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Yamana Gold raised to Buy from Hold at TD Securities

  • Yamana Gold (AUY +2.6%) is upgraded to Buy from Hold with a $6 price target, raised from $5, at TD Securities, which says AUY's spinoff of three non-core Brazilian mines into Brio Gold will eliminate further cash drain and allow management to concentrate on more important projects.
  • The firm expects AUY to focus on further debt reduction, anticipating net debt to EBITDA will dip to a "more comfortable" 1.7x by the end of 2016, compared with a current pro forma ratio of 2.1x.
  • Despite weak gold prices, AUY became free cash flow positive in Q4, which TD expects will continue in 2015 with the company's focus returning to its key low-cost mines and significantly lower capex, adding that net debt should fall to ~$1.18B and its net debt to EBITDA ratio to 1x.

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