Yamana Gold Inc.'s (AUY) latest production outlook for 2008 wowed investors on Monday, driving shares in the company to a 52-week high of $17.94 in intraday trading before paring back to close up 2% at C$17.25.
Yamana announced early Monday morning that gold production is expected to total up to 1.3 million gold equivalent ounces [GEO] in 2008 increasing to 1.6 million GEO in 2009 from mines currently in production and mines under construction.
Blackmont analyst Richard Gray said the estimates were slightly lower than his estimate of 1.36 million and 1.64 million ounces, but noted his figures were both at the upper range of what Yamana provided in its guidance.
He added that Yamana's cash cost estimates of $209 per ounce in 2008 and $300 per ounce in 2009, compare favorably to his estimates of $294 per ounce and $301 per ounce.
"Yamana remains one of the top picks for its exceptional growth prospects in production and cash flow," Mr. Gray told clients in a research note.
He maintained his "buy" rating and C$22 price target on the shares, telling clients in a note, "Yamana remains one of the top picks for its exceptional growth prospects in production and cash flow."
Over at Canaccord Adams, analyst Steven Butler maintained his "buy" rating on left his $21.25 price target unchanged. Like Mr. Gray, his forecast of 1.357 million ounces of gold-equivalent production in 2008 and 1.633 million ounces in 2009 is also near the high end of Yamana's guidance.
He noted in his report to clients that of the several catalyst upcoming that factor into his valuation, the declaration of initial resources at Bonanza (El Penon) and Mercedes alongside the resource estimate at Lower QDD West (Gualcamayo) are among the most important.