Yamana Gold is a Canadian company that engages in the acquisition, financing, exploration, development and operation of precious metal mining properties in Brazil, Argentina, Honduras and Nicaragua. It primarily produces gold from both gold and copper mines. It owns five operating mines in Brazil, as well as gold development-stage properties, exploration properties and land positions in all three major mineral areas in Brazil. Yamana also owns an operating mine in Honduras, a development-stage project in Argentina and significant exploration concessions in Nicaragua.

AUY stock currently trades at about $13.33 per share, and has generally moved upward in the past year, along with the price of gold. Yamana has a market capitalization of $5 billion, and in the past year reported losses of 25 cents per share, with a number of earnings “surprises” on the downside. Hence, Yamana has no P/E ratio, but it does pay a small dividend equal to about 0.3% of its share value. Of interest, about 36% of Yamana’s stock is held by institutions.

In terms of market capitalization, at $5 billion, Yamana is in the same range as other large gold miners like Agnico-Eagle Mines ($4 billion market cap), Harmony Gold ($6 billion market cap) and Kinross Gold ($8 billion market cap). Unlike these other stocks, however, Yamana has demonstrated poor earnings growth and is losing money.

My first reaction is that I don’t like gold mining companies that lose money in a market where the price of gold is going up. It is like not being able to sell beer on a troop ship. Is something wrong? Still, Yamana has no reported long-term debt. And Yamana is exploring and developing its prospects. Company management says that they need some time. So the lure of Yamana is that it is producing gold at intermediate company production levels and is targeting 1 million ounces of gold production by 2008, a mere seven months away. Thus, the attractive investment potential of Yamana is that it holds a significant exploration portfolio in Brazil and Central America, with a respectable budget to uncover reserves and additional resources.
This being a newer mining company we want to give it more time to evolve into a well oiled machine because it's price is cheap.