operations, various legal and tax matters are outstanding from time to
time. In the event that the Company’s estimates of the future resolution of these matters changes, the effects of the changes will
be recognized in the Consolidated Financial Statements. Refer to Note 35 for further discussion on contingencies.
Inventory Valuation
Key Sources of Estimation Uncertainty
The measurement of inventory including the determination of its net realizable value, especially as it relates to ore in stockpiles,
involves the use of estimates. Estimation is required in determining the tonnage, recoverable gold contained therein, and in
determining the remaining costs of completion to bring inventory to its saleable form. Changes in these estimates can result in a
change in mine operating costs of future periods and carrying amounts of inventories
Further, in determining the net realizable value of ore in stockpiles, the Company estimates future metal selling prices, production
forecasts, realized grades and recoveries, timing of processing, and future costs to convert the inventories into saleable form.
Reductions in metal price forecasts, increases in estimated future costs to convert, reductions in the amount of recoverable ounces,
and a delay in timing of processing can result in a write down of the carrying amounts of the Company’s work in process and ore
in stockpiles inventory.
Non-monetary Exchanges
Critical Judgements in Applying Accounting Policies
In accounting for assets (or a group of assets and liabilities) that are acquired in a non-monetary exchange, the Company records
the acquired assets at cost. The cost of such assets is measured at the fair value of the other consideration given to acquire the
assets at the time of their acquisition, unless the exchange transaction lacks commercial substance or the fair value of neither the
assets received nor the assets given up can be reliably measured. If the Company is able to measure reliably the fair value of
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either the assets received or the assets given up, then the fair value of the assets given up is used to measure the cost of the
assets received unless the fair value of the assets received is more clearly evident.
The Integration Transaction, pursuant to which the Company relinquished a non-controlling interest in Agua Rica for an increased
interest in Alumbrera, was a non-monetary exchange of assets and liabilities, with the consideration paid for the additional interest
in Alumbrera being a 43.75% interest relinquished in Agua Rica. The Company determined that the fair value of both what was
being given up in Agua Rica and what was being acquired (the Alumbrera assets and liabilities) could be measured reliably;
however, concluded that the fair value of the Alumbrera assets and liabilities was more clearly evident. Refer to Note 6 for further
details on the Integration Transaction and the valuation approach.
Asset Acquisition vs. Business Combination
Critical Judgements in Applying Accounting Policies
To be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive
process that together significantly contribute to the ability to create outputs. While businesses usually have outputs, outputs are
not required for an integrated set of activities and assets to qualify as a business.
The set of activities and assets acquired in the acquisition of Alumbrera included inputs such as plant and other infrastructure
assets and limited mineral resources, but did not include an organized workforce. Alumbrera had no outputs at the acquisition date
as mining ceased in the third quarter of 2018 at the end of the mine life. Given the absence of an organized workforce, the Company
determined that no substantive processes had been acquired and therefore, Alumbrera did not meet the definition of a ‘business’
in IFRS, and the acquisition was accounted for as an acquisition of assets and liabilities. Refer to Note 6 for further details on the
Integration Transaction.
5.
RECENT ACCOUNTING PRONOUNCEMENTS
Adoption of Definition of a Business (Amendments to IFRS 3)
The Company has adopted the amendments to IFRS 3 for the first time in the current year. The amendments clarify that while
businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business. To
be considered a business an acquired set of activities and assets must include, at a minimum, an input and a substantive process
that together significantly contribute to the ability to create outputs. The amendments remove the assessment of whether market
participants are capable of replacing any missing inputs or processes and continuing to produce outputs. The amendments also
introduce additional guidance that helps to determine whether a substantive process has been acquired.
The amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of
activities and assets is not a business. Under the optional concentration test, the acquired set of activities and assets is not a
business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of
similar assets. The amendments are applied prospectively to all business combinations and asset acquisitions for which the
acquisition date is on or after January 1, 2020. In particular, the amendments were applied to the Company's acquisition of
Alumbrera, where the Company concluded that the acquired set of activities and assets was not a business. Refer to Note 6 for
further details.
Adoption of Other Narrow Scope Amendments to IFRSs and IFRS Interpretations
The Company also adopted other amendments to IFRSs, which were effective for accounting periods beginning on or after January
1, 2020. The impact of adoption was not significant to the Company's consolidated financial statements.
New and Revised IFRSs, Narrow Scope Amendments to IFRSs and IFRS Interpretations not yet Effective
Certain pronouncements have been issued by the IASB that are mandatory for accounting periods after December 31, 2020. There
are currently no such pronouncements that are expected to have a significant impact on the Company's consolidated financial
statements upon adoption; however, the pronouncement below may have a significant impact in future periods.
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Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16).
These amendments clarify the accounting for the net proceeds from selling any items produced while bringing an item of property,
plant and equipment to the location and condition necessary for it to be capable of operating in the manner intended by
management. The amendments prohibit entities from deducting amounts received from selling items produced from the cost of
property, plant and equipment while the Company is preparing the asset for its intended use. Instead, sales proceeds and the cost
of producing these items will be recognized in the consolidated statements of operations. The amendments are effective for annual
reporting periods beginning on or after January 1, 2022, with earlier application permitted. The amendments apply retrospectively,
but only to assets brought to the location and condition necessary for them to be capable of operating in the manner intended by
management on or after the beginning of the earliest period presented in the financial statements in which the Company first
applies the amendments.
6.
BUSINESS TRANSACTIONS
Agua Rica-Alumbrera Integration ("MARA Project")
On March 7, 2019, Yamana, Glencore International AG (“Glencore”) and Goldcorp Inc., now Newmont Corporation (“Newmont”)
(collectively “the Parties”) entered into a definitive Integration Agreement with the purpose of seeking to integrate the Agua Rica
project with the Alumbrera mine, plant and infrastructure (the “Integration Project”) through an Integration Transaction.
On December 17, 2020, the Parties announced the completion of the Integration Transaction, with the Integration Project to be
known as the MARA Project. Under the MARA Project, Agua Rica will be developed and operated using the existing infrastructure
and facilities from the Alumbrera mine, approximately 35 kilometres away.
The Integration Transaction resulted in Yamana relinquishing a non-controlling interest in Agua Rica for an increased interest in
Alumbrera. The below sets out the ownership percentages before and after the completion of the Integration Transaction:
Yamana
Glencore
Newmont
Before Transaction
Alumbrera (i)
Agua Rica
After Transaction
MARA Project
12.50 %
50.00 %
37.50 %
100.00 %
100.00 %
— %
— %
100.00 %
56.25 %
25.00 %
18.75 %
100.00 %
(i)
Although Yamana’s investment in Alumbrera was less than 20% of the issued and outstanding shares, after consideration of other relevant factors including
the proportion of seats on Alumbrera’s board assigned to Yamana, the nature of the business decisions that required unanimous consent of the directors,
and Yamana’s ability to influence the operating, strategic and financing decisions concerning Alumbrera; the Company determined that it had significant
influence over Alumbrera, and therefore, accounted for Alumbrera as an investment in associate using the equity method.
Upon closing of the Integration Transaction, the Company acquired an additional 43.75% interest in Alumbrera. As a result, the
Company’s equity interest in Alumbrera increased from 12.5% to 56.25%. The consideration paid for the additional interest in
Alumbrera was a 43.75% interest in Agua Rica, taking the Company’s interest in Agua Rica down to 56.25%. The Company
determined that it controlled the MARA Project through its 56.25% voting interest, and therefore, in accounting for the Integration
Transaction the Company was required to consolidate Alumbrera, and recognize the non-controlling interests in both Agua Rica
and Alumbrera.
The set of activities and assets acquired in the acquisition of Alumbrera included inputs such as plant and other infrastructure
assets and limited mineral resources, but did not include an organized workforce. Alumbrera had no outputs at the acquisition date
as mining ceased in the third quarter of 2018 at the end of the mine life. Given the absence of an organized workforce, the Company
determined that no substantive processes had been acquired and therefore, Alumbrera did not meet the definition of a ‘business’
in IFRS, and the acquisition was accounted for as an acquisition of assets and liabilities.
IFRS requires a cost-based approach to be applied in accounting for an asset acquisition. The Integration Transaction was a non-
monetary exchange of assets, with the consideration paid for the additional interest in Alumbrera being a 43.75% interest
relinquished in Agua Rica. The acquisition cost was measured based on the fair value of the Alumbrera assets and liabilities as it
was determined that the fair value of these assets and liabilities was more clearly evident than the fair value of the interest being
136
Yamana Gold
given up in Agua Rica. The net fair value of the Alumbrera assets acquired and liabilities assumed was estimated to be $787.9
million. (The net fair value of Alumbrera on a 100% basis was estimated to be $900.5 million).
Prior to the Integration Transaction, Yamana’s existing 12.5% interest in Alumbrera was carried at nil due to previous impairment
write downs largely associated with the Alumbrera mine coming to the end of its life. The Company assessed whether the potential
Integration Transaction was an indicator of impairment reversal for the equity accounted investment given the integration of the
Alumbrera assets with the Agua Rica assets would have a favourable effect on and increase the estimated service potential of the
underlying Alumbrera assets. However, the Company concluded that there was no indicator of impairment reversal as there was
no certainty that the value of Alumbrera had changed until the Integration Transaction was completed, at which point in time the
equity investment in Alumbrera, which had been historically impaired, was derecognized.
In accounting for the Company's existing 12.5% interest in the Integration Transaction, the interest was accounted for at its carrying
amount of nil (and not remeasured to fair value) in line with the Company’s accounting policy whereby existing interests are not
remeasured when accounting for an asset acquisition.
The Company recognizes non-controlling interests that arise in an asset acquisition either at fair value or at the non-controlling
interests’ proportionate share of the acquired entity’s net identifiable assets. This decision is made on an acquisition-by-acquisition
basis. For the non-controlling interests in the MARA Project, the Company elected to recognize the non-controlling interests at the
non-controlling interests' proportionate share of the acquired entity's net identifiable assets..
The net book value of Agua Rica immediately before the Integration Transaction was $889.3 million.
Upon completion of the Integration Transaction, the book value of the MARA Project was $1,677.2 million, of which $889.3 million
was attributable to Yamana, and $787.9 million attributable to the non-controlling interests.
The Company acquired cash and cash equivalents of $222.5 million in the acquisition of Alumbrera.
Fair Value Measurement
The Company obtained independent valuations for the property, plant and equipment and mineral resources of Alumbrera, and
management's assessment of fair value of such assets took into account the independent valuations obtained. Different
approaches were used in valuing the different asset groups. Where the fair value of an asset was able to be determined by
reference to market-based evidence, such as sales of comparable assets, the fair value was determined using this information.
Where fair value of the asset was not able to be reliably determined using market-based evidence, discounted cash flows or
optimized depreciated replacement cost was used to determine fair value.
Annual Report 2020
137
The valuation techniques used for measuring the fair value of the material non-cash assets acquired were as follows.
Assets acquired
Fair value at
December 17, 2020
(100%)
Fair value
measurement
category
Valuation technique
Property, plant
and equipment
$
696.7
Level 3
Mineral resources
Environmental
rehabilitation
provision
$
$
72.0
Level 3
(85.7)
Level 3
Cost technique: The valuation model considers market prices for
similar items when they are available, and depreciated
replacement cost when appropriate. Depreciated replacement cost
reflects adjustments for physical deterioration as well as functional
and economic obsolescence.
Market comparison technique: The valuation model considers
observed transaction multiples using transactions of majority
interests in development stage copper projects in North and South
America over the past 10 years. In arriving at a selected multiple,
appropriate adjustments were made to take into account the
availability of existing infrastructure relative to comparable
transactions, while being cognizant of the initial capital costs that
will still need to be incurred.
Present-value technique using the entity’s own data about the
future cash outflows to be paid to fulfil the obligation and other
inputs including the credit adjusted risk-free interest rate.
The Company believes the methodologies and estimates used to determine fair value are similar to what a market participant
would use in similar circumstances.
Leagold Mining Corporation and Equinox Gold Corp. merger, and subsequent sale of Equinox Units
On May 24, 2018, Yamana completed the disposal of its 53.6% controlling interest in Brio Gold to Leagold Mining Corporation
("Leagold"). Pursuant to the terms of the sale, the Company received 20.5% of Leagold's issued and outstanding shares. The
Company concluded that it had significant influence over Leagold, and therefore, the investment in Leagold was accounted for as
an investment in an associate using the equity method.
On December 16, 2019, Leagold and Equinox Gold Corp. ("Equinox") jointly announced that the companies had entered into a
definitive agreement to combine in an at-market merger. On March 10, 2020, the companies announced that the merger had been
completed. The combined company continues as Equinox Gold under the ticker symbol “EQX” on both the Toronto Stock Exchange
and the New York Stock Exchange.
Pursuant to the transaction, Leagold shareholders received 0.331 of an Equinox share for each Leagold share held. This resulted
in Yamana owning approximately 9% of the combined company at the date of the completion of the merger.
Yamana concluded that, as a result of its reduced shareholding, it no longer had significant influence in the investee, and therefore,
discontinued accounting for the investment using the equity method from the date of the completion of the merger. Yamana
recorded a gain on discontinuation of the equity method of $21.3 million, which is included in other operating expenses, net in the
consolidated statement of operations for the year ended December 31, 2020. The gain was calculated as the difference between
the fair value of Yamana's retained interest (in the form of Equinox shares) and the carrying amount of the investment in Leagold
at the date the equity method was discontinued, adjusted for the loss previously recognized in other comprehensive income that
was reclassified to profit or loss on discontinuation of the equity method. The investment in Equinox is accounted for as a financial
asset at FVOCI.
On April 13, 2020 Yamana announced it had entered into an agreement with Stifel GMP and Cormark Securities Inc. (collectively,
the “Dealers”) to sell 12,000,000 units (each, a “Unit”) at a price of C$10.00 per Unit for gross proceeds to Yamana of $85.2 million
(C$120.0 million) (the “Sale Transaction"). Each Unit consisted of one (1) common share of Equinox owned by Yamana and one-
half (0.5) of a common share purchase warrant of Yamana (each whole warrant a “Warrant”). Each Warrant entitles the holder
138
Yamana Gold
thereof to acquire one (1) additional common share of Equinox owned by Yamana (a “Warrant Share”) at an exercise price of
C$13.50 for a term of 9 months from the date of issue. The Sale Transaction closed on April 15, 2020.
During the third quarter of 2020, Yamana disposed of 1,200,000 Equinox shares for proceeds of approximately $15.6 million
(C$20.5 million).
As at December 31, 2020, Yamana held 6,000,000 Equinox shares, representing approximately 2.5% of the issued and outstanding
Equinox shares, on a non-diluted basis.
Subsequent to year end, 405,000 of the 6,000,000 outstanding purchase warrants to acquire Equinox common shares held by
Yamana were exercised and the same number of shares disposed of at the exercise price of C$13.50, for total proceeds of $4.2
million (C$5.5 million). The remainder of the purchase warrants expired on January 15, 2021.
Sale of the Royalty Portfolio
On February 23, 2020, the Company announced that it had entered into a definitive purchase agreement (the “Purchase
Agreement”) to sell a portfolio of royalty interests and the contingent payment to be received upon declaration of commercial
production at the Deep Carbonates Project (“DCP”) at the Gualcamayo gold mine (together, the “Royalty Portfolio”) to Guerrero
Ventures Inc. (TSX-V:GV) (“Guerrero”).
The assets in the Royalty Portfolio being sold pursuant to the transaction were:
•
•
•
•
•
A 1% net smelter return royalty (“NSR”) on gold production and 2% NSR on base metals from the Riacho dos Machados
(“RDM”) gold mine operating in Minas Gerais, Brazil;
A 2% NSR on oxide gold production from the Gualcamayo gold mine operating in San Juan, Argentina, once the operation
produces approximately 275,000 ounces from January 1, 2020;
A 1.5% NSR on production from the DCP at the Gualcamayo gold mine;
A $30.0 million cash payment receivable upon declaration of commercial production at the DCP at the Gualcamayo gold
mine; and
A 2% NSR on production from the Suruca project in Goiás, Brazil.
On May 25, 2020, Guerrero announced that it had formally changed its corporate name to Nomad Royalty Company Ltd.
(“Nomad”).
On May 27, 2020, the transaction was completed and Yamana received $64.2 million in consideration as follows:
•
•
•
$10.0 million in cash;
$10.8 million, being the fair value of the $10.0 million deferred cash payment. The deferred cash payment is measured
at fair value due to the convertible nature of the financial instrument. Pursuant to the terms in the Deferred Payment
Agreement, Yamana will receive interest on the deferred cash payment of 3% calculated and payable on a quarterly basis,
and the deferred cash payment may be converted at any time, in whole or in part, by Yamana into shares of Nomad at
C$0.90 per share. The deferred cash payment will be due for payment in full at the end of two years. However, Nomad
may pay the deferred cash payment in full at the end of one year, subject to additional payment by Nomad equal to 5%
of the deferred cash payment, and the right of Yamana to convert the deferred cash payment into shares of Nomad at a
price of C$0.90 per share. The instrument creating the deferred cash payment can be transferred at any time. The
deferred cash payment is accounted for as a financial asset at fair value through profit or loss; and
$43.4 million in Nomad common shares at a price of C$0.90 per share, representing approximately 13% of Nomad's
issued and outstanding shares. These shares were subject to a lockup period of six months.
In conjunction with the acquisition of Yamana’s Royalty Portfolio, Guerrero also entered into an agreement to acquire a portfolio of
precious metals royalty, stream and gold loan assets from funds related to Orion Resource Partners (USA) LP (collectively, “Orion”)
for total consideration of $268.0 million.
The purchase price payable to Orion was satisfied through the issuance of $268.0 million in Nomad common shares at a price of
C$0.90 per share, representing approximately 77% of Nomad's issued and outstanding shares. These shares are subject to a
lockup period of 12 months.
On May 29, 2020, Nomad's shares commenced trading on the TSX under the ticker symbol "NSR".
Annual Report 2020
139
On December 11, 2020, Yamana disposed of 22,750,000 Nomad shares through a secondary offering at a price of C$1.10 per
share for total gross proceeds of approximately $19.7 million (C$25.0 million).
As at December 31, 2020, Yamana held 43,750,000 Nomad shares, representing approximately 7.75% of the issued and
outstanding Nomad shares on a non-diluted basis (approximately 10% on a partially-diluted basis).
As Yamana is represented on Nomad's board of directors, the Company concluded that it has significant influence over Nomad,
and the investment in Nomad has been accounted for as an investment in associate using the equity method.
Suyai Option Agreement
On April 28, 2020, Yamana announced that it had entered into a definitive option agreement (the “Option Agreement”) pursuant to
which, it has granted Argentina based Consultores Asset Management S.A. (“CAM”) the right and option to acquire up to a
maximum 40% interest in the legal entity that directly holds the Suyai Project, an advanced stage exploration gold project located
in Chubut Province, in southern Argentina.
The exercise of the option granted is subject to CAM fulfilling certain obligations and achieving certain milestones, and by paying
$31.6 million in various installments plus all of their proportionate expenses during the earn in periods. CAM’s obligations primarily
relate to the performance of environmental, social and governance matters and, in particular, leading the permitting efforts aimed
to advance the project through its different stages of development. CAM has the right to acquire a 35% legal interest by the end of
the first earn in period, which ends on December 31, 2024, and a further 5% legal interest within five years of the satisfaction of
the 35% interest.
Yamana received an upfront payment of $2.0 million from CAM to secure the option, which has been accounted for as a financial
liability at fair value through profit or loss.
Investment in Monarch Gold Corporation
In June 2020, pursuant to a private placement offer by Monarch Gold Corporation ("Monarch") (TSX: MQR), Yamana subscribed
for $3.1 million (C$4.2 million) worth of units of Monarch at a price of C$0.24 per unit and was issued 17,500,000 common shares
of Monarch, along with 8,750,000 warrants. Each warrant entitles Yamana to purchase one common share of Monarch at a price
of C$0.29 until June 10, 2023.
As Yamana’s shareholding is above 5%, the Company is entitled to name a representative to Monarch’s Board of Directors. As
Yamana will be represented on Monarch's board of directors, the Company concluded that it has significant influence over
Monarch, and the investment has been accounted for as an investment in associate using the equity method.
Yamana acquired additional shares in Monarch during the third quarter of 2020, increasing the Company's shareholding from 6%
to 7.1% of Monarch's issued and outstanding shares.
On November 2, 2020, Yamana announced that it had entered into a definitive agreement (the “Agreement”) with Monarch whereby
Yamana would acquire the Wasamac property and the Camflo property and mill (the “Acquisition Properties”) through the
acquisition of all of the outstanding shares of Monarch not owned by Yamana under a plan of arrangement. In connection with the
plan of arrangement, Monarch would complete a spin-out to its shareholders, through a newly-formed company (Monarch Mining)
of its other mineral properties and certain other assets and liabilities of Monarch (collectively, the “Transaction”).
On January 21, 2021, the Company announced the completion of the Transaction.
Under the terms of the Transaction, Monarch shareholders received the following consideration per Monarch share: 0.0376 of a
Yamana share; C$0.192 in cash; and 0.2 of a share of the newly formed Monarch Mining. Yamana issued 11,608,195 Yamana
Shares and paid approximately $46.9 million (C$59.3 million) in cash, for total consideration of approximately $107.8 million
(C$136.1 million).
The Wasamac and Camflo properties will be added to Yamana's Canadian exploration portfolio.
140
Yamana Gold
The Company is currently evaluating whether the Transaction will be accounted for as a business combination or an asset
acquisition, and will conclude in the first quarter of 2021.
Chapada
On July 5, 2019, the Company completed the sale of the Chapada mine to Lundin Mining Corporation and received total
consideration of $856.2 million, net of transaction costs of $5.8 million. The consideration was comprised of $800.0 million in cash
received upon closing of the transaction, $54.0 million being the fair value ascribed to the Gold Price Instrument (refer below), and
$8.0 million, being the fair value ascribed to a 2% net smelter return royalty on gold production from the Suruca deposit. The
Company also received the right to receive a further $100.0 million of consideration, contingent upon the construction of a pyrite
roaster at Chapada. The gain on sale of Chapada was impacted by the final settlement associated with the working capital delivery
of $33.0 million, as anticipated. The Company recorded a $273.1 million gain on sale, as calculated below.
The Gold Price Instrument entitled the Company to additional cash payments of up to $125.0 million based on the price of gold
over the five-year period from the date of closing, as follows:
•
•
•
$10.0 million per year for each year over the next 5 years where the gold price averages over $1,350/oz, up to a maximum
cash payment of $50.0 million;
An additional $10.0 million per year for each year over the next 5 years where the gold price averages over $1,400/oz,
up to a maximum cash payment of $50.0 million; and
An additional $5.0 million per year for each year over the next 5 years where the gold price averages over $1,450/oz, up
to a maximum cash payment of $25.0 million.
On September 16, 2019, the Company monetized the Gold Price Instrument, selling to a third party for consideration of
$65.5 million, recognizing an $11.5 million gain on sale.
Included in "Net proceeds on disposal of subsidiaries and other assets" in the Company's consolidated statement of cash flows
are the proceeds received on the sale of Chapada and the $65.5 million received on the sale of the Gold Price Instrument, net of
the impact of the aforementioned working capital delivery.
At April 15, 2019, the sale was considered highly probable; therefore, the assets and liabilities of Chapada were classified as
assets and liabilities held for sale and presented separately under current assets and current liabilities, respectively, in the
Company's balance sheet at June 30, 2019. As the consideration expected to be received in the transaction exceeded the carrying
amount, no impairment was required upon reclassification.
The gain on disposal of Chapada was calculated as below:
Total consideration including working capital adjustments (net of transaction costs)
Net assets sold and derecognized:
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Property, plant and equipment
Trade and other payables
Income taxes payable
Other provisions and liabilities
Environmental rehabilitation provisions
Deferred tax liabilities
Net assets
Gain on disposal (Note 10)
Chapada
856.2
43.1
0.5
31.4
157.4
670.0
(31.9)
(18.2)
(150.5)
(58.7)
(60.0)
583.1
273.1
$
$
$
$
The gain on disposal is included in other operating income, net in the consolidated statement of operations for the year ended
December 31, 2019.
The results of Chapada up to its disposal date are included in the "Other Mines" operating segment in Note 7.
Annual Report 2020
141
7.
SEGMENT INFORMATION
The Company bases its operating segments on the way information is reported and used by the Company's chief operating
decision maker ("CODM"), being the Company's Senior Executive Group. The results of operating segments are reviewed by the
CODM in order to make decisions about resources to be allocated to the segments and to assess their performance.
The Company considers each of its individual operating mine sites as reportable segments for financial reporting purposes. Further,
the results of operating mines that the Company does not intend to manage in the long-term, and for which a disposal plan has
been initiated, are reviewed as one segment. In addition to these reportable segments, the Company aggregates and discloses
the financial results of other operating segments with similar economic characteristics as reviewed by the CODM, including
exploration properties and corporate entities, under "Corporate and Other".
Significant information relating to the Company's reportable segments is summarized in the tables below:
Canadian
Malartic
Jacobina
Cerro
Moro
El Peñón
Minera
Florida
Other
Mines (i)
Corporate
and other
(ii)
Total
Property, plant and equipment at December
31, 2020
Total assets at December 31, 2020
Total liabilities at December 31, 2020
Capital expenditures for the year ended
December 31, 2020
$ 1,059.5
$ 1,638.1
$ 458.3
$
74.8
Property, plant and equipment at December
31, 2019
Total assets at December 31, 2019
Total liabilities at December 31, 2019
Capital expenditures for the year ended
December 31, 2019
Canadian
Malartic
$ 1,082.9
$ 1,646.2
$ 415.7
$
82.7
$
$
$
$
$
$
$
$
897.7 $
936.4 $
273.1 $
457.8 $ 1,111.0 $
550.0 $ 1,168.0 $
407.3 $
79.2 $
43.4 $
48.9 $
47.8 $
296.1 $
322.2 $
108.6 $
39.5 $
— $ 2,862.7 $ 6,684.8
— $ 3,808.1 $ 8,422.8
— $ 1,924.0 $ 3,250.5
— $
19.3 $
273.7
Jacobina
Cerro
Moro
El Peñón
Minera
Florida
Other
Mines (i)
Corporate
and other
(ii)
Total
917.6 $
866.1 $
571.2 $
952.7 $
955.5 $
612.5 $
269.0 $
112.3 $
210.5 $
61.7 $
43.4 $
49.7 $
292.6 $
317.1 $
94.0 $
34.3 $
— $ 2,222.5 $ 5,952.9
— $ 2,633.2 $ 7,117.2
— $ 1,795.8 $ 2,897.3
35.8 $
24.1 $
331.7
(i)
(ii)
Other mines is comprised of the Chapada mine, which was divested July 2019.
"Corporate and other" includes advanced stage development projects, exploration properties, corporate entities, the Company's investments in associates
and the MARA Project with property, plant and equipment of $1,856.4 million, total assets of $2,109.7 million and total liabilities of $429.2 million (December
31, 2019: Agua Rica Project of $1,151.1 million, $1,156.5 million, and $269.4 million, respectively).
$
$
Canadian
Malartic
471.0 $
(185.4)
285.6 $
(133.4)
(4.5)
Jacobina
Cerro
Moro
El Peñón
312.1 $
241.3 $
381.1 $
(95.5)
(115.8)
(141.8)
216.6 $
125.5 $
239.3 $
(52.6)
(2.0)
(86.1)
(19.2)
(69.6)
(7.0)
Minera
Florida
155.5 $
(75.6)
79.9 $
(44.2)
(7.7)
—
$
147.7 $
—
(369.0)
560.0
162.0 $
(348.8) $
722.7 $
—
28.0 $
Other
mines (ii)
Corporate
and other
Total
— $
—
— $
—
—
—
— $
— $ 1,561.0
—
(614.1)
— $
946.9
(9.1)
(0.1)
(395.0)
(40.5)
—
191.0
(9.2) $
702.4
Other expenses (iii)
Earnings before taxes $
Income tax expense
(212.3)
490.1
(286.5)
Net earnings $
203.6
For the year ended December 31, 2020
Revenue
Cost of sales excluding DDA (i)
Gross margin excluding DDA
DDA
Temporary suspension, standby and
other incremental COVID-19 costs
(Impairment) reversal of impairment of
mining properties
Segment income (loss)
142
Yamana Gold
For the year ended December 31, 2019
Revenue
Cost of sales excluding DDA (i)
Gross margin excluding DDA
DDA
Segment income (loss)
Canadian
Malartic Jacobina
$ 460.5 $ 224.0 $
(198.9)
$ 261.6 $ 129.1 $
(135.4)
$ 126.2 $
Cerro
Moro
299.6 $
El Peñón
297.0 $
Minera
Florida
103.8
$
(94.9)
(153.8)
(153.4)
(70.6)
145.8 $
143.6 $
33.2
$
(56.7)
(121.7)
(102.0)
(35.7)
72.4 $
24.1 $
41.6 $
(2.5) $
Corporate
and other
Total
— $
1,612.2
—
(782.8)
— $
829.4
(8.3)
(471.7)
Other
mines (ii)
227.3 $
(111.2)
116.1 $
(11.9)
104.2 $
(8.3) $
Other expenses (iii)
Earnings before taxes $
Income tax expense
Net earnings $
357.7
(47.4)
310.3
(84.7)
225.6
(i)
(ii)
(iii)
Depletion, depreciation and amortization ("DDA").
Other mines is comprised of the Chapada mine, which was divested in July 2019.
Other expenses are comprised of general and administrative expenses, exploration and evaluation expenses, share of loss of associates, other operating
(expenses) income, net, finance costs and other costs. net, as per the consolidated statement of operations.
Information about Geographical Areas
Revenue is attributed to regions based on the source location of the product sold.
For the years ended December 31,
Canada
Chile
Brazil
Argentina
Total revenue
Non-current assets for this purpose exclude deferred tax assets.
As at December 31,
Canada
Chile
Brazil
Argentina
United States
Total non-current assets
Information about Major Customers
$
$
$
$
2020
471.0 $
536.6
312.1
241.3
2019
460.5
400.8
451.3
299.6
1,561.0 $
1,612.2
2020
1,784.4 $
1,891.2
927.0
2,769.4
34.7
7,406.7 $
2019
1,863.9
1,341.0
949.2
2,447.7
33.0
6,634.8
The Company sells its metals through the corporate office to major metal exchange markets or directly to major Canadian financial
institutions and to smelters. Given the nature of the Company's products, there are always willing market participants ready to
purchase the Company's products at the prevailing market prices.
The following table presents sales to individual customers that exceeded 10% of annual metal sales for the following periods:
For the years ended December 31,
Customer (i)
1
2
3
4
5
Total sales to customers exceeding 10% of annual metal sales
Percentage of total metal sales
$
$
2020
394.6
$
365.6
334.7
199.7
158.9
2019
371.8
320.5
275.0
192.3
—
1,453.5
$
93.1 %
1,159.6
71.9 %
(i)
A balance is only included for a customer in each year where total sales to that customer exceeded 10% of annual metal sales in the period.
Annual Report 2020
143
8.
REVENUE
Disaggregation of Revenue
The following table disaggregates revenue by metal:
For the years ended December 31,
Gold
Silver
Copper
Total revenue from contracts with customers
Provisional pricing adjustments (i)
Total revenue
$
$
$
2020
1,341.8 $
219.2
—
1,561.0 $
—
1,561.0 $
2019
1,262.8
178.5
162.7
1,604.0
8.2
1,612.2
(i)
Amount represents the provisional pricing adjustments related to silver and copper concentrate from the Cerro Moro and Chapada mines, respectively.
Transaction Price Allocated to the Remaining Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that has not yet been recognized, which
includes deferred revenue amounts relating to the Company's streaming arrangement that will be invoiced and recognized as
revenue in future periods. The Company applies the practical expedient in paragraph 121 of IFRS 15 and does not disclose
information about remaining performance obligations that have original expected durations of one year or less.
At December 31, 2020 the aggregate amount of the revenue allocated to unsatisfied performance obligations was $77.6 million.
The Company expects to recognize approximately $17.1 million of this revenue over the next 12 months and the remainder over
a period of approximately 11 years.
9.
EMPLOYEE COMPENSATION AND BENEFITS EXPENSES
Employee compensation and benefits expense included in the statement of operations is as follows:
For the years ended December 31,
Wages and salaries
Social security, pension and government-mandated programs (i)
Other benefits (ii)
Total employee compensation and benefits expenses
$
$
2020
176.2 $
79.0
29.2
284.4 $
2019
174.5
77.2
20.1
271.8
(i)
(ii)
Included in this item are defined contribution pension plans for all full-time qualifying employees of the Company. Contributions by the Company are based
on a contribution percentage using the annual salary as the base and are made on a quarterly basis or as otherwise determined by the Company. The
assets of the plans are held separately from those of the Company and are managed by independent plan administrators. The total expense recognized in
the consolidated statement of operations of $6.4 million (2019: $5.9 million) represents contributions payable to these plans by the Company at rates
specified in the rules of the plans. As at December 31, 2020, contributions of $2.6 million due in respect of the 2020 reporting period (2019: $2.6 million)
had not been paid over to the plans but were paid subsequent to the end of the year.
Included in Other benefits are share-based payment transactions. Refer Note 31 for further information.
144
Yamana Gold
10.
OTHER OPERATING EXPENSES (INCOME), NET
For the years ended December 31,
Changes in provisions (i)
(Recovery) Write-down of tax recoverables and other assets
Gain on discontinuation of the equity method (Note 6)
Gain on sale of subsidiaries (Note 6)
Loss on sale of other assets
Mark-to-market loss on deferred share compensation
Net mark-to-market gain on financial assets and financial liabilities
Reorganization costs
Other expenses (ii)
Other operating expenses (income), net
$
2020
9.1 $
(2.1)
(21.3)
—
3.8
10.9
(6.9)
0.5
20.6
2019
6.9
25.6
—
(273.1)
2.4
3.3
(1.9)
3.8
10.6
$
14.6 $
(222.4)
(i)
(ii)
Amount represents the recording (reversal) of certain existing provisions based on management's best estimate of the likely outcome.
Other expenses is comprised primarily of contributions to social and infrastructure development causes in jurisdictions where the Company is active, and
business and professional transaction costs.
11.
OTHER COSTS, NET
For the years ended December 31,
Finance income
Net gain on derivatives
Net foreign exchange loss
Other costs, net
12.
FINANCE COSTS
For the years ended December 31,
Unwinding of discounts on provisions
Interest expense on long-term debt
Financing costs paid on early note redemption (Note 28)
Interest expense on lease liabilities (Note 34)
Amortization of deferred financing, bank, financing fees and other finance costs (i)
Finance costs
$
$
$
$
2020
(1.1) $
(1.8)
21.6
18.7 $
2020
9.0 $
51.9
—
3.5
12.6
77.0 $
2019
(2.2)
(7.2)
29.0
19.6
2019
11.1
71.8
35.0
4.4
21.9
144.2
(i)
Included in other finance costs for the years ended December 31, 2020 and 2019 is $4.5 million and $9.4 million, respectively, of non-cash interest expense
related to the financing component of deferred revenue contracts.
13.
IMPAIRMENT AND REVERSAL OF IMPAIRMENT
In the fourth quarter of 2020, the Company reviewed its operating mine sites for indicators of impairment or impairment reversal
and performed the annual goodwill impairment test for the Canadian Malartic cash-generating unit ("CGU"). The Company
observed an increase in the fair value less costs of disposal ("FVLCD") of the El Peñón mine in Chile that resulted in a partial
reversal of the impairment losses recorded in 2015 and 2016. This reversal was partially offset by an impairment at Cerro Moro.
The FVLCD of the Canadian Malartic CGU exceeded the carrying value. No indicators of impairment or impairment reversal were
identified for any of the Company's other CGUs.
In relation to the impacts of the COVID-19 pandemic, the Company has been able to continue operating at all CGUs during the
current year, with the exception of Canadian Malartic and Cerro Moro, both of which experienced temporary suspensions of
operations for a short period earlier in the year. While there have been disruptions to the movements of workers to some assets
and additional costs have been incurred to introduce appropriate protocols at all sites (with additional costs also expected to be
incurred in 2021), the Company does not believe that the COVID-19 impacts represent an indicator of impairment for any CGU
except as a contributing indicator for Cerro Moro - as discussed below.
Annual Report 2020
145
For the year ended December 31, 2020, the Company's net impairment reversal in respect of the following CGUs was as follows:
For the year ended December 31,
El Peñón
Cerro Moro
Net impairment reversal
2020
560.0
(369.0)
191.0
$
$
2020 Indicators of Impairment and Impairment Reversal
El Peñón
The Company recorded impairments at the El Peñón mine in 2015 and 2016. The impairment in 2015 was a result of the Company
downward adjusting its macroeconomic assumptions, which negatively impacted future estimated cash flows, and the Company's
updated view on value beyond mineral reserves and mineral resources. During 2016, the Company determined that the
sustainable, long-term optimal production level for the mine was a production expectation of 140,000 ounces of gold and 4,150,000
ounces of silver per annum, which negatively impacted future cash flows.
Following a standout year and solid fourth quarter from El Peñón in 2020, where sustained production and costs were in line with
an improved LOM and budget, the mine demonstrated its ability to maintain its current production and cost profile. The Company
considered the following factors to be an indicator of reversal of the previous impairment charge:
•
•
•
Prolonged and sustained high production levels, which have led to significantly higher production for both gold and silver
than that envisioned in the mine plan developed in 2016 at the time of rightsizing of the operation. This was the result of
both plant improvements to increase throughput, and higher grade ores being mined.
A sustained reduction in costs benefiting from the higher production and continuous cost reduction initiatives carried out
over the past year.
Significant exploration successes throughout the year, which lead to increased mineral resources for December 31, 2020,
which both extended the life of the mine and improved the life of mine models.
The Company concluded that the recoverable amount for the El Peñón CGU, representing the CGU’s FVLCD, exceeded the
carrying amount. This resulted in a non-cash accounting reversal of the impairment charges previously recorded in 2015 and 2016
on mineral properties subject to depletion, which was limited to the carrying amount of the El Peñón CGU that would have been
determined had no impairment charge been recognized in prior years, net of depletion, depreciation and amortization charges,
totalling $560.0 million.
Cerro Moro
During 2020, the Cerro Moro mine experienced lower production at higher than expected unit costs. The following considerations
were taken into account while developing the new LOM plan:
• Country-specific matters including the announcement on December 30, 2020 of the change to the export tax in Argentina
•
•
to 4.3%, and its indefinite extension.
Expected lower annual production in comparison with prior year guidance and expectations, particularly for 2021.
A higher cost structure than previously anticipated and consistent with current costs being observed in the operation,
which have exceeded those in the Company’s budget and guidance due to general cost pressures, inefficiencies and
general operational challenges in relation to COVID-19.
• Delays in reaching previously targeted exploration results and mineral reserve and mineral resource additions. Despite
promising recent results in core areas of the mine and newly discovered areas, the Company has been delayed in its
goal of increasing mineral reserves and mineral resources in the operation.
Given the decrease in the overall Cerro Moro CGU profitability as identified in the latest LOM plan, the impact of the LOM plan on
the value of exploration potential and land interest, and the impact of a reduction in reserves and resources, the Company
concluded that these factors represent an indicator of impairment for Cerro Moro as of December 31, 2020. The Company
concluded that the recoverable amount for the Cerro Moro CGU, representing the CGU’s FVLCD, was below the carrying amount.
In consideration of the above, a non-cash accounting impairment of $369.0 million was recognized.
146
Yamana Gold
Impairment Testing: Key Assumptions
The determination of FVLCD, with level 3 input of the fair value hierarchy, includes the following key applicable assumptions:
•
Production volumes: In calculating the FVLCD, the production volumes incorporated into the cash flow models based
on detailed life of mine plans and take into account development plans for the mines agreed by management as part of
the long-term planning process. Production volumes are dependent on a number of variables, such as: the recoverable
quantities; the production profile; the cost of the development of the infrastructure necessary to extract the reserves; the
production costs; the contractual duration of mining rights; and the selling price of the commodities extracted. As each
producing mine has specific reserve characteristics and economic circumstances, the cash flows of the mines are
computed using appropriate individual economic models and key assumptions established by management. The
production profiles used were consistent with the reserves and resource volumes approved as part of the Company’s
process for the estimation of proven and probable reserves, resource estimates and in certain circumstances, include
expansion projects. These are then assessed to ensure they are consistent with what a market participant would estimate.
• Commodity prices: Forecast commodity prices are based on management’s estimates and are derived from forward
price curves and long-term views of global supply and demand, building on past experience of the industry and consistent
with external sources. Estimated long-term gold, silver and copper prices of $1,550 per ounce (2019: $1,350 per ounce),
$20.00 per ounce (2019: $17.50 per ounce) and $3.00 per pound (2019: $3.04 per pound) respectively, have been used
to estimate future revenues.
• Discount rates: In calculating the FVLCD, a real post-tax discount rate of 3.5% (2019: 3.75%) based on the Company's
weighted average cost of capital (“WACC”). The WACC used in the models is in real terms, consistent with the other
assumptions in the models.
Exchange rates: Foreign exchange rates are estimated with reference to external market forecasts and based on
observable market data including spot and forward values. In the current year, there was a depreciation in the long-term
rates of the local currencies in which the Company operates.
•
The Company has performed a sensitivity analysis to identify the impact of changes in long-term metal prices and operating costs
which are key assumptions that impact the impairment calculations. The Company assumed a 1% change in the metal price
assumptions and a 1% change in exchange rate inputs while holding all other assumptions constant. Based on the results of the
impairment testing performed, the CGU’s sensitivity to changes in these key assumptions appear below. Generally there is a direct
correlation between metal prices and industry cost levels as a significant decline in metal prices will often be mitigated by a
corresponding decline in industry operating input cost levels. The Company believes that adverse changes in metal price
assumptions would impact certain other inputs in the life of mine plans which may offset, to a certain extent, the impact of these
adverse exchange rate and metal price changes.
El Peñón
Cerro Moro
Change in recoverable
value from a 1% change
in metal prices
Change in recoverable
value from a 1% change in
exchange rates
42.1 $
22.0
15.3
3.5
$
The model used to determine impairment is based on management's best assumptions using material and practicable data which
may generate results that are not necessarily indicative of future performance. In addition, in deriving this analysis, the Company
has made assumptions based on the structure and relationships of variables as at the balance sheet date which may differ due to
fluctuations throughout future years with all other variables assumed to remain constant. Actual changes in one variable may
contribute to changes in another variable, which may amplify or offset the individual effect of each assumption.
Although these estimates are based on management's best knowledge of the amounts, events or actions, the actual results may
differ from these estimates.
Annual Report 2020
147
14.
INCOME TAXES
Income Tax Expense (Recovery)
For the years ended December 31,
Current tax expense (recovery)
Current tax expense in respect of the current year
Adjustment for prior periods
Impact of foreign exchange
Interest and penalties
Deferred income tax expense (recovery)
Deferred income tax recovery recognized in the current year
Adjustment for prior periods
Impact of foreign exchange
Net income tax expense
2020
119.5 $
(4.5)
0.1
1.1
116.2 $
114.1 $
3.4
52.8
170.3 $
286.5 $
$
$
$
$
$
2019
91.8
1.6
0.7
0.9
95.0
(30.3)
2.9
17.1
(10.3)
84.7
The following table reconciles income taxes calculated at statutory rates with the income tax expense in the consolidated
statements of operations:
For the years ended December 31,
Earnings (loss) before income taxes
Canadian statutory tax rate (%)
Expected income tax expense (recovery)
Impact of higher foreign tax rates (i)
Impact of change in enacted tax rates (ii)(iii)
Permanent differences
Change in recognition of deferred tax assets
Foreign exchange and other translation amounts
True-up of tax provisions in respect of prior years
Withholding taxes
Mining taxes on profit
Planned distribution of foreign earnings of the company
Other
Net income tax expense
Income tax expense (recovery) is represented by:
Current income tax expense
Deferred income tax expense (recovery)
Net income tax expense
$
$
$
$
2020
490.1 $
26.5 %
129.9
28.8
2.8
28.1
53.4
(3.4)
(1.1)
8.4
28.9
10.1
0.6
286.5 $
116.2 $
170.3
286.5 $
2019
310.3
26.5 %
82.2
42.2
6.3
(63.2)
(20.6)
(11.0)
4.5
6.7
29.1
9.0
(0.5)
84.7
95.0
(10.3)
84.7
(i)
(ii)
(iii)
The Company operates in multiple foreign tax jurisdictions that have tax rates that differ from the Canadian statutory rate.
In November 2016, the Quebec government enacted changes to the income tax rate as proposed in the 2016 provincial budget. Beginning in 2017, the
provincial rate has been decreasing by 0.1% per year, and over 4 years has decreased from 11.9% to 11.5% in 2020.
On December 29, 2017 the Argentine government enacted tax reform legislation that reduced the corporate rate from 35% to 30% in 2018 with a further
reduction to 25% starting in 2020. On December 23, 2019, the Argentine government enacted a new law that would postpone the reduction to 25% until
2021.
Deferred Income Taxes
The following is the analysis of the deferred income tax assets (liabilities) presented in the consolidated balance sheets:
As at December 31,
The net deferred income tax assets (liabilities) are classified as follows:
Deferred income tax assets
Deferred income tax liabilities
2020
2019
$
$
98.1 $
(1,229.1)
(1,131.0) $
80.8
(1,041.4)
(960.6)
148
Yamana Gold
For the year ended December 31, 2020
Deductible temporary differences
Amounts related to tax losses
Financing costs
Environmental rehabilitation provision
Derivative liability
Property, plant and equipment
Equity securities at FVOCI
Other
Net deferred income tax liabilities
For the year ended December 31, 2019
Deductible temporary differences
Amounts related to tax losses
Financing costs
Environmental rehabilitation provision
Derivative liability
Property, plant and equipment
Other
Net deferred income tax liabilities
Opening
balance
Recognized in
profit or loss
Recognized
in OCI
$
11.8 $
1.4 $
102.6
71.7
4.5
0.5
11.8
(10.6)
9.1
(0.1)
(1,150.5)
(184.4)
—
(1.2)
0.4
2.2
$
(960.6) $
(170.3) $
— $
—
—
—
2.0
—
(2.2)
—
(0.2) $
Opening
balance
Recognized in
profit or loss
Recognized
in OCI
$
16.3 $
0.1 $
105.1
87.4
11.0
(0.9)
(1,260.3)
0.6
(2.5)
(15.7)
7.9
0.9
21.4
(1.8)
$
(1,040.8) $
10.3 $
— $
—
—
—
0.5
—
—
0.5 $
Divestitures
— $
—
—
—
—
—
—
—
Closing
balance
13.2
114.4
61.1
13.6
2.4
(1,334.9)
(1.8)
1.0
— $
(1,131.0)
Divestitures
(4.6) $
—
—
(14.4)
—
88.4
—
69.4
$
Closing
balance
11.8
102.6
71.7
4.5
0.5
(1,150.5)
(1.2)
(960.6)
A deferred income tax asset in the amount of $95.8 million has been recorded in Canada (2019: $77.6 million). The deferred
income tax asset consists mainly of unused tax losses and deductible temporary differences which arose primarily from financing
costs and general and administrative expenses. Projections of taxable profits from various sources and tax planning were used to
support the recognition of the losses. The future projected income could be affected by metal prices and quantities of proven and
probable reserves. If these factors or other circumstances change, we would reassess our ability to record the deferred income
tax asset relating to the unused tax losses.
Unrecognized Deductible Temporary Differences and Unused Tax Losses
Deferred tax assets have not been recognized in respect of the following items:
As at December 31,
Deductible temporary differences (no expiry)
Capital losses (no expiry)
Operating losses
$
$
2020
71.5 $
120.2
101.2
292.9 $
Operating losses at December 31, 2020 will expire as follows:
2021
2022
2023
2024
2025
2026 and onwards
Unlimited
Canada
— $
$
U.S.
16.4 $
Brazil
— $
Chile
— $
—
—
—
—
238.0
—
18.8
34.2
14.9
7.3
122.9
3.3
—
—
—
—
—
—
—
—
—
—
60.3
94.7
$
238.0 $
217.8 $
60.3 $
94.7 $
Argentina
— $
—
—
14.9
—
—
14.9 $
Other
— $
— $
— $
— $
— $
6.3 $
— $
6.3 $
2019
166.4
149.1
121.6
437.1
Total
16.4
18.8
34.2
29.8
7.3
367.2
158.3
632.0
Annual Report 2020
149
Unrecognized Taxable Temporary Differences Associated with Investments and Interests in Subsidiaries
As at December 31, 2020, an aggregate temporary difference of $3.2 billion (2019: $2.8 billion) related to investments in
subsidiaries was not recognized because the Company is able to control the timing of the reversal of the temporary difference and
it is probable that the temporary difference will not reverse in the foreseeable future.
15.
EARNINGS PER SHARE
Earnings per share for the years ended December 31, 2020 and 2019 was calculated based on the following:
Attributable to Yamana Gold Inc. equity holders
Net earnings
2020
2019
$
203.6 $
225.6
Earnings per share is based on the weighted average number of common shares of the Company outstanding during the period.
The diluted earnings per share reflects the potential dilution of common share equivalents, such as outstanding share options, in
the weighted average number of common shares outstanding during the period, if dilutive.
The weighted average number of shares used in the calculation of earnings per share for the years ended December 31 was
based on the following:
(in thousands of units)
Weighted average number of common shares - basic
2019
950,266
2020
951,818
Weighted average number of dilutive share options
Weighted average number of dilutive Restricted share units
Weighted average number of common shares - diluted
74
1,954
953,846
—
1,658
951,924
The following securities could potentially dilute basic earnings per share in the future, but were not included in the computation of
diluted earnings per share because they were anti-dilutive:
(in thousands of units)
Potential dilutive securities
Share options
Restricted share units
2020
182
541
2019
1,286
790
722
2,076
2020
$
3.0 $
(21.6)
(16.8)
(10.7)
(6.7)
(18.1)
$
(70.9) $
2019
18.0
(1.5)
10.6
(56.5)
(15.6)
(23.7)
(68.7)
16.
SUPPLEMENTARY CASH FLOW INFORMATION
Net Change in Working Capital
For the years ended December 31,
Net (increase) decrease in:
Trade and other receivables
Inventories
Other assets
Net increase (decrease) in:
Trade and other payables
Other liabilities
Movement in above related to foreign exchange
Net change in working capital (i)
(i)
Change in working capital is net of items related to Property, Plant and Equipment.
150
Yamana Gold
Cash and Cash Equivalents
As at December 31,
Cash at bank
Bank short-term deposits
Total cash and cash equivalents (i) (ii)
$
$
2020
485.8 $
165.4
651.2 $
2019
156.3
2.5
158.8
(i)
(ii)
Cash and cash equivalents consist of cash on hand, cash on deposit with banks, bank term deposits and highly liquid short-term investments with terms of
less than 90 days from the date of acquisition.
The cash and cash equivalents disclosed above and in the consolidated statement of cash flows include $223.1 million that are held by the MARA Project.
These deposits are to be used specifically by the MARA Project and are therefore, not available for general use by the other entities within the consolidated
Company. Included in this amount is $55.6 million of cash deposits serving as collateral for bank guarantees.
Other Non-Cash Expenses, net
For the years ended December 31,
Loss on disposal and write-down of assets
Amortization of union negotiation bonuses
Provision on indirect taxes
Other expenses
Total non-cash expenses, net
$
$
2020
13.7 $
11.4
(5.9)
9.5
28.7 $
2019
31.5
10.0
(2.5)
7.2
46.2
Changes in Liabilities Arising from Financing Activities
The table below details changes in the Company’s liabilities arising from financing activities. Liabilities arising from financing
activities are those for which cash flows were, or future cash flows will be, classified in the Company’s consolidated statement of
cash flows as cash flows from financing activities.
At January 1,
Changes from financing cash flows
Debt issued
Debt repayments
Interest paid
Payment of lease liabilities
Other changes
Interest expense
New leases
Changes arising from disposal of subsidiaries
Other
At December 31,
2020
Debt
Accrued
interest (i)
Lease
liabilities
$
1,047.9 $
4.0
$
43.5
$
200.0
(256.2)
—
—
—
—
—
2.1
—
—
(51.4)
—
51.9
—
—
(0.4)
—
—
(3.5)
(17.1)
3.5
8.6
—
0.2
$
993.8 $
4.1
$
35.2
$
2019
Accrued
interest (i)
Lease
liabilities
12.6 $
41.8
—
—
(80.0)
—
71.8
—
—
(0.4)
4.0 $
—
—
(4.4)
(16.8)
4.4
26.2
(7.7)
—
43.5
Debt
1,758.7 $
240.0
(952.5)
—
—
—
—
—
1.7
1,047.9 $
(i)
Included in Note 25: Trade and Other Payables.
Annual Report 2020
151
17.
FINANCIAL INSTRUMENTS
(a)
Financial Assets and Financial Liabilities by Categories
As at December 31, 2020
Financial assets
Cash and cash equivalents
Trade and other receivables
Convertible loan receivable (iii)
Investments in equity securities (i)(ii)
Warrants
Derivative assets - Non-hedge
Other financial assets
Total financial assets
Financial liabilities
Total debt
Trade and other payables
Derivative liabilities - Hedging instruments
Derivative liabilities - Non-hedge
Other financial liabilities
Total financial liabilities
Amortized cost
FVOCI - equity
instruments
Mandatorily at
FVTPL - others
FV - Hedging
instruments
Total
$
$
$
$
— $
— $
4.2
—
—
—
—
19.7
23.9 $
993.8 $
240.4
—
—
173.4
—
—
68.7
—
—
—
68.7
$
— $
—
—
—
—
1,407.6 $
— $
651.2 $
—
11.7
—
2.5
0.4
—
665.8 $
— $
—
—
6.1
—
6.1 $
— $
651.2
—
—
—
—
—
—
— $
— $
—
9.0
—
—
9.0
$
4.2
11.7
68.7
2.5
0.4
19.7
758.4
993.8
240.4
9.0
6.1
173.4
1,422.7
As at December 31, 2019
Financial assets
Cash and cash equivalents
Trade and other receivables
Investments in equity securities (i)
Warrants
Derivative assets - Hedging instruments
Derivative assets - Non-hedge
Other financial assets
Total financial assets
Financial liabilities
Total debt
Trade and other payables
Derivative liabilities - Hedging instruments
Other financial liabilities
Total financial liabilities
$
$
$
$
Amortized cost
FVOCI - equity
instruments
Mandatorily at
FVTPL - others
FV- Hedging
instruments
Total
— $
— $
3.4
—
—
—
—
8.6
—
8.4
—
—
—
—
12.0 $
8.4 $
1,047.9 $
— $
219.5
—
171.1
—
—
—
1,438.5 $
— $
158.8 $
—
—
2.8
—
3.8
—
165.4 $
— $
—
—
—
— $
— $
158.8
—
—
—
0.1
—
—
3.4
8.4
2.8
0.1
3.8
8.6
0.1 $
185.9
— $
1,047.9
—
1.8
—
219.5
1.8
171.1
1.8 $
1,440.3
(i)
(ii)
(iii)
Investments in publicly quoted equity securities that are neither subsidiaries nor associates are categorized as FVOCI pursuant to the irrevocable election
available in IFRS 9 for these instruments. The Company’s portfolio of equity securities is primarily focused on the mining sector. These are strategic
investments and the Company considers this classification to be more relevant.
Includes the Company’s investment in Equinox (formerly Leagold). On March 10, 2020, the Company ceased to have significant influence over the entity
and no longer recognizes it as an investment in associate. On April 15, 2020, the Company disposed of 12,000,000 Equinox shares accounted for at FVOCI.
As noted above, equity securities in the Company's investment portfolio are considered to be strategic investments. For such investments, the Company's
focus is to assess the best path for creation of value for shareholders, which may include monetization of said investments, such as was the case in the
sale of the Equinox shares. The fair value of the Equinox shares at the date of derecognition was $91.1 million and the Company recorded a cumulative
loss of $6.5 million on disposal.
Represents the Deferred Cash Payment receivable from the Nomad transaction. Refer to Note 6.
152
Yamana Gold
(b)
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. In assessing the fair value of a particular contract, the market participant
would consider the credit risk of the counterparty to the contract. Consequently, when it is appropriate to do so, the Company
adjusts its valuation models to incorporate a measure of credit risk.
i)
Fair Value Measurements of Financial Assets and Financial Liabilities Measured at Fair Value
The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments that are measured
at fair value:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at
the measurement date.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly.
Level 3: Unobservable inputs for the asset or liability.
The levels in the fair value hierarchy into which the Company’s financial assets and liabilities that are measured and recognized
on the consolidated balance sheets at fair value on a recurring basis were categorized as follows:
Assets
Cash and cash equivalents
Convertible loan receivable
Investments in equity securities
Warrants
Derivative related assets
Liabilities
Derivative related liabilities
December 31, 2020
December 31, 2019
Level 1
input
Level 2
input
Aggregate
fair value
651.2 $
— $
651.2 $
—
68.7
—
—
11.7
—
2.5
0.4
11.7
68.7
2.5
0.4
719.9 $
14.6 $
734.5 $
— $
— $
15.1 $
15.1 $
15.1 $
15.1 $
$
$
$
$
Level 1
input
158.8 $
—
8.4
—
—
167.2 $
— $
— $
Level 2
input
Aggregate
fair value
— $
158.8
—
—
2.8
3.9
—
8.4
2.8
3.9
6.7 $
173.9
1.8 $
1.8 $
1.8
1.8
At December 31, 2020, there were no financial assets and liabilities measured and recognized at fair value on a non-recurring
basis.
There were no transfers between Level 1 and Level 2 during the year ended December 31, 2020. At December 31, 2020, there
were no financial assets or liabilities measured and recognized on the consolidated balance sheets at fair value that would be
categorized as Level 3 in the fair value hierarchy.
ii)
Valuation Methodologies Used in the Measurement of Fair Value for Level 2 Financial Assets and Financial
Liabilities
Warrants and Convertible loan receivable
The fair value of warrants, and the convertible loan receivable are determined using a Black-Scholes model based on relevant
assumptions including risk free interest rate, expected dividend yield, expected volatility and expected warrant life which are
supported by observable current market conditions.
Derivative assets and liabilities
The fair value of derivative instruments is determined using either present value techniques or option pricing models that utilize a
variety of inputs that are a combination of quoted prices and market-corroborated inputs. The Company continues to monitor the
potential impact of the recent instability of the financial markets, and will adjust its derivative contracts for credit risk based upon
the credit default swap spread for each of the counterparties as warranted.
Annual Report 2020
153
iii)
Carrying Value versus Fair Value
Set out below is a comparison by class of the carrying amounts and fair value of the Company's financial instruments, other than
those whose carrying amounts are a reasonable approximation of fair value:
Debt
Senior notes
December 31, 2020
December 31, 2019
Financial instrument
classification
Carrying amount
Fair value (i)
Carrying amount
Fair value (i)
Amortized cost
$
996.5 $
989.3 $
1,051.3 $
1,042.2
(i)
The Company's senior notes are accounted for at amortized cost, using the effective interest method. The fair value required to be disclosed is determined
by discounting the future cash flows by a discount factor based on an interest rate of 5%, which reflects the Company's own credit risk.
Management assessed that the fair values of trade and other receivables, trade and other payables, and other financial assets
and liabilities approximate their carrying amounts, largely due to the short-term maturities of these instruments. Derivative assets
and liabilities are already carried at fair value.
(c)
Derivative Instruments ("Derivatives")
Summary of derivatives at December 31, 2020
Currency contracts (iv)
Option contracts
BRL option contracts (millions) (i)
Forward contracts
BRL forward contracts (millions) (ii)
Other
DSU contracts (millions of DSUs) (iii)
Notional Amount
Average
call strike
price
(per USD)
Average
put strike
price
(per USD)
Remaining term
Cash flow
hedge Non-hedge
Fair value
(USD)
R$3.85
R$4.32
January - June 2021
R$93.0
—
(3.7)
Average FX/USD
forward rate
R$4.07
Per share value (C$)
January - June 2021
R$93.0
—
(5.3)
$7.26
January - November 2021
—
4.2
0.4
(i)
(ii)
(iii)
The Company has designated zero cost collar option contracts as cash flow hedges for its highly probable forecasted BRL expenditure requirements. The
Company has elected to only designate the change in the intrinsic value of options in the hedging relationships. The change in fair value of the time value
component of options is recorded in OCI as a cost of hedging. These cash flow hedges are expected to cover approximately 38% of the BRL denominated
forecasted costs from January 2021 to June 2021, respectively.
On November 5 and 6, 2019, the Company entered into forward contracts totalling BRL 93.0 million (approximately US$17.9 million) split evenly from
January 2021 to June 2021 at a weighted average BRL to US Dollar forward rate of BRL 4.07 per US Dollar. These forward contracts are expected to cover
approximately 38% of the BRL denominated forecasted costs from January 2021 to June 2021 respectively.
During the fourth quarter of 2020, the Company entered into a derivative contract to mitigate the volatility of its share price on DSU compensation, effectively
locking in the exposure of the Company for 4.2 million DSUs (approximately 88% of outstanding DSUs at the time) at a value of C$7.26 per share.
In January 2021, the Company entered into the following additional derivative contracts to hedge against the risk of increases in
the value of foreign currencies in several jurisdictions:
• Canadian Dollar to USD: Forward contracts with monthly notional maturities of C$20.0 million from February to December
2021, at an average forward price of C$1.2703 (total notional of C$220.0 million);
• Chilean Peso to USD: Forward contracts with monthly notional maturities of CLP$9.3 billion from February to December
•
2021, at an average forward price of CLP$736.80 (total notional of CLP$102.3 billion);
Brazilian Real to USD: Zero-cost collars with monthly notional maturities of R$16.0 million from July 2021 to December
2022 with an average call strike price of R$5.25 and an average put strike price of R$5.71 (total notional of R$288.0
million), and forward contracts with monthly notional maturities of R$16.0 million from July 2021 to December 2022 at an
average forward price of R$5.4925 (total notional of R$288.0 million).
As at December 31, 2020, the Company also had derivative liabilities relating to the warrants issued to purchase Equinox shares
held by Yamana of $1.4 million, and option agreements of $4.7 million. Refer to Note 6 for further details.
154
Yamana Gold
Fair Values of Derivatives
At as December 31,
Derivatives designated as hedging instruments
Currency contracts
Total derivatives designated as hedging instruments
Derivatives not designated as hedging instruments
Warrants and options contracts
DSU contracts
Total derivatives not designated as hedges
Total derivative instruments (Note 20 and Note 26)
Asset derivatives
Liability derivatives
2020
2019
2020
2019
$
$
$
$
— $
— $
—
0.4
0.4 $
0.4 $
0.1
0.1
—
3.8
3.8
3.9
$
$
$
$
9.0 $
9.0 $
6.1
—
6.1 $
15.1 $
1.8
1.8
—
—
—
1.8
Cash Flow Hedge Gains (Losses) in Accumulated Other Comprehensive Income (“AOCI”)
For the year ended December 31,
Exchange rate risk
Currency option contracts
Time value of option contracts excluded from
hedge relationship
Gains (Losses) on Non-hedge Derivatives
Gain (loss) recognized in cash flow
hedge reserve
Gain (loss) reclassified or adjusted
from cash flow hedge reserve
2020
2019
2020
2019
$
$
$
(24.0) $
(24.0) $
(0.2)
(24.2) $
(4.3) $
(4.3) $
(1.3)
(5.6) $
16.9 $
16.9 $
—
16.9 $
9.3
9.3
—
9.3
The net gain (loss) on derivatives not designated as hedging instruments was comprised of the following:
For the years ended December 31,
Realized gains (losses)
Commodity contracts
DSU contracts
$
Unrealized gains (losses)
Commodity contracts
DSU contracts
$
$
$
2020
2019
— $
1.8
1.8 $
— $
(3.4)
(3.4) $
2.9
—
2.9
(2.0)
4.4
2.4
18.
FINANCIAL RISK MANAGEMENT
Exploration, development and mining of precious metals involve numerous risks as a result of the inherent nature of the business,
global economic trends and the influences of local social, political, environmental and economic conditions in the various
geographical areas of operation. As such, the Company is subject to several financial and operational risks that could have a
significant impact on its profitability, financial instruments and levels of operating cash flows. In particular, financial risks include
market risk (including currency risk, commodity price risk and interest rate risk), credit risk, and liquidity risk.
Market Risk
Market risk is the risk that changes in market factors, such as foreign exchange, commodity prices or interest rates will affect the
value of the Company's financial instruments. Market risks are managed by either accepting the risk or mitigating it through the
use of derivatives and other economic hedges.
Annual Report 2020
155
(a)
Currency Risk
The Company’s sales are predominantly denominated in US Dollars. The Company is primarily exposed to currency fluctuations
relative to the US Dollar as a portion of the Company’s operating costs and capital expenditures are denominated in foreign
currencies; predominately the Brazilian Real, the Argentine Peso, the Chilean Peso, and the Canadian Dollar. Monetary assets
denominated in foreign currencies are also exposed to foreign currency fluctuations. These potential currency fluctuations could
have a significant impact on production costs and affect the Company’s earnings and financial condition. To limit the variability in
the Company’s expected operating expenses denominated in foreign currencies, the Company restarted its hedging program in
May 2016, entering into forward contracts and zero-cost collar option contracts.
Details of outstanding derivative instruments can be found in Note 17.
The following table outlines the Company's exposure to currency risk and the pre-tax effects on net earnings and other
comprehensive income at the end of the reporting period of a 10% change in the foreign currency for the foreign currency
denominated monetary items. The sensitivity analysis includes cash and cash equivalents and trade payables. The number below
indicates an increase or decrease in net earnings or other comprehensive income where the US Dollar strengthens or weakens
by 10% against the relevant foreign currency.
(On 10% change in US Dollars exchange rate)
BRL
ARS
CAD
CLP
Effect on net
earnings, before tax
Effect on other comprehensive
income, before tax
$
$
$
$
2020
0.3 $
0.5 $
4.2 $
2.3 $
2019
1.1 $
1.1 $
5.1 $
2.6 $
2020
1.0 $
— $
0.1 $
0.1 $
2019
0.5
—
—
0.1
The sensitivity analysis included in the tables above should be used with caution as the results are theoretical, based on
management's best assumptions using material and practicable data which may generate results that are not necessarily indicative
of future performance. In addition, in deriving this analysis, the Company has made assumptions based on the structure and
relationships of variables as at the balance sheet date which may differ due to fluctuations throughout the year with all other
variables assumed to remain constant. Actual changes in one variable may contribute to changes in another variable, which may
amplify or offset the effect on earnings.
(b)
Commodity Price Risk
The Company's profitability and long-term viability depend, in large part, upon the market price of metals that may be produced
from the Company's properties, primarily gold, silver and copper. Market price fluctuations of these commodities could adversely
affect profitability of operations and lead to impairments of mineral properties. Metal prices fluctuate widely and are affected by
numerous factors beyond the Company's control including but not limited to supply and demand, consumption patterns,
macroeconomic factors (interest, exchange and inflation), banking and political conditions, and mining specific factors. The
Company periodically uses forward contracts to economically hedge against the risk of declining metal prices for a portion of its
forecast sales.
There were no derivatives to hedge metal sales outstanding at December 31, 2020 or December 31, 2019.
Interest Rate Risk
Interest rate risk is the risk that the fair values and future cash flows of the Company’s financial instruments will fluctuate because
of changes in market interest rates. The Company monitors its exposure to interest rates and its exposures with a mix of fixed-and
floating-rate debt. As at December 31, 2020, all of the Company’s long-term debt was at fixed rates. The Company's revolving
credit facility, which is subject to floating rates of interest, was not drawn at December 31, 2020.
A 10% increase or decrease in the interest earned from financial institutions on deposits held would result in a nominal increase
or decrease in the Company’s net earnings. There was no significant change in the Company’s exposure to interest rate risk during
the year ended December 31, 2020.
156
Yamana Gold
Credit Risk
Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial instrument. The Company
is exposed to various counterparty risks including, but not limited to: (i) financial institutions that hold the Company’s cash and
short-term investments; (ii) companies that have payables to the Company, including bullion customers; (iii) providers of risk
management services (including hedging arrangements); (iv) shipping service providers that move the Company’s material; (v) the
Company’s insurance providers; (vi) refineries contracted that hold and process the Company's precious metals; and (vii) the
Company’s lenders. The Company seeks to limit counterparty risk by entering into business arrangements with high credit-quality
counterparties, limiting the amount of exposure to each counterparty and monitoring the financial condition of counterparties. In
addition, credit risk is further mitigated in specific cases by maintaining the ability to novate contracts from lower quality credit
counterparties to those with higher credit ratings. For cash and cash equivalents and trade and other receivables, credit risk is
represented by the carrying amount on the consolidated balance sheets.
Cash and cash equivalents are deposited with highly rated corporations and the credit risk associated with these deposits is low.
The Company sells its products to large international financial institutions and other organizations with high credit ratings. Historical
levels of receivable defaults and overdue balances over normal credit terms are both negligible, thus the credit risk associated with
trade receivables is also considered to be negligible. The assessment of recoverability of trade receivables at December 31, 2020
considered the impacts of COVID-19 and no recoverability issues were identified. For derivatives, the Company assumes no credit
risk when the fair value of the instruments is negative. When the fair value of the instruments is positive, this is a reasonable
measure of credit risk. The Company does not have any assets pledged as collateral.
The Company's maximum credit exposure to credit risk is as follows:
As at December 31,
Cash and cash equivalents
Trade and other receivables
Derivative assets (Note 17)
Convertible loan receivable (Note 6)
Loans and other receivables
Liquidity Risk
$
$
2020
651.2 $
4.2
0.4
11.7
19.7
2019
158.8
3.4
3.9
—
8.6
687.2 $
174.7
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company
has in place a rigorous planning, budgeting and forecasting process to help determine the funds required to support the Company’s
normal operating requirements on an ongoing basis, its expansionary plans and its dividend distributions. The Company ensures
that sufficient committed loan facilities exist to meet its short-term business requirements, taking into account its anticipated cash
flows from operations and its holdings of cash and cash equivalents. Details of the undrawn credit facility are included in Note 28.
The following table summarizes the remaining contractual maturities of the Company's significant financial liabilities, shown in
contractual undiscounted cash flows.
2020
2019
As at December 31,
Trade and other payables
Debt repayments
Interest payments on debt
Lease liabilities
Derivative liabilities
Other financial liabilities
Total
Within 1
year
2 - 3
years
$ 240.4 $
— $
—
431.5
50.3
11.7
10.4
78.2
17.4
2.7
Total
Over 5
years
4 - 5
years
Total
— $ — $ 240.4 $ 219.5
282.9 1,001.8
1,058.0
25.6
187.3
15.2
—
72.6
287.4
33.2
9.7
2.0
2.2
226.9
15.1
50.8
54.0
1.8
56.6
129.3
$ 369.4 $ 537.6 $ 334.5 $ 396.3 $ 1,637.8 $ 1,686.3
139.2
7.8
Annual Report 2020
157
At December 31, 2020, the Company had letters of credit and guarantees outstanding in the amount of $178.9 million (December
31, 2019: $85.7 million) of which $155.9 million (December 31, 2019: $83.7 million) represented guarantees for reclamation
obligations. These letters of credit are automatically extended for one year periods from their expiration dates.
19.
INVENTORIES
As at December 31,
Product inventories
Work in process
Ore stockpiles
Materials and supplies
Less: non-current ore stockpiles included in other non-current assets (Note 21)
$
$
$
2020
26.6 $
9.9
168.5
96.5
301.5 $
(149.4)
152.1 $
2019
23.8
9.0
142.8
89.7
265.3
(131.9)
133.4
For the year ended December 31, 2020, inventory impairment charges of $6.2 million were recorded against materials and supplies
inventory (December 31, 2019: $0.7 million), which are included in cost of sales excluding depletion, depreciation and amortization.
20.
OTHER FINANCIAL ASSETS
As at December 31,
Derivative assets (Note 17)
Loans and other receivables
Investments in equity securities and warrants (i)
Convertible loan receivable (ii)
Current
Non-current
$
$
$
$
2020
0.4 $
19.7
71.2
11.7
103.0 $
14.3 $
88.7
103.0 $
2019
3.9
8.6
11.2
—
23.7
8.5
15.2
23.7
(i)
(ii)
Includes the Company's investment in Equinox Gold. Refer to Note 6 for further details.
As part of the sale of the Royalty Portfolio in March 2020, the Company received a deferred cash payment that is convertible into shares of Nomad. Refer
to Note 6 for further details.
21.
OTHER ASSETS
As at December 31,
Non-current portion of ore stockpiles (Note 19) (i)
Income tax recoverable and installments
Tax credits recoverable (ii)
Advances, deposits and prepaids
Other
Current
Non-current
$
$
$
$
2020
149.4 $
2.8
77.4
64.1
5.0
298.7 $
96.1 $
202.6
298.7 $
2019
131.9
1.8
64.6
46.9
6.5
251.7
97.5
154.2
251.7
(i)
(ii)
Non-current ore stockpiles represent material not scheduled for processing within the next twelve months at the Company's Canadian Malartic and Jacobina
mines.
Tax credits recoverable consist of sales taxes which are recoverable either in the form of a refund from the respective jurisdictions in which the Company
operates or against other taxes payable and value-added tax.
158
Yamana Gold
22.
PROPERTY, PLANT AND EQUIPMENT
Cost
At January 1, 2020
Additions
Reclassifications, transfers and other non-cash
movements (i)
Reclassified as held for sale and disposals
At December 31, 2020
Accumulated depletion, depreciation and
amortization ("DDA") and impairment
At January 1, 2020
DDA
Impairment and impairment reversal (ii)
Disposals
At December 31, 2020
Carrying amount, December 31, 2020
Amount included above as at December 31,
2020
Assets not being depreciated
Cost
At January 1, 2019
Additions
Reclassifications, transfers and other non-cash
movements (i)
Reclassified as held for sale and disposals
At December 31, 2019
Accumulated depletion, depreciation and
amortization ("DDA") and impairment
At January 1, 2019
DDA
Disposals
At December 31, 2019
Carrying amount, December 31, 2019
Amount included above as at
December 31, 2019
Assets under construction
Assets not being depreciated
$
$
$
$
$
$
$
$
$
$
$
$
$
Land, building,
plant & equipment
Operating
mine mineral
interests (iii)
Development
projects and
Exploration &
evaluation
1,868.9 $
7,066.6 $
68.7
19.4
(44.6)
187.4
40.1
—
1,912.5 $
7,294.0 $
(1,042.6) $
(4,006.3) $
(139.7)
(114.0)
37.7
(264.0)
305.0
—
(1,258.7) $
653.8 $
(3,965.4) $
3,328.7 $
2,839.2 $
17.8
681.6
(63.5)
3,475.1 $
(772.7) $
—
—
—
(772.7) $
2,702.4 $
Total
11,774.6
273.9
741.1
(108.1)
12,681.6
(5,821.7)
(403.7)
191.0
37.7
(5,996.8)
6,684.8
— $
655.8 $
2,702.4 $
3,358.2
Land, building,
plant & equipment
Operating
mine mineral
interests (iii)
Development
projects and
Exploration &
evaluation
2,354.5 $
7,370.6 $
78.4
75.8
(639.8)
222.4
11.4
(537.8)
1,868.9 $
7,066.6 $
(1,254.4) $
(3,811.2) $
(155.1)
366.8
(1,042.6) $
826.3 $
(314.9)
119.8
(4,006.3) $
3,060.2 $
2,809.7 $
32.9
(0.7)
(2.7)
2,839.2 $
(772.8) $
—
—
(772.7) $
2,066.4 $
Total
12,534.8
333.7
86.5
(1,180.3)
11,774.6
(5,838.4)
(470.0)
486.6
(5,821.7)
5,952.9
— $
— $
86.4 $
752.6 $
— $
2,066.4 $
86.4
2,819.0
(i)
(ii)
(iii)
Reclassifications, transfers and other non-cash movements includes non-cash additions to PPE and changes in the environmental rehabilitation provision
as per Note 29. Includes non-cash additions acquired as part of the MARA transaction in 2020. Refer to Note 6 for additional details.
During the year ended December 31, 2020, the Company recognized an impairment charge totalling $369.0 million related to Cerro Moro and an impairment
reversal of $560.0 million related to El Peñón. Refer to Note 13 for additional details.
At December 31, 2020, $509.6 million of E&E assets related to assets in production were included in operating mine mineral interests (December 31, 2019
- $527.7 million). During the year ended December 31, 2020, the Company impaired $15.0 million of such E&E costs at Cerro Moro, and during the year
ended December 31, 2019 the company disposed of $63.9 million of such E&E costs related to the Chapada divestment.
Annual Report 2020
159
23.
GOODWILL AND OTHER INTANGIBLE ASSETS
Cost
At January 1, 2020
Additions
Dispositions
At December 31, 2020
Accumulated amortization and impairment
At January 1, 2020
Amortization
At December 31, 2020
Net book value at December 31, 2020
Cost
At January 1, 2019
Dispositions
At December 31, 2019
Accumulated amortization and impairment
At January 1, 2019
Amortization
At December 31, 2019
Net book value at December 31, 2019
Goodwill (i)
Other intangible
assets (ii)
403.7 $
—
—
403.7 $
(45.0) $
—
(45.0) $
358.7 $
76.0 $
9.6
(0.3)
85.3 $
(42.5) $
(5.1)
(47.6) $
37.7 $
Goodwill (i)
Other intangible
assets (ii)
403.7 $
—
403.7 $
(45.0) $
—
(45.0) $
358.7 $
77.6 $
(1.6)
76.0 $
(36.5) $
(6.0)
(42.5) $
33.5 $
$
$
$
$
$
$
$
$
$
$
Total
479.7
9.6
(0.3)
489.0
(87.5)
(5.1)
(92.6)
396.4
Total
481.3
(1.6)
479.7
(81.5)
(6.0)
(87.5)
392.2
(i)
(ii)
Goodwill represents the excess of the purchase cost over the fair value of net assets acquired in a business acquisition. On June 16, 2014, the Company
acquired a 50% interest in Canadian Malartic. Goodwill of $427.7 million was recognized on the excess of the purchase consideration over the fair value of
the assets and liabilities acquired. In March 2018, the Company sold certain jointly owned exploration properties of the Canadian Malartic Corporation, and
derecognized $24.0 million of goodwill allocated to the exploration properties.
Other intangible assets primarily comprise capitalized system development costs.
24.
INVESTMENT IN ASSOCIATES
Details of the Company's investments in associates as at December 31, 2020 and 2019 are as follows:
Material Associate
Principal
Name of Associate
activity
Leagold Mining Corporation Gold mining
Country of
incorporation
Principal
place of
business
% Ownership
interest
2020
2019
Canada Brazil, Mexico
— % 20.4 % $
Quoted fair value (i) Carrying amount
2020
2019
2019
— $ 144.5 $ — $ 120.3
2020
(i)
The fair value of the Company's interest in Leagold, which was listed on the TSX, was based on the quoted market price at December 31, 2019, which is a
Level 1 input in terms of IFRS 13.
160
Yamana Gold
On March 10, 2020 Leagold completed a merger transaction with Equinox Gold Corp., which resulted in Yamana owning
approximately 9% of the combined company. Yamana concluded that, as a result of its reduced shareholding, it no longer had
significant influence in the investee, and therefore, discontinued accounting for the investment using the equity method from the
date of the completion of the merger. Refer to Note 6 for further details on the merger transaction.
The following table summarizes the change in the carrying amount of the Company's investment in Leagold:
Balance as at January 1
Company's share of net loss of Leagold
Company's share of other comprehensive loss of Leagold
Derecognition of investment in Leagold upon discontinuation of the equity method (Note 6)
Balance as at December 31
$
$
2020
120.3 $
(4.1)
(1.6)
(114.6)
— $
2019
146.0
(16.3)
(9.4)
—
120.3
Summarized financial information in respect of the Company’s investment in Leagold is set out below. The summarized financial
information below represents amounts in Leagold's consolidated financial statements prepared in accordance with IFRS, adjusted
for fair value adjustments at acquisition and differences in accounting policies. The table also reconciles the summarized financial
information to the carrying amount of the Company’s interest in Leagold. The information for 2019 presented in the table includes
the results of Leagold for the period from January 1 to December 31, 2019. The information for 2020 includes the results of Leagold
only for the period from January 1 to March 10, 2020, because Yamana ceased to have significant influence in the investee as of
March 10, 2020.
Summarized Consolidated Balance Sheet Information
As at December 31,
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets of associate
Yamana's share of net assets
Goodwill
Other equity adjustments
Carrying Amount
$
$
$
$
$
$
Summarized Consolidated Statement of Operations and Comprehensive (loss) Income Information
For the year ended December 31,
Net (loss) earnings
Other comprehensive loss
Total comprehensive (loss) income
$
$
2020
— $
—
— $
—
—
— $
— $
— $
—
—
— $
2020
(20.0) $
(8.1)
(28.1) $
2019
238.8
800.4
1,039.2
111.1
440.8
551.9
487.3
99.4
26.5
(5.6)
120.3
2019
(79.9)
(46.1)
(126.0)
Immaterial Associates
The Company also acquired interests in two individually immaterial associates during the year ended December 31, 2020 (Nomad
Royalty Company and Monarch Gold Corporation). The Company acquired its interest in both of these associates as the result of
transactions entered into by the Company. The Company's interest in both associates was below 20%; however, the Company
determined that it had significant influence because it had representation on the boards of both investees. Refer to Note 6 for
further details.
Annual Report 2020
161
The following table analyzes, in aggregate, the carrying amount and share of net earnings of these associates.
Aggregate carrying amount of individually immaterial associates
Aggregate amounts of the Company's share of:
Net earnings
25.
TRADE AND OTHER PAYABLES
As at December 31,
Trade payables
Other payables (i)
(i)
Other payables include dividends, salaries, bonuses, pension, and interest payable, among other accruals.
26.
OTHER FINANCIAL LIABILITIES
As at December 31,
Lease liabilities (Note 34)
Royalty payable
Severance accrual
Deferred share units/performance share units liability (Note 31)
Accounts receivable and value added tax financing credit (i)
Current portion of long-term debt (Note 28)
Derivative liabilities (Note 17)
Other
Current
Non-current
$
$
2020
154.2 $
86.2
240.4 $
2020
35.2 $
16.5
39.7
38.4
27.6
—
15.1
16.0
188.5 $
78.8 $
109.7
188.5 $
$
$
$
$
$
$
2020
34.3
3.1
2019
153.9
65.6
219.5
2019
43.5
9.6
33.2
28.0
34.5
56.2
1.8
22.3
229.1
131.1
98.0
229.1
(i)
Accounts receivable and value added tax ("VAT") financing credits are payable within 30 days from the receipt of proceeds on doré sales, or payable in the
month of approval of the VAT credit, respectively.
27.
OTHER PROVISIONS AND LIABILITIES
As at December 31,
Other taxes payable
Provision for repatriation taxes payable (i)
Provision for taxes
Deferred revenue on metal streaming arrangement (ii)
Other provisions and liabilities (iii)
Current
Non-current
$
$
$
$
2020
19.7 $
18.5
3.9
77.6
70.4
190.1 $
77.6 $
112.6
190.2 $
2019
19.3
27.9
10.8
89.2
35.4
182.6
39.5
143.1
182.6
(i)
(ii)
The Company is subject to additional taxes in Chile on the repatriation of profits to its foreign shareholders. Total taxes in the amount of $18.5 million (2019:
$27.9 million) have been accrued on the assumption that the profits will be repatriated.
On October 27, 2015 the Company entered into three metal purchase agreements with Sandstorm pursuant to which, the Company received advanced
consideration of $170.4 million against future deliveries of silver production from Cerro Moro, Minera Florida and Chapada, copper production from Chapada,
and gold production from Agua Rica. The advanced consideration is accounted for as deferred revenue, with revenue recognized when the metals are
delivered to the counterparty. The liabilities associated with the deferred revenue balances referenced to production from the Chapada mine were
derecognized as part of the sale of the Chapada mine in July 2019. The following table summarizes the changes in deferred revenue from the metal
streaming arrangement:
162
Yamana Gold
As at December 31, 2019
Recognition of revenue during the year net of interest accretion
Variable consideration adjustment
Current portion
Non-current portion
As at December 31, 2020
$
$
$
$
2020
89.2
(10.7)
(0.9)
77.6
13.5
64.1
77.6
(iii)
Other provisions and liabilities include the current portion of environmental rehabilitation provisions, and other contingent provisions. The increase during
the year reflects the provisions associated with the initial acquisition and consolidation of Alumbrera and an increase in the current portion of environmental
rehabilitation provisions.
28.
LONG-TERM DEBT AND CREDIT FACILITY
As at December 31,
Senior notes
$300 million notes issued December 2017
4.625% 10-year notes due December 2027
$500 million notes issued June 2014
4.95% 10-year notes due July 2024
$300 million notes issued June 2013
Series B - 4.78% 10-year notes due June 2023 ($265 million)
$500 million notes issued March 2012
Series B - 4.36% 8-year notes due March 2020 ($85 million)
Series C - 4.76% 10-year notes due March 2022 ($200 million)
Series D - 4.91% 12-year notes due March 2024 ($140 million)
Revolving credit facility
Revolving credit facility (net of capitalized debt issuance costs)
Total debt (i)
Less: current portion of long-term debt (Note 26)
Long-term debt
2020
2019
$
280.4 $
280.1
149.8
240.4
—
190.5
135.4
149.2
240.2
56.2
190.3
135.3
$
$
$
996.5 $
1,051.3
(2.7)
(3.4)
993.8 $
1,047.9
—
993.8 $
(56.2)
991.7
(i)
Balances are net of unamortized discounts and capitalized transaction costs of $8.0 million (2019: $10.1 million).
Senior Notes
The Company's senior notes are unsecured and interest is payable semi-annually. Each series of senior notes is redeemable, in
whole or in part, at the Company's option, at any time prior to maturity, subject to make-whole provisions. The senior notes are
accreted to the face value over their respective terms. In March 2020, the Company repaid the remaining outstanding balance on
the B Series of the senior notes issued in March 2012, which became due. The Company's next repayment on the senior notes is
not until March 2022.
Revolving Credit Facility
In July 2019, the Company extended the term of the revolving credit facility ("the Facility") from June 2023 to July 2024, under
existing terms and conditions, and the maximum amount available under the Facility was reduced from $1.0 billion to
$750.0 million. The Facility is unsecured and has an interest rate on drawn amounts of LIBOR plus an interest margin of between
1.20% and 2.25% depending on the Company's credit rating, and a commitment fee of between 0.24% and 0.45% depending on
the Company's credit rating. The Company drew down $200.0 million during the first quarter of 2020 as a precaution given the
uncertainty associated with the COVID-19 pandemic, and repaid $100.0 million of this during the second quarter of 2020, and the
remaining outstanding balance of $100.0 million during the fourth quarter of 2020.
Annual Report 2020
163
Covenants
The senior notes and revolving credit facility are subject to various financial and general covenants. The principal covenants are
tangible net worth of at least $2.3 billion; maximum net total debt (debt less cash) to tangible net worth of 0.75; and leverage ratio
(net total debt/EBITDA) to be less than or equal to 3.5:1. The Company was in compliance with all covenants as at December 31,
2020.
29.
ENVIRONMENTAL REHABILITATION PROVISION
The Company incurs environmental rehabilitation liabilities relating to its operating and closed mines and development projects.
Significant rehabilitation activities include land rehabilitation, demolition of buildings and mine facilities, and ongoing care and
maintenance and monitoring.
The Company estimates future rehabilitation costs based on the level of current mining activity and estimates of costs required to
fulfill the Company’s future obligations. Changes in environmental rehabilitation provision estimates during the year reflect changes
in cash flow estimates as well as assumptions including discount and inflation rates.
At December 31, 2020, the present value of the environmental rehabilitation provision relating to the Company's mining properties
was estimated at $392.7 million (December 31, 2019: $220.4 million) using discount rates ranging between 0.08% and 52.76%
(December 31, 2019: 1.77% and 16.16%). The undiscounted value of these liabilities was $527.1 million (December 31, 2019:
$272.0 million).
The following table reconciles the beginning and ending carrying amounts of the Company's environmental rehabilitation provision.
The majority of the expenditures are expected to take place over the next 100 years. Certain obligations related to post closure
monitoring and maintenance at the Company's Chilean mines are expected to continue in perpetuity.
Balance, beginning of year
Environmental rehabilitation provisions acquired during the year (Note 6)
Accretion expense included in finance costs
Revisions in estimates and obligations
Expenditures during the current year
Foreign exchange impact
Reclassified to liabilities relating to assets held for sale
Balance, end of year
Current (i)
Non-current
$
$
$
$
2020
220.4 $
85.7
9.0
82.4
(3.2)
(1.6)
—
392.7 $
29.2 $
363.5
392.7 $
2019
250.3
—
12.1
25.9
(4.3)
(3.8)
(59.8)
220.4
5.7
214.7
220.4
(i)
The current portion of the environmental rehabilitation provision is included in the current portion of Other Provisions and Liabilities. Refer to Note 27.
Regulatory authorities in certain jurisdictions require that security be provided to cover the estimated environmental rehabilitation
obligations. As at December 31, 2020, the Company had outstanding letters of credit in the amount of $66.4 million (C$84.6 million)
(December 31, 2019: $70.1 million (C$91.1 million)) representing guarantees for reclamation obligations and road construction
relating to the Company's share of mining interest in Canadian Malartic, and $20.1 million (December 31, 2019: $nil) and $13.7
million (December 31, 2019: $13.6 million) representing guarantees for reclamation obligations relating to the Company's Chilean
mines and US properties, respectively. The Company's MARA Project also had outstanding bank guarantees for reclamation
obligations totalling $55.6 million, for which an equivalent amount of cash collateral had been posted. These letters of credit are
automatically extended for one year periods from their expiration dates.
164
Yamana Gold
30.
SHARE CAPITAL
Common Shares Issued and Outstanding
The Company is authorized to issue an unlimited number of common shares at no par value and a maximum of eight million first
preference shares. There were no first preference shares issued or outstanding as at December 31, 2020 (2019: nil).
For the years ended December 31,
Issued and outstanding - 952,620,947 common shares
(December 31, 2019 - 950,435,244 common shares):
Balance, beginning of year
Exercise of options and share appreciation rights
Issued on vesting of restricted share units
Dividend reinvestment plan (i)
Issuance of flow-through shares (ii)
Share cancellations and other adjustments (iii)
Balance, end of year
2020
Number of
common shares
(In thousands)
950,435
$
167
1,100
70
1,000
(151)
952,621
$
2019
Number of
common shares
Amount
(In thousands)
(In millions)
949,342 $
7,636.4
—
1,021
77
—
(5)
—
3.4
0.2
—
(0.1)
950,435 $
7,639.9
Amount
(In millions)
7,639.9
0.9
3.4
0.5
5.3
(1.1)
7,648.9
(i)
(ii)
(iii)
The Company has a dividend reinvestment plan to provide holders of common shares a simple and convenient method to purchase additional common
shares by electing to automatically reinvest all or any portion of cash dividends paid on common shares held by the plan participant without paying any
brokerage commissions, administrative costs or other service charges. At December 31, 2020, a total of 6,713,636 shares have subscribed to the plan. 5
On July 3, 2020, the Company closed a flow-through financing for proceeds of $7.4 million (C$10.0 million) consisting of the issue and sale of 1,000,000
flow-through common shares at a price of C$10.00 per share. The proceeds were allocated between the offering of shares and the sale of tax benefits. The
allocation was made based on the difference between the quoted price of the shares and the amount the investors paid for the shares, with a deferred flow-
through premium liability recognized for the difference. Accordingly, the Company recorded share capital of $5.3 million (C$7.2 million) and a deferred flow-
through premium liability of $2.0 million (C$2.7 million). The liability will be reversed and a tax recovery recognized upon filing of the appropriate renunciation
forms with the Canadian taxation authorities for qualifying expenditures previously incurred. As at December 31, 2020, the Company had incurred
$1.9 million of expenditures in relation to the financing; the Company has until December 31, 2021 to fulfil its obligation by incurring Canadian exploration
eligible flow-through expenditures.
Includes the cancellation of 150,456 common shares that were not exchanged by holders of Osisko common shares pursuant to the terms of the Plan of
Arrangement related to the acquisition of the Canadian Malartic mine in 2014. Holders of Osisko common shares were to exchange their shares for common
shares of Yamana within a time period of six years following the closing of the transaction. As certain Osisko shareholders failed to surrender their certificates
representing Osisko common shares by June 16, 2020, non-certificated positions representing 150,456 Yamana common shares were cancelled during the
third quarter of 2020.
Dividends Paid and Declared
For the years ended December 31,
Dividends paid
Dividends declared in respect of the year
Dividend paid (per share)
Dividend declared in respect of the year (per share)
31.
SHARE-BASED PAYMENTS
$
$
$
$
2020
53.0 $
69.1 $
0.06 $
0.07 $
2019
23.7
28.8
0.03
0.03
The total expense relating to share-based payments includes accrued compensation expense related to plans granted in the
current period, plans granted in the prior period and adjustments to compensation associated with mark-to-market adjustments on
cash-settled plans, as follows:
For the years ended December 31,
Expense related to equity-settled compensation plans
Expense related to cash-settled compensation plans
Total expense recognized as compensation expense
As at December 31,
Total carrying amount of liabilities for cash-settled arrangements (Note 26)
$
$
$
2020
4.4 $
27.1
31.5 $
2020
38.4
$
2019
4.6
10.4
15.0
2019
28.0
Annual Report 2020
165
The following table summarizes the equity instruments outstanding related to share-based payments.
As at December 31, (In thousands)
Share options outstanding (i)(ii)(iii)
Restricted share units ("RSU") (iv)
Deferred share units ("DSU") (v)(vi)
Performance share units ("PSU") (vii)
2020
256
2,494
4,751
2,119
2019
1,286
2,448
4,881
2,274
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
The aggregate maximum number of common shares that may be reserved for issuance under the Company's Share Incentive Plan is 24.9 million (2019:
24.9 million).
As at December 31, 2020, 256,348 share options with a weighted average exercise price of C$5.30 were outstanding and exercisable (December 31, 2019:
1,286,448 share options with a weighted exercise price of C$7.98 outstanding and exercisable).
During the year ended December 31, 2020, no share options were granted, 166,764 share options were exercised with a weighted average price of C$7.12
on the date of exercise, and 863,336 share options expired.
During the year ended December 31, 2020, the Company granted 1,229,957 RSUs with a weighted average grant date fair value of C$4.96 per RSU; a
total of 1,099,890 RSUs vested and the Company credited $3.4 million (2019: $3.4 million) to share capital in respect of RSUs that vested during the year.
There were a total of 83,535 RSUs cancelled during the year ended December 31, 2020.
During the year ended December 31, 2020, the Company granted 222,973 DSUs and recorded an expense of $1.1 million, and 353,080 DSUs were settled.
During the fourth quarter of 2020, the Company entered into a derivative contract to mitigate the volatility of share price on DSU compensation, effectively
locking in the exposure of the Company for 4.2 million DSUs (approximately 88% of outstanding DSUs at the time) at a value of C7.26 per share. For the
year ended December 31, 2020, the Company recorded a mark-to-market loss on DSUs of $7.6 million and a mark-to-market gain on the DSU hedge of
$0.5 million.
During the year ended December 31, 2020, 1,110,446 PSU units were granted with an expiry date of December 31, 2022 and a fair value of C$10.87 per
unit at December 31, 2020. There were payouts of 1,182,980 PSU units and cancellation of 82,392 PSU units during the year ended December 31, 2020.
32.
NON-CONTROLLING INTERESTS
As at December 31,
Agua De La Falda S.A. (i)
Estelar Resources S.A. (ii)
Minera Agua Rica Alumbrera Ltd. (iii)
$
$
2020
18.7 $
16.0
791.3
826.0 $
2019
18.7
16.0
—
34.7
(i)
(ii)
(iii)
The Company holds a 56.7% interest in the Agua De La Falda ("ADLF") project along with Corporación Nacional del Cobre de Chile ("Codelco"). The ADLF
project is an exploration project that includes the Jeronimo Deposit and is located in northern Chile.
During the second quarter of 2018, the Company entered into an arrangement with Fomento Minero de Santa Cruz S.E. ("FOMICRUZ") pursuant to which,
FOMICRUZ is entitled to certain subordinated shares in the legal entity that directly owns Cerro Moro, Estelar Resources S.A. These subordinated shares
entitle FOMICRUZ to a 5% interest in future dividends after the Company's investment in Cerro Moro, which includes construction and development along
with acquisition costs, has been recovered in full. As part of the arrangement and as further consideration to the Company, the right to use the land related
to the Bahía Laura properties, a significant land package to the west and south west of Cerro Moro, was obtained at an approximate value of $16.0 million.
On December 17, 2020, the Company, along with partners Glencore and Newmont, completed the integration of the Agua Rica project with the Alumbrera
plant and infrastructure, pursuant to which, Yamana relinquished a non-controlling interest in Agua Rica for an increased interest in Alumbrera. Upon
completion of the integration transaction, Yamana owned 56.25%, with Glencore and Newmont owning 25.00% and 18.75%, respectively, of Minera Agua
Rica Alumbrera Ltd., the legal entity that indirectly holds the integrated MARA project. As at December 31, 2020, Minera Agua Rica Alumbrera Ltd. had
current assets of $241.9 million, non-current assets of $1,867.7 million, current liabilities of $45.8 million and non-current liabilities of $383.3 million. Net
loss (and therefore, net loss attributable to non-controlling interests) and cash flows for the 14 day period between completion of the integration transaction
and December 31, 2020 were negligible. Refer to Note 6 for further details on the integration transaction.
33.
CAPITAL MANAGEMENT
The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined
with strategic acquisitions, to ensure the externally imposed capital requirements relating to its long-term debt are being met, and
to provide returns to its shareholders. The Company defines capital that it manages as net worth, which is comprised of total
shareholders’ equity and debt obligations (net of cash and cash equivalents). Refer to Notes 30 and 28, respectively, for a
quantitative summary of these items.
The Company manages its capital structure and makes adjustments to it in light of general economic conditions, the risk
characteristics of the underlying assets and the Company’s working capital requirements. In order to maintain or adjust its capital
structure, the Company, upon approval from its Board of Directors, may issue shares, pay dividends, or undertake other activities
as deemed appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions
out of the ordinary course of business, including proposals on acquisitions or other major investments or divestitures, as well as
capital and operating budgets. The Company has not made any changes to its policies and processes for managing capital during
the year.
166
Yamana Gold
34.
LEASES
A significant proportion of the Company’s lease arrangements, by value, relate to equipment and vehicles used at the Company's
mine sites. Other leases include offices and various IT equipment. The majority of lease terms are negotiated through the
Company’s procurement function, although agreements contain a wide range of different terms and conditions. Information about
leases for which the Company is a lessee is presented below.
(a)
Right-of-use assets
Balance at December 31, 2019
Additions
Depreciation charge for the year
Balance at December 31, 2020
Balance at January 1, 2019
Additions
Depreciation charge for the year
Net right-of-use assets reclassified to assets held for sale
Balance at December 31, 2019
(b)
Lease liabilities
Maturity analysis - contractual undiscounted cash flows
Less than one year
Two to three years
Four to five years
More than five years
Total undiscounted lease liabilities at December 31
Lease liabilities included in the balance sheet at December 31 (Note 26)
Current
Non-current
Buildings
Vehicles
Machinery and
Equipment
Total
$
$
7.1 $
7.6
(1.3)
13.4 $
13.5 $
2.2
(10.3)
5.4 $
22.7 $
0.6
(9.2)
43.3
10.4
(20.8)
14.1 $
32.9
Buildings
Vehicles
Machinery and
Equipment
Total
$
5.3 $
2.9
(1.1)
—
$
7.1 $
17.0 $
8.0
(7.0)
(4.5)
13.5 $
19.2 $
41.5
15.3
(9.1)
(2.7)
26.2
(17.2)
(7.2)
22.7 $
43.3
2020
2019
$
$
$
$
$
$
$
$
$
$
11.7 $
17.4
9.7
15.2
54.0 $
35.2 $
12.9 $
22.3 $
2020
20.8 $
3.5 $
61.2 $
13.7 $
0.9 $
19.6
20.0
9.6
1.6
50.8
43.5
15.5
28.0
2019
17.2
4.4
73.8
32.9
1.9
(c)
Amounts recognized in net earnings
Depreciation expense on right-of-use assets
Interest expense on lease liabilities (Note 12)
Variable lease payments not included in the measurement of lease liabilities (i)
Expenses relating to short-term leases
Expenses relating to leases of low value assets, excluding short-term leases of low value assets
(i)
Certain of the equipment leases in which the Company is the lessee contain variable lease payment terms that are linked to the usage of the equipment
(i.e. tonnes mined), either for the contract as a whole or only when a fixed minimum is exceeded. Variable payment terms are used to link rental payments
to usage and reduce fixed costs. The Company expects the level of variable lease payments to remain broadly consistent in future years.
(d)
Amounts recognized in the consolidated statement of cash flows
Included within cash flows from operating activities
Included within cash flows used in financing activities
Total cash outflow for leases
$
$
2020
79.3 $
17.1
96.4 $
2019
113.1
16.8
129.9
Annual Report 2020
167
35.
COMMITMENTS AND CONTINGENCIES
In addition to entering into various operational commitments in the normal course of business, the Company had commitments of
approximately $8.7 million at December 31, 2020 (December 31, 2019: $9.4 million) for construction activities at its sites and
projects.
36.
RELATED PARTY TRANSACTIONS
Related Parties and Transactions
The Company’s related parties include its subsidiaries, associates, joint arrangement in which the Company is a joint operator,
and key management personnel. During its normal course of operations, the Company enters into transactions with its related
parties for goods and services. Transactions between the Company and its subsidiaries, which are related parties of the Company,
have been eliminated on consolidation and are not disclosed in this note. There were no other related party transactions for the
years ended December 31, 2020 and 2019.
Compensation of Key Management Personnel
Key management personnel compensation comprises:
For the years ended December 31,
Short-term employee benefits (i)
Post-employment benefits
Termination benefits
Share-based payments (ii)
$
$
2020
14.5 $
1.9
—
17.5
33.9 $
2019
14.2
1.7
3.4
9.6
28.9
(i)
(ii)
Short-term employee benefits include salaries, bonuses payable within 12 months of the balance sheet date and other annual employee benefits.
Relates to share option, RSU, DSU and PSU grants. Balances exclude the periodic fair value adjustment on the DSUs.
*************
168
Yamana Gold
Corporate Governance & Committees of the Board
Corporate Governance
Committees of the Board
Yamana and the board recognize the importance of corporate
governance to the effective management of the Company
and to the protection of its employees and shareholders. The
Company’s approach corporate governance is designed with a
view to ensuring that Yamana’s business and affairs are effectively
managed so as to enhance shareholder value.
The Company’s corporate governance practices meet the
Canadian, United States and United Kingdom legal requirements
and best practices that apply to the Company. The Company
continues to monitor governance developments to ensure our
practices continue to be current and appropriate, and support our
high standards of governance and stewardship.
Our governance practices meet the corporate governance
requirements for a company with a listing on the standard
segment of the Main Market of the London Stock Exchange (LSE),
and most of our practices also meet the corporate governance
listing standards of the New York Stock Exchange (NYSE) even
though we are not required to as a foreign private issuer. You
can find details about how our practices differ from the NYSE
standards on our website (www.yamana.com).
Code of Conduct
The board has adopted a Code of Conduct (the “Code”) for
its directors, officers, employees and any third party acting on
our behalf or representing Yamana such as contractors, agents
and consultants. The board encourages and promotes an overall
culture of ethical business conduct by promoting compliance
with applicable laws, rules and regulations in all jurisdictions in
which the Company conducts business; providing guidance to
directors, officers, employees and third parties to help them
recognize and deal with ethical issues; promoting a culture of
open communication, honesty and accountability; and ensuring
awareness of disciplinary action for violations of ethical business
conduct.
Yamana has established a toll-free compliance call line and
website to allow for anonymous reporting of any suspected Code
violations, including concerns regarding accounting, internal
controls over financial reporting or other auditing matters.
The board has the following four standing committees:
Audit Committee
The Audit Committee provides assistance to the board in
fulfilling its financial reporting and control responsibilities to the
shareholders of the Company and the investment community.
The external auditors of the Company report directly to the
Audit Committee.
Compensation Committee
The Compensation Committee, which is composed entirely
of independent directors, among other things may determine
appropriate compensation for the Company’s directors and
senior officers. The process by which appropriate compensation
is determined is through periodic and annual reports from
the Compensation Committee on the Company’s overall
compensation and benefits philosophies.
Corporate Governance and Nominating Committee
This committee is responsible for conducting an annual review of
the board’s relationship with management to ensure the board is
able to, and in fact does, function independently of management;
develops and recommends to the board for approval a long-term
plan for board composition that takes into consideration the
independence of directors, competencies and skills of the board as
a whole; reviews retirement dates and the appropriate size of the
board with a view to facilitating effective decision making and the
strategic direction of the Company; and develops and implements
a process to handle any director nominees who are recommended
by security holders.
Sustainability Committee
The board also has a Sustainability Committee to assist in
oversight of sustainability, environmental, health and safety
matters, including monitoring the implementation and
management of the Company’s policies, procedures and practices
relating to sustainability, environmental, health and safety matters.
To view Yamana’s board and committee charters, code of conduct,
corporate governance practices as well as how they compare to
the NYSE standards, please visit www.yamana.com/Governance.
More information can also be found in Yamana’s Management
Information Circular.
Annual Report 2020
169
Corporate Information
Board of Directors
Senior Management
Peter Marrone
Executive Chairman
Daniel Racine
President and Chief Executive Officer
Jason LeBlanc
Senior Vice President,
Finance and Chief Financial Officer
Yohann Bouchard
Senior Vice President, Operations
Richard Campbell
Senior Vice President,
Human Resources
Gerardo Fernandez
Senior Vice President,
Corporate Development
Craig Ford
(incoming)
Senior Vice President,
Health, Safety and Sustainable
Development
Ross Gallinger
(retiring)
Senior Vice President,
Health, Safety and Sustainable
Development
Henry Marsden
Senior Vice President, Exploration
Sofia Tsakos
Senior Vice President,
General Counsel and
Corporate Secretary
John Begeman(1)(4)
Company Director
Christiane Bergevin(2)(3)
Company Director
Alex Davidson(4)
Company Director
Richard Graff(1)(2)
Lead Director
Kimberly Keating(2)(4)
Company Director
Peter Marrone*
Executive Chairman
Jane Sadowsky(1)(3)
Company Director
Dino Titaro(2)(3)(4)
Company Director
* Non-independent Board Member
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Corporate Governance and
Nominating Committee
(4) Member of the Sustainability Committee
170
Yamana Gold
Shareholder Information
Share Listings
Toronto Stock Exchange: YRI
New York Stock Exchange: AUY
London Stock Exchange: AUY
Capitalization
(millions of common shares)
Outstanding at December 31, 2020
Weighted average 2020
Basic
Fully diluted
2020 Common Share Trading Information
Location
Toronto (C$)
New York (US$)
London (GB£)
Closing price
7.27
5.71
429.00
High
9.04
6.83
477.50
Ticker
YRI
AUY
AUY
Dividends
Yamana currently pays a quarterly dividend of US $0.02625 per share
2020 Dividend Schedule
Anticipated 2021 Dividend Schedule
Record Date
March 31, 2020
June 30, 2020
September 30, 2020
December 31, 2020
Payment Date
Record Date
April 14, 2020
July 14, 2020
October 14, 2020
January 14, 2021
March 31, 2021
June 30, 2021
September 30, 2021
December 31, 2021
Payment Date
April 14, 2021
July 14, 2021
October 14, 2021
January 14, 2022
952.6
951.8
953.8
Low
3.75
2.57
380.00
Annual Report 2020
171
Auditors
Deloitte LLP
FTI Consulting (UK Public Relations)
+44 7974 201 715 / +44 203 727 1000
Email: yamana.gold@fticonsulting.com
Executive Office
200 Bay Street
Royal Bank Plaza, North Tower
Suite 2200
Toronto, Ontario
M5J 2J3
Phone: 1 416 815 0220
Fax: 1 416 815 0021
Annual General Meeting
Thursday, April 29, 2021
11:00 a.m. Eastern DST
Meeting to be held via live webcast.
Information is available on Yamana’s website
at www.yamana.com
Electronic Delivery of Shareholder Documents
If you would like to receive your shareholder and financial
documents electronically, please enroll in Yamana’s electronic
delivery program through Through Computershare Trust
Company at www.computershare.com/mailinglist
Transfer Agent
For information regarding shareholdings, dividends, certificates,
change of address, electronic delivery, or exchange of share
certificates due to an acquisition please contact:
Computershare Trust Company of Canada
100 University Avenue, 8th Floor
Toronto, Ontario, Canada M5J 2Y1
Phone: 1 800 564 6253
Computershare Trust Company N.A.
462 S. 4th Street
Louisville, Kentucky
USA 40202
Phone: 1 800 962 4284
From all other countries
Phone: 1 514 982 7555
www.computershare.com
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol, BS99 6ZZ
United Kingdom
Phone: +44 0 370 702 000
www-uk.computershare.com/Investor
Investor Contact
For additional financial information, industry developments,
latest news and corporate updates:
Phone: 1 416 815 0220
Email: investor@yamana.com
Website: www.yamana.com
172
Yamana Gold
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www.yamana.com