Zero premium acquisitions are a thing of the past, according to Peter Marrone, executive chair of Yamana Gold (NYSE:AUY) who stressed acquirers need to pay fair value. Marrone spoke to Kitco correspondent Paul Harris at BMO's Global Metals & Mining Conference held in Florida last week. Yamana recognizes that it may potentially be a target following the acquisition of Kirkland Lake Mining by Agnico Eagle Mines, given it has a 1 million ounces a year production profile at an all-in sustaining cost of around US$900 per ounce, and a number of development projects.
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Hello, and welcome to kit co news at the BMO metals and mining conference with me, Paul Harris today I'm joined by Peter Maroney, executive chair of Yamana gold. Good morning, Peter. Good morning. How are you? I am very well. We've got a lot to talk about today. Peter. Let's start with the 2021 Yamana gold performance.
You produce there. A million ounces or record level, you ended on a real high record quarter. It must be very pleased with that. We are delighted with the performance across all of our minds. We're delighted with the production. We're delighted that our costs came in, where they did, as you are aware. Every ounce of gold was produced at $1,030 for the year, but in the fourth quarter alone, with that record production of over two, just about 240,000 gold equivalent ounces, we produce every ounce of gold at about $960.
And that's quite impressive, but to me, Paul, the most impressive part is that's the headline. But I think we, we looked below the headline. The most impressive part is our increased improvement of probable reserves of bubble. We depleted. And more than that is that we didn't sacrifice our resources to do that.
Our measured indicator was emotions went up and our further resources state, but come to going up, as you are aware, proven, and probable reserves is backward looking. This is what we have as at the end of a year. And we're normally taught. Touching into are measured and indicated in our inferred resources that upgrade to proven and probable reserves that implies then that we have less prudent, measured and indicated and inferred resources.
But if you can increase that inventory, that means your future is secure because what you did the year before that is historical can be prospective because you now have that inventory of inferred and measured indicated that can convert into proven and probable. Excellent. Well, that all spills with the sort of long-term sustainability of the business, and we're here at an investment conference.
So investors really sort of care about that. But one thing we've seen the gold price has been relatively strong for the past year, two years, but gold equity share prices have been sort of lagging out. Why do you think that is? And what will it take to for that to, for gold equities to get up to where the gold prices really good question.
And I don't know that I have the definitive. I'm sure that people will be writing about this at some point into the future. But I would say that at the end of the day, gold is gold and equities while they are a proxy for gold, they're still equities. And so if the broader market is performing a certain way, then the gold equities will perform.
I'd say that the broader market has probably been the greatest impediment to gold equities performing better because everyone was invested in that broader market. And no one was ripping attention to this comparatively small. I don't know today with the market capitalization of our entire industry is, but I have to imagine it's in the range of $300 billion.
Well, that's a fraction of the size of a, one of these behemoth technology company. So it seems to me that it's a small industry. We have to attract the attention of the broader investment community, but because it's small, it takes a little bit of time to direct that. Thank you, Peter, with a number of companies, arguably trading below what their real value is.
Is it a, or should it be a fertile time for M and a activity? And when we sent a few transactions last year, should there be more coming down the pipeline? So, so another really good question. And I'm in these very broad, the spectrum of what is M and A's Barry bought it for one end is buying something, a company that buys another company at the other end of the.
Or somewhere in the spectrum is a business combination of two companies, perhaps describing that as a merger of equals or, or something akin to that. And then at the furthest end of the spectrum is where one company buys another company outright, mostly a larger company that buys a smaller company. And I'd say that the grounds are fertile for combinations.
I'm not convinced that they're fertile for acquisitions. And what I mean by. Single LASIK companies, opportunities such as that. I'd love to believe that they're there, but the reality is that while they may make a good investment opportunity, when you invest, you invest based on many things, including the optionality is gold price going higher.
Mike, they discover make a discovery of more ounces, higher grade in the ground. When you buy something, you bought it for life and you have to buy it on the basis of what it is at that time. You have to buy it at its fair value, but you. If you have to make sure that whatever value you can deliver on top of what you paid for it, those two supposed to your shareholders and presently, we just don't see that there's a lot out there.
That would be interesting because on the acquisition side, on the business combination side, I can see many things that would be very interesting. Okay. Well, let's dig into that a little bit more. Peter, the zeitgeists in the sector a few years ago was zero premium mergers. Merchants equals. But recent transaction, we seem premium starting to come into things again.
So again, is this becoming we entering into a potentially very productive time for the sector and investors. And to what extent is this necessary to have that additional consolidation? So decades ago, someone said to me, that business combinations transactions of that type are like living organisms, like.
I don't know if the analogy is a good one, but there, everything is unique. And so I think we have to look at it from a lens that we can't paint with the same brush. Every canvas has to be painted differently, perhaps if I can put it that way. And so it seems to me then that we can't just say that every transaction has to be done at zero premium.
There will be transactions where that could make. But there will be other transactions where it doesn't make sense at all. And in the end where I come down on this is that we have to pay fair value. If we're buying something, we have to pay for value. If we're being bought, then someone has to pay fair value for us.
That fair value is whatever two arms linked parties negotiate to be the case. And so it seems to me that it's the wrong thing to do, to say that every transaction has to be done at zero premium because there will be transactions. And often there are many trends. We are a premium must be paid because it will reflect the fair value of what you're buying.
Okay. You, Monica has done various transactions over the years, and we'll talk some about some of those specifically in a moment, but to your current market cap is about 5 billion. Do you see yourselves more as a potential acquirer or potential? Acquiree this the moment Paul, we have a million ounces of production coming from five months.
We have a sixth mine on the horizon where there was there. Wasn't like mine in. With those six minds, we get to a production platform. We'll go 1.2 to 1.2, 5 million ounces within this outlook care that we have of the next decade. So let's say within the next five to 10 years, we get to that point more recently.
We've indicated that we believe that our minds, those same six assets can generate somewhere between 1.2, 5000001.5 million ounces. And then there's our Maura Proctor. Mara's an asset with our 56. We would be attributable copper production does is 260 million pounds of copper. Well, that in gold terms is about 590 to 600,000 ounces of gold.
So our existing portfolio supports not a million ounces, but between 1,000,002 million ounces. And so the way that I look at it then is I'm inclined to look at business. You know, from a friendly perspective, we can either go as a purchaser. We can go as a business combination where we merge with someone that is comparable to us.
All we can get bought, where we're open to all of the possibilities that deliver value for shareholders. But at the end of the day, what I hope our shareholders will recognize and what a potential buyer or participant in the deal will understand is that my personal view is that our share price today is not reflecting.
On the basis of what I've just described as that portfolio. Okay. You mana has the profile of your man has changed considerably over, over the years and you've, you've done some really stand out those, you know, you've bought half of Canadian Malartic and you've recently bought some out. You paid the deal for related to Mara that enables you to get the processing facilities.
There you've divested assets. You haven't been afraid to let things go, including some significant assets like Chick-fil-A, which was. Asset in the early life of Imana and the dividend policy. So all in sustaining costs of $900 per ounce, your mama's a very attractive company today. I certainly think so. I certainly think as a shareholder, as a founder of this company, as an executive and board member in this company, that we should certainly be attracting more attention in the marketplace and our share price should be higher than it is.
If an industry participant would like to look at. We're very happy for that industry participant to look, but they should recognize what is its fair value. You mentioned several of those transactions in 2014, we bought Anita malarkey. We paid a premium. I don't think it's fair for shareholders to ask the question.
Did you overpaid because of the premium that, that you paid, we felt at the time that we paid fair value, it is now incumbent on us as a buyer to say, here's the value we can create on top of what we pay, which is that fair value. It looks like. We've taken 47,000 tons of throughput per day, to an excessive 56,000 tons of throughput.
We've taken the production platform as a result for a higher production platform. We've decreased costs. We've generated impressive cash flows that are punch well above the pay grade of the weight class of that $1.5 billion. And we paid for the 50% dependent on Malartic. And now we have more than 15 million ounces.
That's 15 million ounces in inventory in the ground, in the. That will support a mind plan of a nice 545,000 ounces per year until somewhere into the 2040s and beyond. Well, I think your recent releases, your talk, looking at a mine life to 2039 or between 500 and 600,000 ounces a year. And when we spoke recently, you, you said there's potential there.
You think that's potentially for Canadian Malartic whose 1 million ounces a year. Tell me a little bit more about that. It's an internal view that we have now. We have not talked about how we get there other than in broad brush. We've not said what the cap X is expected to be. Although we have an internal view on what that cap ex is expected to be, and it would be substantially lower than what we're paying for the underground development presently.
But the flat capacity is really the key here. The plant capacity is an excessive of 56,000 tons per day. The underground that gets us that 500 to 600,000 ounces that you've mentioned is only 20,000. So we have all that excess plant capacity. So is it beyond the realm of possibilities as these ore bodies extend to the east and get larger?
Is it beyond the realm of possibilities that within a horizon of, let's say within the next eight to 10 years, we might be looking at a second shaft that will allow us to increase that throughput above that 20,000 tons per day. And that's where we think the possibility. And Quebec is going to be a central element of your minor going forward.
In addition to Canadian Malartic, you've got the WASA Mac mine that you bought last year. How's that you recently announced that you've got the permitting, you're doing the permanency of the bolt sampling, which may be to get out underground and have a really, really good look around as well as putting in some of that underground development.
How is Mike advancing? Very, very well we're in the permitting process. We've already identified. What we intend to do from a drilling perspective, we were carrying 1.9 million ounces. Almost 2 million ounces in inventory has proven and probable reserves that supports a mind plan. That is an average of just about 170,000 ounces per year for roughly 10, 11 years.
But that was the base case because we're making new discoveries. We know that the male body extends at depth and we've made a parallel discovery of a new shares. And as we continued to advance the exploration about, and then development, it does look to us as though the inventory of ounces will continue to increase.
So with the same plant that we're currently, that is currently going to be in development, we should be able to get a production platform that is substantially higher than that 170,000 ounces per year. Let me explain that a little bit. In the first several years versus three years, we're getting a production of 200,000 ounces.
So, what we're doing is we're saying let's extend that for the full initially 10 years at 200,000 ounces per year, rather than one 70. And we think that we'll be able to get more than that. So our current plan for is 200,000 ounces per year at below $850. All in sustaining costs for at least 15 years.
And we believe that the inventory that is there improving a probable reserves in resources and these new exploration discoveries. Okay, let's talk, Argentina. Argentina is becoming, or has become the go-to place for exploration for gold copper gold gold. Copper Uman has been there for a number of years.
And just today we saw a big, another big transaction announced BHP investing a hundred million dollars into the filo filo mining. You've been there for a long period of time with the you develop Cerro Moro. You've had other exploration projects there and more recently putting together the Mara. Oh, why'd you think Argentina is becoming so attractive today?
Boy, what a question? It's it's painful to know that you're right, but it's not showing itself. And so for years, as you are aware, I've been saying that Argentina is a better place for mining investment than people assume. And there's a lag often between what you see on the ground and what the, the general copulation worldwide.
Is is, is perceiving. I'm really happy to see that that's now beginning to manifest itself. Argentina is big elephant country, and it's a country that had to come to grips with how does it want its economy to grow? How does it want to get itself out of this debt situation that it is in? And it now recognizes that because of a big elephant country in opportunities for mining, it should allow the exploitation of those opportunities.
Argentina has always said, as a country and provinces. That they want this to be done responsibly. We'd been there since 2006. We've developed two minds. We have several projects, one mind already in production and several other projects, including our Myra project. And so we certainly have the ability to demonstrate that we can do things responsibly.
And that's where I think the country is looking for. And that's what has been happening in the country. It has been demonstrating at least in certain provinces that it is supportive of mine. Now, if you look at a province, Exxon one, They've been supportive of mining for at least a couple of decades. And you see that in its GDP, in the wealth of its citizenry in, in, in the growth that has occurred in the province.
And there are other provinces that are now saying we should be able to capture some of that as well. And what I find very, very interesting today is that at a presidential level there support for mining, but even more interestingly, because mining is provincial in Argentina, there's a natural national regime, but there's also a mining is, is regulated.
The four largest provinces for mining Catamarca San Juan and Southern cruise included. So where we operate and where we have operated those provinces of saying we are forming an alignment that allows us to be able to promote in country the development of mining. Well, one of the key criticisms of Argentina in general by people has been the, uh, the taxation things to do with exchange rate controls.
Uh, repatriation taxes, things of that nature. It is the local government, the sort of provincial governments and the national governments. Are they, um, streamlining that or providing greater clarity on that? Perhaps tax stability agreements, things of that nature. How is the sort of the fiscal arrangements?
You know, I prefer not to be critical of a country. You made reference to one of the criticisms. I think every country has its own attendant. And I prefer to be sanguine when we look at all countries in which we do operate in, could be operating. There are periods of peaks and valleys. And so there are periods where a country goes into a, a place where it has to do something different from a taxation point of view, from a fiscal point of view.
Sometimes it's understandable why they have to do that at least geopolitically, although even from a corporate perspective, we may not. But I think is the good news in Argentina today is that they recognize the errors of the past, but it does not encourage investment. If there's ambiguity, if there's uncertainty, if they create uncertainty by having a fiscal regime, that is one thing that changes to something different.
And so it seems to me that given that recognition, the country is now saying let's create some stability for mining and we're voting to say, these are the things that one has to do the responsibility side of companies. And this is what we need as governments. We'll require by way of taxation and otherwise she has become considerably more stable and more than more stable.
It's also becoming very clear to us that there's strong support for the encouragement of mining by reducing taxes and royalties and these during payback periods. Okay. So Wayne, a key development project you have in Argentina is the mirror project. What's the plan there? How is that advancing? Well, Morris is going through a feasibility study.
As you are aware, it is a comparatively simplified feasibility study because the flats already built. That was the idea to the integration of the infrastructure with our agro Rica, the creeks, the combined mower project, this new partnership that owned that owned Tamara. So the feasibility study this year and we start the permitting process this year, but, but nothing is.
So when we say start the permitting posters this year, that's the formal permitting process already in consultation with governmental authorities who say, these are the segments. These are the things we intend to introduce and cut. The vodka province is a, is a small province and we don't want to overwhelm them because very, very big project.
And so we're, we're incrementally saying these are the things that we're going to be introducing. How do you feel about that? And then going through. Okay. So coming to our end of our conversation here today, Peter let's sum up or round up with one of the key goals. What are the key things you want to achieve this year?
Where do you want your mom to go to be at the end of the year? So demonstrate again another year where we meet our production values and we need our cost guidance likely coming in better on production, similar to what we did last year and better on costs. I'd like to advance Mara to a point where we demonstrate its value.
It's not reflected in our share price. So is that a strategic transaction that occurs or do we advance it through the, the, the, um, the process of, of development? I'd like to also continue to demonstrate. We can increase Buhner probable reserves and resources. And I think this is an excellent year, perhaps the next two years or beyond will be excellent years because what we see is because of that inventory of resources, we can upgrade much of that resource to proven and probable this year at our four wholly wholly-owned mines.
And this year, next year will be two very interesting years because. Majority, perhaps all of the ounces that are in inventory as resources at our underground project, the Odyssey project in Malartic we'll convert the proven and probable. Those are some of the things that you'd like to see this here.
There's going to be a lot of news out of Yamana this year. Peter Maroney executive chair. Thank you very much for joining us today. Thank you very much. Kitco news special coverage of a 31st global metals and mining conference is brought to you by gold Tara.