Before we get into Yamana Gold Inc. (USA) (NYSE:AUY), a micro cap gold mining company that’s gaining popularity is Bullfrog Gold Corp (OTCMKTS:BFGC). The company had recently announced that Kjeld Thygesen has joined the Company as an independent Director. “Mr. Thygesen brings 46 years of international credentials in the mining research and finance sectors and joins Alan Lindsay, Chairman and David Beling, President and CEO as a member of Bullfrog’s Board. Mr. Lindsay and Mr. Beling have been involved with Mr. Thygesen on many business matters for more than 24 years and very much look forward to his able contributions on behalf of the Company.” For investors and traders looking to get an early entry into gold mining sector, Bullfrog Gold Corp (OTCMKTS:BFGC) offers the right opportunity with plenty of room to grow. Read more HERE
Yamana Gold Inc. (USA) (NYSE:AUY) is one of the gold stocks that have notched triple digit gains so far in 2016, tracking the surge in gold prices amid a wave of global economic uncertainty. To keep the gains flowing, Yamana has singled out an enemy to battle: debt. The company recently revealed a plan to cut its net debt by at least $300 million by the end of next year. For perspective, Yamana had a debt of $1.9 billion at the end of 2Q2016, having declined from more than $1.96 billion in 1Q2016. If Yamana says it is determined to clean up its balance sheet by reducing debt, you can take the company seriously. Looking back the last five quarters, you can’t help but notice that Yamana has been trying to reduce its indebtedness. At the end of 2Q2015, the company carried a debt of $2.069 billion, which it reduced to $2.06 billion in 3Q2015, before falling further to $1.90 million in 4Q2015.
Can Yamana deliver on its $300 million debt reduction promise?
The reason investors may question Yamana’s ability to reduce its debt by $300 million by the end of 2017 as promised is the recent downturn in gold market. Gold prices are up about 18% so far in 2016 and even managed to hit a 30-year high in 1Q2016, but sentiments in the gold market have weakened. As December approaches, traders are not sure how interest rate hike by the U.S. Federal Reserve would impact gold demand and prices.
As such, not only have gold stocks been hit by a wave of selloffs, but questions have also been raised about how depressed gold prices could impact the ability of gold miners such as Yamana to generate enough cash to pay down debts.
Asset monetization
In the case of Yamana, the company is one of the well-managed gold miners with an efficient production structure. In 2Q, it cost Yamana $664 to produce an ounce of gold. That tells you that even if gold prices were to come down to $1,000, Yamana’s operations would still be profitable, thus producing cash flow to pay down debt. Yamana is not only looking to cash flow from operations. The company is also disposing non-core assets, thus dropping down some operating costs and picking up new funds to strengthen the balance sheet. Yamana stock is up about 100% YTD. The stock rose 2.2% to close at $3.72 in the last session.
