AUY says the collective bargaining agreements are for terms of 40 and 48 months, and are in line with the preceding final offer.
AUY says the interruption in operations has not significantly affected mine and consolidated production, and it expects to recover production from other operations shorter term and from El Peñón throughout the year.
Gold pushes past $1,200/oz. to its highest price in seven weeks, as the dollar weakened in reaction to Pres.-elect Trump’s first post-election news conference.
Traders were disappointed by the press conference, as it brought little discussion of economic policy plans - “Instead, the press conference was dominated by verbal sabre-rattling, which highlighted the risks of a Trump presidency,” according to metals analysts at Commerzbank.
“Unless the dollar can rally strongly, which I doubt, then gold should continue to grind slowly higher,” says David Govett, head of precious metals at brokerage firm Marex Spectron.
Other analysts warn that gold's 7% bounce since Dec. 15 may be running out of steam because the dollar likely would rebound once Trump moves forward with his economic plans.
Yamana Gold's (AUY +0.2%) says operations at its El Peñón mine in Chile were suspended late last week after underground workers rejected the company's final offer and one of two unions went on strike.
El Peñón is AUY's second most productive gold mine, with an output of nearly 165K oz. of gold in the first nine months of 2016, equal to 17% of the company's gold output.
AUY said late yesterday that operations at El Peñón had been shut down but did not say when, and that it had reached collective bargaining agreements with workers at its Minera Florida operation in Chile, and that the mine and plant were operating at full capacity.
Analysts at TD Securities, who rate AUY as a Buy, reassure that "these mine strike shutdowns are usually resolved within a couple of weeks and typically do not have any material impact on valuation."
RBC Capital upgrades gold miners Yamana Gold (AUY +1.7%), Tahoe Resources (TAHO +3.3%) and Alamos Gold (AGI +7.2%) to Outperform from Sector Perform (I, II, III) with respective price targets of $4.50, $19 and $8.50, as the firm sees gold entering a period of seasonal strength.
RBC expects AUY to outperform peers given leverage to gold and attractive valuation, forecasts strong free cash flow for TAHO driven by low-cost silver and gold production from mines in Guatemala, Peru and Canada, and sees AGI benefiting from drill-bit driven value creation at Mulatos and continued operational gains at Young-Davidson.
However, RBC downgrades Gold Fields (GFI +1%) to Sector Perform from Outperform, as a possible M&A overhang, near-term balance sheet pressure and cautious sentiment around South Deep lead it to believe investors will prefer lower-risk investment alternatives.
AUY says a spinoff will allow it to "better focus on its portfolio of six, soon to be seven, producing mines in top mining jurisdictions and on its organic growth pipeline."
Last November, AUY tried to reduce its stake in Brio through a private share placement but later suspended the plan, citing poor market conditions; this time, AUY shareholders will receive purchase rights in Brio as a dividend in-kind, which they can use to buy shares in the unit.
Precious metals miners are slammed as gold prices dip well below $1,300/oz. to settle at $1,269.70, its lowest since the U.K.'s Brexit vote in June, as upbeat U.S. manufacturing data yesterday has stoked expectations of higher interest rates.
Gold is “falling off the cliff,” says Naeem Aslam, chief market analyst at ThinkMarkets. “Traders are buying the equity market with both hands, especially over in the U.K.” as the British pound declines.
Newmont Mining (NYSE:NEM) was today's best-performing stock in the S&P 500 and precious metals miners gained across the board, enjoying a big boost from the Fed’s decision to keep interest rates unchanged.
NEM even outperformed the VanEck Vectors Gold Miners ETF (NYSEARCA:GDX) - +7.5% vs. +7% - and Credit Suisse analysts say business in looking up for the miner, as NEM continues to meet or beat cost and production targets, as well as strengthen its portfolio.
The firm adds that NEM believes shareholders appreciate its predictability, discipline and defining growth based on free cash flow rather than production.