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Brazil Mine 'Demonstrates Growth is Real'
Research Report

Source:

Conclusions from a recent site visit are delivered in a CIBC report.

In an Oct. 4 research note, analyst Anita Soni reported that CIBC raised its valuation of Yamana Gold Inc.'s (YRI:TSX; AUY:NYSE; YAU:LSE) Jacobina mine in Brazil to $968 million from $925 million following a visit to the site.

"The mine showed well, with phase 1 optimization on track to be completed ahead of the scheduled mid-2020 commissioning and on budget of $5.3 million," Soni commented. With the changes already made, the mill achieved 6,400 tpd (6.4 Ktpd) in Q3/19. The goal is 6.5 Ktpd. That rate would increase production to 180,000 ounces (180 Koz) by 2022, noted Soni.

Yamana is considering a phase 2 expansion to 7.58.5 Ktpd, which CIBC incorporated into its model on the company. This throughput rate would boost production to 200225 Koz in 2022-2023. Capex for phase 2 is now an estimated $75 million, down from about $150 million. The company is targeting Q1/20 for releasing the phase 2 prefeasibility study.

"We believe the company may be able to achieve the 200225 Koz level at 7.5 Ktpd with higher throughput grade of 2.52.6 grams per ton (2.52.6 g/t), currently at about 2.4 g/t," Soni highlighted.

During the visit, management emphasized the exploration potential and long-term expansion opportunities at Jacobina, Soni reported. The current reserve estimate is 2.28 million ounces at 2.4 g/t, and all deposits there remain open along strike and downdip. Recent drill intercepts from the Canavieiras and Morro do Vento areas were positive, "including encouraging high-grade results near to mine infrastructure."

She added, "Ultimately, the company is targeting raising the overall reserve grade of the deposit from the current 2.4 g/t at 13 years of mine life to over 2.6 g/t with a 20-year reserve life."

CIBC has an Outperformer rating and a CA$4.40 per share price target on Yamana, whose stock is currently trading at around CA$3.46 per share.

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Disclosures from CIBC, Yamana Gold Inc., October 4, 2019

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analysts employed outside the U.S. are not registered as research analysts with FINRA. These analysts may not be associated persons of CIBC World Markets Corp. and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Yamana Gold Inc. (AUY)

CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from Yamana Gold Inc. in the next 3 months.




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