Yamana Gold (AUY) 450p

Loss to date: 2.2%

Original entry point: Buy at 460p, 22 October 2020

Miner Yamana Gold (AUY) has expanded its portfolio of assets after agreeing a deal to acquire all the shares in smaller rival Monarch Gold that it doesn’t already own for $114 million in cash and shares.

The deal gives Yamana access to the Wasamac gold project in Canada, which is around 100 kilometres from its Canadian Malartic mine.

Yamana says the project has the potential to be an underground mine capable of achieving the same scale, grade, production and costs as its Jacobina mine in Brazil and Canadian Malartic asset, and believes the acquisition is ‘significantly enhancing’ to its future growth prospects.

Wasamac is not yet in production, but according to a feasibility study from 2018 once up and running it could produce 142,000 ounces of gold a year at a very promising all-in sustaining cost of $630 per ounce.

Having a good range of producing assets is crucial for a mining company to limit any risks in case they encounter operational problems at a particular project, and while the Wasamac project is not yet in production, it could be soon.

Monarch filed a project notice, the first step in the mining permit application process, in November 2019 and the process usually takes between 18 and 24 months.

SHARES SAYS: We are encouraged by this deal and remain bullish.

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