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Thank you all for joining us this morning. Before I turn the call over, I need to advise that certain statements made during this call today may contain forward-looking information, and actual results could differ from the conclusions or projections in that forward-looking information, which include, but are not limited to, statements with respect to the estimation of mineral reserves and resources, the timing and amount of estimated future production, cost of production, capital expenditures, future metal prices and the cost and timing of the development of new projects.For a complete discussion of the risks, uncertainties and factors which may lead to actual financial results and performance being different from the estimates contained in the forward-looking statements, please refer to Yamana's press release issued yesterday announcing third quarter 2019 results as well as the management's discussion and analysis for the same period and other regulatory filings in Canada and the United States.I would like to remind everyone that this conference call is being recorded and will be available for replay today at 12:00 p.m. Eastern Time. Replay information and the presentation slides accompanying this conference call and webcast are available on Yamana's website at yamana.com.I will now turn the call over to Mr. Racine, President and CEO.
Thank you, operator. Thank you all for joining us, and welcome to our third quarter conference call. With me on the call today is Jason LeBlanc, our CFO. Other members of management are also in the room and will be available for the Q&A portion of the call.I'll start, as I do every quarter, with health, safety and corporate responsibility. The total recordable injury frequency rate continue to trend lower at 0.58, down from 0.66 a year earlier, a 12% improvement. We did not have any significant environmental or social incident at our site during the quarter. As of the third quarter, we began environmental monitoring programs at all operations with neighboring local communities. These programs allow communities to partake in environmental monitoring, improving transparency, and ultimately, strengthening our license to operate.GEO production during the quarter was in line with our plan at a cost of $678 per GEO and an all-in sustaining cost at $1,039 per GEO. The all-in sustaining cost reflects a company decision to increase exploration spend and concentrate sustaining capital spend in the second half of the year. The additional exploration spend allows us to build on the strong running result being obtained across all our operations. We share some of those results in the third quarter with exploration updates for Jacobina and Canadian Malartic, and we'll be providing updates in Q4 for Minera Florida and El Peñón. The additional sustaining capital spend provides greater certainty for Q4 and into 2020. Historically, Q4 is our strongest quarter, and that trend is going to continue this year and bring costs in line with annual guidance. I'll talk more on that shortly.Net earnings during the quarter of $201 million or $0.21 per share include a number of items that might not be reflective of current and ongoing operations, most notably, the $273 million gain on the sale of Chapada. On adjusted basis, net earnings of $52 million (sic) [ $49.5 million ] or $0.05 per share. Cash flows from operating activities before net change in working capital were $152.4 million or $0.16 per share. Free cash flow before dividend and debt repayment was $29.4 million compared to a loss of $19.7 million a year earlier. We declare a 100% increase to our dividend in the third quarter, raising our annual dividend to $0.04 per share. And as Jason will discuss, we are looking to increase it further in the future.It was an eventful quarter with a number of positive developments. We decreased our total debt by $800 million, lowering our net debt by $810 million to $949 million. And we now have far greater financial flexibility to reinvest in the business, deliver growth and increase shareholder returns. $1,500 gold does not change our business plan nor it will change the discipline with which we allocate capital, a point I cannot stress enough. But it does mean we will generate more free cash, allowing us to further reduce debt and increase returns.During the quarter, we provided the reserve resource and exploration update for Jacobina. Since year-end 2017, mineral reserves has increased by 20.5%, and grade is up 5.3%. The increase supports annual gold production above 170,000 ounces, which was our previous guidance target for Jacobina, following completion of Phase 1 expansion was expected in mid-2020. Planned throughput in Q2 approach our Phase 1 target of 6,500 tonnes per day at a recovery of 96.2%. The remaining Phase 1 investment is expected to add consistency and stability to the process plan. The increase in mineral reserve and mineral reserve grade also supports the potential for the Phase 2 expansion.During the quarter, we also provided a positive exploration update for Canadian Malartic, including the discovery of new mineralized zone known as East Gouldie. Mineralization at East Gouldie has been intercept by drilling along 1,200 meters of strike over 700 meter vertical extend across wide intercepts. In addition, the results suggest the potential for another zone between East Gouldie and Odyssey. Results also indicate that East Gouldie, East Malartic and Sladen zones are converging at depth, suggesting the prospect for a large underground bulk tonnage opportunity. The positive results drove our decision to disclose inferred mineral resources below 1,000 meters for East Malartic at year-end 2018. Our 50% share was 1.48 million ounces, bringing our share of the total inferred mineral resources at East Malartic to 2.88 million ounces, a 106% increase. Drilling at East Gouldie is ongoing, and we expect a preliminary inferred mineral resources for the deposit by year-end 2019. We initiated the purchase of Canadian Malartic led by our Chairman, who engaged in the purchase because of the cash flow from the operations and also the underground potential. We conducted expansive diligence. While only the Odyssey potential was identified at the time, we concluded there was a strong potential for a large underground ore body. Four of our 5 mines are underground operations, and eventually, all 5 will be with Canadian Malartic. Our team at Yamana has years of underground experience. And as many as you know, personally, I spent over 25 years in the underground mines in the Abitibi. This is a high priority for us after Jacobina, and we would consider the merit of getting some synergies from developing the underground while we still have open pits.Turning to operations. We produced 239,000 GEO in the third quarter, including 209,000 ounces of gold and 2.5 million ounces of silver. As mentioned, we chose to increase spending in the third quarter as it allows us to build on strong exploration results and set up for a strong Q4 in 2020.To give some added color, we expect fourth quarter operating costs to benefit from strong performance at El Peñón and Minera Florida primarily due to a grade improvement. We also expect to benefit from the start of production of 4 underground mines at Cerro Moro, including the high-grade Zoe underground mine.Taking a look at our individual mines. El Peñón had a strong quarter, with production exceeding the same year earlier period as well as the second quarter of 2019. The improvement was driven by higher gold and silver feed grade, in line with plan and a trend that will continue -- that we expect to continue in Q4. We also expect that El Peñón production will exceed our guidance.I think it's worth noting that recent mine development at El Peñón has greatly improved the operation, production flexibility and follows a similar strategy undertaken at Jacobina, which, once again, exceeded its production plan and posted its third straight quarter this year of record production. Costs at Jacobina during the quarter were in line with expectation and lower than Q3 of 2018. The decline reflects the internalization of underground development activities that were previously under contract. Jacobina is well positioned to meet or exceed our revised annual guidance of 152,000 ounce -- GEO ounces.As mentioned, we provided a positive exploration update for Jacobina during the quarter, and we continue to explore aggressively, targeting new addition to mineral reserves at 3 grams per tonne or better.Production at Canadian Malartic was in line with plan, and the mine is well positioned to meet its full year forecast of 330,000 ounces. The Extension Project continues to advance as expected, with modest contribution from Barnat anticipated in the fourth quarter of 2019. The ramp-up will continue throughout 2020 with meaningful contributions to begin in 2021. At Cerro Moro, production feed grade and mine ore grade were consistent with plan but lower than prior year period and the second quarter of 2019 due to mine sequencing. As mentioned, 4 underground mines are expected to be in development and production during Q4, including the high-grade Zoe underground mine. Cerro Moro continues to pursue an aggressive drill program to delineate near-mine targets, test major near-mine and regional structures. At Minera Florida, production was impacted by lower gold grade and decreased throughput due to development challenges stemming from mechanical availability and mine sequencing compared to the prior year period. Mine management has taken action to improve mechanical availability, which is expected to increase in the fourth quarter. In relation to mining sequence, we shift production to the core mine to focus on exploration and development in the Agua Fria concession and prepare the PVS, Pataguas and Don Leopoldo veins for long-term success. Overall, our GEO production and costs are well on track to meet the 2019 guidance. And now I'll hand it over to Jason to discuss the financials.
Thank you, Daniel, and good morning, everyone. I'd like to start out with some thoughts about our cost performance during Q3 and recent quarters. As you can see on the top-left graph, in relation to the first half of 2019, third quarter cash costs were stable at $678 per GEO. Shifting to the upper right, all-in sustaining costs at $1,039 per GEO were impacted by the increase in our exploration budget as well as the timing of sustaining capital spend, shown in the bottom left and right graphs, respectively. As Daniel mentioned, the decision to concentrate sustaining spend in the second half of the year supports the highest quarterly rates of mining and production during the fourth quarter as well as improving access and flexibility in mining operations into 2020. This strategy had been notably effective at Jacobina, resulting in higher production rates in recent years and quarters, and at El Peñón where production levels have increased together with development rates there. The higher spend later in the year is sequencing and does not change our total annual guidance for sustaining capital of $167 million nor did it impact cash margins due to the increase in the gold price during the quarter. Sustaining CapEx in Q4 is expected at about $47 million, which were true up to our guidance for the year. AISC is expected to decline in the fourth quarter, similar to the profile in 2018, and be in line with our overall annual guidance.Following the improvement in the company's financial flexibility, one of the first decisions was to allocate a portion of our better cash flow profile to a higher dividend. As such, a doubling of the quarterly dividend was declared in Q3 and positions Yamana with one of the better yields amongst the peers seen here. With an expectation of improving cash flow and cash balances, the company will be evaluating future increases to its dividend rate.Part of this appropriateness is how our dividend measures in relation to our revenue, cash flow and on a per ounce basis. These are factors we will continue to consider in evaluating the level of our dividend and the sustainability of that level. With the growth in our cash flow and free cash flow profile, we intend to balance our reinvestment in the company through organic growth opportunities in exploration with increasing cash balances and also improvements to our dividend. Our expectation is there are opportunities for improvement across all of these measures.Revenue in the third quarter was $357.8 million compared with $424.7 million in the same period last year. The decrease reflects that the company's current portfolio includes 5 mines compared to 7 in the third quarter last year. G&A in the quarter was $21.8 million, up primarily due to mark-to-market on stock-based comps from share price depreciation during the quarter. This is partially offset by the reductions in G&A announced earlier this year. We continue to expect 2019 G&A costs on a cash basis of $68 million compared to previous guidance of $75 million. Net earnings attributable to Yamana equity holders in the third quarter were $0.21 per share. This includes certain items that may not be reflective of current and ongoing operations, mainly the $273 million gain on the sale of Chapada. When adjusted for these items, earnings in the quarter were $0.05 per share, more than double the $0.02 generated in the third quarter of 2018.Cash flow from operating activities more than doubled in the latest quarter to $157.4 million from $64.5 million a year earlier. Free cash flow before dividends and debt repayments during the quarter was $29.4 million, and we reduced net debt during the quarter by about $810 million. The performance during Q3 was a continuation of the inflection point on free cash flow that we had in Q2, but we expect a further step change in free cash flow for Q4 with our best production quarter of the year.As Daniel mentioned, we monetized the gold price instrument during Q3 for $65.5 million in cash. The decision to monetize the gold price instrument followed a detailed analysis to determine the fair value of the instrument. Our analysis of value factored in the forward curve and consensus views for the gold price, gold price volatility and appropriately discounting the value of the instrument for risks and the uncertainty of the future gold price. We concluded that the fair value could not be derived by simply calculating the present value of the instrument based on a maximum potential payout over a 5-year tenor.This view was corroborated during a price discovery process and led to the monetization of the instrument during Q3 for $65.5 million in cash. The consideration represents immediate recognition of nearly 3 years of the maximum payment under the instrument, a value that we may never have received due to gold price volatility. As a reference, we estimated the fair value of the instrument at around $35 million in April when the agreement to sell Chapada was announced. On July 5, the Chapada closing date and the recognition date of the instrument as well, we estimated the fair value at $54 million. Monetizing assets when it makes sense for the business, as we did in this case, is another way in which we generate value. And with that, I will turn the call back over to Daniel.
Thanks, Jason. It was a positive quarter for Yamana. We delivered strong free cash flow growth, and we will continue to do so. While costs increased in the quarter, this was by choice, and we will bring costs in line with annual guidance during the fourth quarter. We will continue to evaluate our strategic assets and deliver value by advancing, developing, where appropriate, monetizing them. Our upcoming catalysts includes exploration update for El Peñón and Minera Florida in Q4 and the reserve and resource update for the entire company in Q1 of 2020. Results from Jacobina's prefeasibility study are expected in Q1 of 2020, and we will be providing a preliminary inferred mineral resources for East Gouldie in the same quarter. And with that, we'll be happy to take your questions.
[Operator Instructions] The first question is from Stephen Walker with RBC Capital Markets.
Just wanted to ask, Daniel, we heard Northern Star, Barrick and Newmont talking about streamlining the development costs underground. And given your underground exposure, Daniel, could you talk a little bit about what we're seeing in the industry with respect to the development -- the traditional development of a crew during scaling, bolting, screening and then another crew coming into to do jumbo drilling? What we're seeing from Australia and some of the other underground miners is that it's having streamline to 1 crew that is using jumbo for that. Do you see the potential for adopting this modification in the underground Latin American operations? Or is this something that could be a future cost benefit on unit mining costs for Yamana?
Thank you, Stephen. Look, each mine -- each underground mine is different. And I think our costs are -- already, I look the costs at El Peñón, I look at the costs at Jacobina, they are already quite low compared to the industry standard. And then look, I think there's certain mines you can do bolting with jumbos, but other mines, you need boulders. And it's different. In our case, it's not different crew. They're all part of the same crew. There's a crew working together, some are doing with the jumbo, some are coming back after to do the marking then the bolting for the phase to be ready. So it depends always in the grade, the amount of phases you have also and the priority you have. We don't have one single phase of priority. So we have many at our mines. And then to be efficient, that's the way you do it, too. You are in many phases at the same time with the same crew. So I think each mine is different. When you have bigger mine with bigger opening, then you can assume you can do it with the same equipment. But with the size of mine we have, type of ore body we have, it's going to be challenging to be different. But like I said right from the start, we're very happy. When you're in the $2,000 per meter doing development at your mine, I think it's challenging to go lower than that.
I agree. And maybe just stepping back a little bit. You gave a number of improvements to the operating costs on a unit basis. Do you see further improvements that are possible? Or are you starting to see cost inflation, whether it's contract cost inflation, maintenance cost inflation? Are you starting to see impacts of inflationary pressures on your unit costs? Or do you think that there's further benefits and improvements?
No. There's further benefit of improvement. We've mentioned that 2020 and '21, we're going to continue to further improve. We have great operation excellence in all our mines. They all work and share the benefit they see at each of them mine, how to improve different areas. We have implemented that at Jacobina a few years ago and also implemented at all our mines. They share benefits or ideas to improve costs. And as our, naturally, as our production is going to go higher with grade, then we're going to benefit with lower costs just by the divider being higher. So we will continue to see costs going down for Yamana.
The next question is from Tanya Jakusconek with Scotiabank.
Just a couple of technical questions and then one for Jason. Just on the technical side, maybe, Daniel, can we talk a little bit about just some of the challenges? Like some of the assets did very well, but Minera Florida and Cerro Moro seem to just be a bit challenged in the quarter. I appreciate that you're expecting a stronger Q4 for both. But maybe just review, what's happening there? Why the stronger Q4? And then does the guidance for Minera Florida of 85,000 ounces appear doable for this year, and similarly, 130,000 for Cerro Moro? That's my first question.
Okay. So I'll start with Cerro Moro. I think Cerro Moro, we mentioned, we're going to be in 4 mines now underground starting this quarter. So you'll see a grade going back up for Cerro Moro. And then answering the second part of the question, we're very confident that Cerro Moro's production for the full year will be pretty close to the guidance. For Minera Florida….
The grade is going back up to what sort of level?
The 10 to 11 grams per tonne, where the reserve grade is. So above 11. For Florida, it's been more challenging. I think we've decided to change the way we were doing mining. You're going to see cost decrease in Q4, production increase. We're very confident. Is Florida going to meet the guidance? Probably, it's going to be shy of guidance. Globally, it will be higher than guidance because, like I mentioned, Peñón and Jacobina will be higher than guidance. Cerro Moro will be close to guidance, and Malartic will be on guidance. So globally, we'll meet the guidance for both gold and silver, but Florida will be more challenging. But we see -- you'll see great improvement in Q4 for Florida.
Okay. And maybe just some comments on where do you see this asset going longer term, Minera Florida?
I mentioned many times during this year that we see huge potential in exploration at Florida. Florida will be an 85,000 to 90,000 ounces for a few more years, 2 or 3 years. Then we should see production going up. What we're doing and Yohann is doing with the team at the mine is to adapt the costs to that reality of 85,000 to 90,000 ounces per year. And again, I mentioned in Q2 and I'll say it again, you have good surprises when we'll come with resources and reserves update in February for Florida and many of our mines, but Florida especially. But we don't want to go too fast at Florida and go right away on these new zones and start to develop them and mine them without doing the proper exploration before. So we're still very hopeful that Florida will be a very good mine. Now our target is clear for the mine. We make sure that we go to the best areas. We adapt our costs to make sure that the mine is generating cash flow and free cash flows. Even if they're modest, at least it's going to be in the positive side of the business. And again, I'm saying again, we're very optimistic on the future of Florida.
Okay. And maybe -- you mentioned reserves and resources, which was my second question. With everything that you've done this year, do you think you'll be able to replace your reserves and resources without changing commodity prices?
Yes. We said it also too. It's clear that all our mines won't change the parameters we used last year. So we used $1,250 to do our resources and reserves last year and then we'll do the same this year. So all the same parameters, all the same exchange, the same value for everywhere. So gold price increases won't increase the way artificially our resources or reserves. We're using the same parameters last year. And yes, we're very confident that we're going to replace globally our reserve and resources. And Florida is one of the ones who will probably overperform.
Okay. Perfect. And then maybe, Jason, just coming back on your sort of your hedging policy for both currencies and gold. And I know we've talked a little bit about you do hedge currencies going forward. Just maybe talk a little bit about your gold hedging strategy given the color you put in, in Q4. And how do you see hedging in 2020?
Yes. I'll start with the currencies first. That's the way you asked the question, Tanya. And we've been a very steady state hedger of certain currencies when it made sense. That's from a cash flow certainty perspective. I don't think anything has changed there. So you can continue more of the same where we would hedge, in certain cases, between 50%, and say, 70%, maybe up to 75% of local currencies. On the gold question, yes, you're referring to the color we put in place just for Q4. I guess I'd start by saying we're not gold hedgers. We won't continue to hedge gold. That was a fit-for-purpose for a quarterly perspective. We saw the opportunity within the rise up in gold prices and some of the dislocations that happened there and the volatility that presented an opportunity like that. And really, the purpose on Q4, I'll go back to the comments I made in my remarks about profile of free cash flow. We are very excited to have an inflection point in Q2, Q3, also deliver free cash. But Q4 is the one where we see a multiple of that free cash flow generation. And really, with the increases in gold prices, we're able to effectively lock that in, that we can show that current trend upwards. But I would consider that a one and done as it relates to gold hedging. I think it also allows us to continue on our path of increasing cash, of reducing debt levels. We don't have any real debt maturities due until 2022. We do have a more modest payment of fixed-term debt in the first quarter of next year. So with that free cash that we've locked in, we can defease that upcoming debt payment. Beyond that you should expect growing cash balances and decreasing net debt.
So -- just so I understand, so if we were to see a move upward in the gold price, I shouldn't be looking at your next quarter and thinking there's another color coming with that statement?
No. You shouldn't -- I wouldn't conclude that, no.
The next question is from Michael Fairbairn with Canaccord Genuity.
Jason, just a question for you around capital guidance for the rest of the year. I know you guys said that in Q4, you expect to spend about $47 million for sustaining. And first off, I was wondering if you could give any more granularity around both the growth CapEx stockpile, CapEx at Malartic and even capitalized exploration going into Q4. And I also wanted to ask around the percentage of exploration that would be capitalized. I think at one point, you guys have said you'd expect to capitalize about 77% exploration costs this year. I just wanted to know if that was still the case going into the last quarter.
Yes. That still pretty good, Michael. And I'll try to run through those. If I forget something, please just remind me. Yes, as mentioned, we're going to do sustaining capital for the year, I said $47 million on the call, so you should expect that. Exploration, you can see in the disclosure, we increased that $10 million. That's all capitalized exploration. We'll go through there. The expense portion is probably running a couple of million dollars per quarter. That's still a good run rate. On the growth side, we announced a few projects this year. So that will be a couple of million dollars, I'd say, above guidance. But big picture, call it, online with guidance. On the stockpiling, frankly, that's about 1 million tonnes at Malartic during Q4, I believe. So that's a pretty good number to use, and just apply your mining costs to that.
Okay. And on a total basis, are you able to give any kind of guidance around what you expect that total CapEx number to be?
On which line, Michael?
Just across the board including sustaining, exploration, stockpiling and growth.
Yes. It just would be -- it's effectively all of our guided levels.
The next question is from Mike Jalonen with Bank of America.
Just 2 questions. First, Agua Rica, it looks like positive progress there with your partners tying with Alumbrera. Just wondering, there might be a change in government of Argentina very shortly, more left wing. Just what if that would impact the project pipeline? And then I was just wondering on Cerro Moro. Is Yamana getting cash out of the country with the foreign exchange controls?
Yes. Jason can answer the second part. But yes, we can -- I can say that there's no issue to bring cash out of the country for us. Jason can give more detail, but that's not an issue. And regarding your first question, after the first round of elections in Argentina, the run-up candidate, Mr. Fernandez, even -- not even a week after that first round, contacted all the mining companies to go meet him. And then we were part of it. And we don't see any big change on our part in the country after this weekend elections. So it's the second round on Sunday. We're going to see the results. But so far, we don't see any major changes with the potential new president of the country. We'll see what are the results, but we don't see any changes. And yes, Agua Rica's study is going really well. We started the permitting process and then we're going through the phase of doing the feed study for mid next year.
Yes. And Mike, I wouldn't really add anything more than Daniel said. It's business as usual in Argentina. As it relates to moving our money, we see no impediments to getting cash out. And we've been operating in Argentina for over 10 years and have had experience in this before. And we see this as a very similar episode. It's a little bit more elbow grease, but it gets done normal course.
The next question is from Anita Soni with CIBC.
Most of the questions had been asked, so I'll ask about January and February. Coming into January, are you going to do a production update as you normally do for the fourth quarter? And then when will you deliver guidance? Is it January or February this year?
Yes. We have decided as a company probably to do preproduction release twice a year. So January will probably be one and then July will be the other one. So we don't think there's a purpose to do it each quarter, but I think twice a year will be the way we want to go in the future. So you can expect that, yes, in January, we're going to pre-release production. On the guidance and then resources and reserves, it's always the second week of February.
[Operator Instructions] The next question is from Steven Butler with GMP Securities.
Jason, interest payments, how do you expect they will fall and to roughly what level in the fourth quarter?
Yes. Steve, I guess you can just -- you could build that up off of our total debt level then gross debt, it's about probably, call it, $1.05 billion. You can apply a 5% rate to that. That will account for the interest rates, standby fees and some other ancillary costs. I think it's a pretty easy way to do it. You just divide that by 4 and then respectively, you'll need to take into account our free cash flow generation, obviously. And we'll see those debt levels going down, so the interest will go down commensurately.
Okay. Sounds fine. And then guys, just on El Peñón. I noticed your ore mined, approximately 2,700 tonnes per day, just a hair above that, and the ore milled, about 3,500 tonnes per day, slightly less. Is the stockpiling strategy -- do you have a fair stockpile at El Peñón that can help sustain the mill at that 3,500 tonnes per day rate? And maybe you can give a sense for the tonnes and stockpile tonnes and grade, if you have it.
Steve, I'm going to answer that one here. Hang on. At this moment, we got about, I would say, 18,000 tonnes of stockpile, and we also have low-grade stockpile. So you can see -- I mean we see that the contribution from the run-of-mine is increasing, and contribution from the local stockpile is decreasing quarter-over-quarter. So this is really a strategy. And this is based on our flexibility to feed the mill from run-of-mine with more working and activities.
Right. So into 2020 or '21, do you expect to be able to sustain or even improve upon the run-of-mine from underground above the 2,700 tonnes per day level?
I think we're going to see improvement quarter-over-quarter at Peñón. I mean we're still working on our budget, but Peñón is trending very well. The rightsizing that we did was -- I mean it takes time. You need to rightsize first your tonne and after that your cost. And we're at the stage where we really rightsize our costs. So we see a really positive momentum in Peñón, and there's -- we believe that it's going to continue over in 2020 and going forward.
[Operator Instructions] There are no further questions registered at this time, so I would like to turn the meeting over to Mr. Daniel Racine.
Thank you, operator. Thank you, everyone, for joining us. We look forward to updating you on our fourth quarter results in February. And for us, at all our mines, it's business as usual. So we should have a great Q4 like we mentioned many times today and in the past. Thank you. Bye-bye.
Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you all for your participation.