Intrinsic value of Yamana Gold Inc. - YRI

Previous Close

$3.41

  Intrinsic Value

$1.46

stock screener

  Rating & Target

str. sell

-57%

Previous close

$3.41

 
Intrinsic value

$1.46

 
Up/down potential

-57%

 
Rating

str. sell

We calculate the intrinsic value of YRI stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  3.87
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
Revenue, $m
  2,415
  2,570
  2,730
  2,898
  3,072
  3,254
  3,444
  3,642
  3,848
  4,064
  4,289
  4,524
  4,770
  5,028
  5,297
  5,579
  5,874
  6,183
  6,506
  6,845
  7,201
  7,573
  7,963
  8,372
  8,801
  9,251
  9,723
  10,218
  10,737
  11,282
  11,853
Variable operating expenses, $m
 
  5,626
  5,975
  6,338
  6,716
  7,110
  7,521
  7,949
  8,397
  8,864
  9,352
  9,804
  10,338
  10,896
  11,479
  12,090
  12,729
  13,399
  14,100
  14,834
  15,604
  16,411
  17,257
  18,143
  19,073
  20,048
  21,070
  22,143
  23,268
  24,449
  25,687
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,055
  5,626
  5,975
  6,338
  6,716
  7,110
  7,521
  7,949
  8,397
  8,864
  9,352
  9,804
  10,338
  10,896
  11,479
  12,090
  12,729
  13,399
  14,100
  14,834
  15,604
  16,411
  17,257
  18,143
  19,073
  20,048
  21,070
  22,143
  23,268
  24,449
  25,687
Operating income, $m
  -640
  -3,057
  -3,244
  -3,440
  -3,643
  -3,856
  -4,077
  -4,308
  -4,549
  -4,800
  -5,063
  -5,280
  -5,567
  -5,868
  -6,182
  -6,511
  -6,855
  -7,216
  -7,593
  -7,989
  -8,404
  -8,838
  -9,294
  -9,771
  -10,272
  -10,797
  -11,347
  -11,925
  -12,531
  -13,167
  -13,834
EBITDA, $m
  -15
  -2,368
  -2,516
  -2,670
  -2,831
  -2,999
  -3,173
  -3,356
  -3,546
  -3,745
  -3,952
  -4,169
  -4,396
  -4,633
  -4,881
  -5,141
  -5,413
  -5,697
  -5,996
  -6,308
  -6,635
  -6,978
  -7,338
  -7,715
  -8,110
  -8,525
  -8,960
  -9,416
  -9,894
  -10,396
  -10,923
Interest expense (income), $m
  130
  118
  138
  158
  178
  200
  223
  246
  271
  297
  324
  352
  381
  411
  443
  477
  512
  549
  587
  627
  670
  714
  760
  809
  860
  913
  969
  1,028
  1,089
  1,154
  1,222
Earnings before tax, $m
  -832
  -3,175
  -3,382
  -3,597
  -3,822
  -4,056
  -4,300
  -4,554
  -4,820
  -5,097
  -5,387
  -5,632
  -5,948
  -6,279
  -6,625
  -6,988
  -7,367
  -7,765
  -8,181
  -8,617
  -9,073
  -9,552
  -10,054
  -10,580
  -11,131
  -11,710
  -12,316
  -12,953
  -13,620
  -14,321
  -15,055
Tax expense, $m
  -439
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -416
  -3,175
  -3,382
  -3,597
  -3,822
  -4,056
  -4,300
  -4,554
  -4,820
  -5,097
  -5,387
  -5,632
  -5,948
  -6,279
  -6,625
  -6,988
  -7,367
  -7,765
  -8,181
  -8,617
  -9,073
  -9,552
  -10,054
  -10,580
  -11,131
  -11,710
  -12,316
  -12,953
  -13,620
  -14,321
  -15,055

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  234
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  11,892
  12,413
  13,190
  14,000
  14,842
  15,721
  16,637
  17,592
  18,590
  19,631
  20,719
  21,857
  23,045
  24,289
  25,590
  26,951
  28,376
  29,869
  31,432
  33,070
  34,786
  36,584
  38,469
  40,446
  42,518
  44,692
  46,971
  49,362
  51,871
  54,502
  57,263
Adjusted assets (=assets-cash), $m
  11,658
  12,413
  13,190
  14,000
  14,842
  15,721
  16,637
  17,592
  18,590
  19,631
  20,719
  21,857
  23,045
  24,289
  25,590
  26,951
  28,376
  29,869
  31,432
  33,070
  34,786
  36,584
  38,469
  40,446
  42,518
  44,692
  46,971
  49,362
  51,871
  54,502
  57,263
Revenue / Adjusted assets
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
Average production assets, $m
  10,735
  11,422
  12,137
  12,881
  13,657
  14,465
  15,308
  16,187
  17,105
  18,063
  19,064
  20,111
  21,204
  22,348
  23,545
  24,798
  26,110
  27,483
  28,921
  30,428
  32,007
  33,662
  35,396
  37,215
  39,122
  41,122
  43,219
  45,419
  47,727
  50,148
  52,689
Working capital, $m
  104
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total debt, $m
  2,359
  2,596
  2,974
  3,367
  3,776
  4,203
  4,648
  5,113
  5,598
  6,104
  6,633
  7,185
  7,763
  8,367
  9,000
  9,661
  10,354
  11,079
  11,839
  12,635
  13,469
  14,343
  15,259
  16,220
  17,227
  18,283
  19,391
  20,553
  21,772
  23,051
  24,393
Total liabilities, $m
  5,795
  6,033
  6,411
  6,804
  7,213
  7,640
  8,085
  8,550
  9,035
  9,541
  10,070
  10,622
  11,200
  11,804
  12,437
  13,098
  13,791
  14,516
  15,276
  16,072
  16,906
  17,780
  18,696
  19,657
  20,664
  21,720
  22,828
  23,990
  25,209
  26,488
  27,830
Total equity, $m
  6,096
  6,380
  6,780
  7,196
  7,629
  8,080
  8,551
  9,043
  9,555
  10,091
  10,650
  11,234
  11,845
  12,484
  13,153
  13,853
  14,585
  15,353
  16,156
  16,998
  17,880
  18,804
  19,773
  20,789
  21,854
  22,972
  24,143
  25,372
  26,661
  28,014
  29,433
Total liabilities and equity, $m
  11,891
  12,413
  13,191
  14,000
  14,842
  15,720
  16,636
  17,593
  18,590
  19,632
  20,720
  21,856
  23,045
  24,288
  25,590
  26,951
  28,376
  29,869
  31,432
  33,070
  34,786
  36,584
  38,469
  40,446
  42,518
  44,692
  46,971
  49,362
  51,870
  54,502
  57,263
Debt-to-equity ratio
  0.387
  0.410
  0.440
  0.470
  0.500
  0.520
  0.540
  0.570
  0.590
  0.600
  0.620
  0.640
  0.660
  0.670
  0.680
  0.700
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.800
  0.810
  0.820
  0.820
  0.830
Adjusted equity ratio
  0.503
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -416
  -3,175
  -3,382
  -3,597
  -3,822
  -4,056
  -4,300
  -4,554
  -4,820
  -5,097
  -5,387
  -5,632
  -5,948
  -6,279
  -6,625
  -6,988
  -7,367
  -7,765
  -8,181
  -8,617
  -9,073
  -9,552
  -10,054
  -10,580
  -11,131
  -11,710
  -12,316
  -12,953
  -13,620
  -14,321
  -15,055
Depreciation, amort., depletion, $m
  625
  689
  728
  769
  812
  857
  904
  952
  1,003
  1,056
  1,111
  1,111
  1,172
  1,235
  1,301
  1,370
  1,443
  1,518
  1,598
  1,681
  1,768
  1,860
  1,956
  2,056
  2,161
  2,272
  2,388
  2,509
  2,637
  2,771
  2,911
Funds from operations, $m
  846
  -2,486
  -2,654
  -2,828
  -3,010
  -3,199
  -3,396
  -3,602
  -3,817
  -4,041
  -4,276
  -4,521
  -4,777
  -5,044
  -5,325
  -5,618
  -5,925
  -6,246
  -6,583
  -6,935
  -7,305
  -7,692
  -8,098
  -8,524
  -8,970
  -9,438
  -9,929
  -10,443
  -10,984
  -11,550
  -12,145
Change in working capital, $m
  -52
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from operations, $m
  898
  -2,486
  -2,654
  -2,828
  -3,010
  -3,199
  -3,396
  -3,602
  -3,817
  -4,041
  -4,276
  -4,521
  -4,777
  -5,044
  -5,325
  -5,618
  -5,925
  -6,246
  -6,583
  -6,935
  -7,305
  -7,692
  -8,098
  -8,524
  -8,970
  -9,438
  -9,929
  -10,443
  -10,984
  -11,550
  -12,145
Maintenance CAPEX, $m
  0
  -593
  -631
  -671
  -712
  -755
  -799
  -846
  -894
  -945
  -998
  -1,053
  -1,111
  -1,172
  -1,235
  -1,301
  -1,370
  -1,443
  -1,518
  -1,598
  -1,681
  -1,768
  -1,860
  -1,956
  -2,056
  -2,161
  -2,272
  -2,388
  -2,509
  -2,637
  -2,771
New CAPEX, $m
  -669
  -687
  -715
  -744
  -776
  -808
  -843
  -879
  -918
  -958
  -1,001
  -1,046
  -1,094
  -1,144
  -1,197
  -1,253
  -1,311
  -1,373
  -1,438
  -1,507
  -1,579
  -1,655
  -1,735
  -1,819
  -1,907
  -2,000
  -2,097
  -2,200
  -2,308
  -2,421
  -2,540
Cash from investing activities, $m
  -513
  -1,280
  -1,346
  -1,415
  -1,488
  -1,563
  -1,642
  -1,725
  -1,812
  -1,903
  -1,999
  -2,099
  -2,205
  -2,316
  -2,432
  -2,554
  -2,681
  -2,816
  -2,956
  -3,105
  -3,260
  -3,423
  -3,595
  -3,775
  -3,963
  -4,161
  -4,369
  -4,588
  -4,817
  -5,058
  -5,311
Free cash flow, $m
  385
  -3,766
  -4,000
  -4,243
  -4,497
  -4,762
  -5,038
  -5,327
  -5,629
  -5,945
  -6,275
  -6,620
  -6,982
  -7,360
  -7,756
  -8,171
  -8,606
  -9,062
  -9,539
  -10,040
  -10,565
  -11,115
  -11,693
  -12,298
  -12,933
  -13,599
  -14,298
  -15,031
  -15,801
  -16,608
  -17,456
Issuance/(repayment) of debt, $m
  -249
  366
  378
  393
  410
  427
  445
  464
  485
  506
  529
  553
  578
  604
  632
  662
  693
  725
  760
  796
  834
  874
  916
  961
  1,007
  1,056
  1,108
  1,162
  1,219
  1,279
  1,342
Issuance/(repurchase) of shares, $m
  0
  3,564
  3,781
  4,013
  4,255
  4,507
  4,771
  5,045
  5,332
  5,632
  5,946
  6,216
  6,559
  6,918
  7,294
  7,688
  8,100
  8,532
  8,984
  9,458
  9,955
  10,476
  11,023
  11,596
  12,197
  12,827
  13,488
  14,182
  14,910
  15,673
  16,475
Cash from financing (excl. dividends), $m  
  -378
  3,930
  4,159
  4,406
  4,665
  4,934
  5,216
  5,509
  5,817
  6,138
  6,475
  6,769
  7,137
  7,522
  7,926
  8,350
  8,793
  9,257
  9,744
  10,254
  10,789
  11,350
  11,939
  12,557
  13,204
  13,883
  14,596
  15,344
  16,129
  16,952
  17,817
Total cash flow (excl. dividends), $m
  8
  164
  159
  164
  168
  173
  178
  183
  188
  194
  200
  149
  155
  163
  170
  178
  186
  195
  204
  214
  224
  235
  246
  258
  271
  284
  298
  313
  328
  344
  361
Retained Cash Flow (-), $m
  445
  -3,564
  -3,781
  -4,013
  -4,255
  -4,507
  -4,771
  -5,045
  -5,332
  -5,632
  -5,946
  -6,216
  -6,559
  -6,918
  -7,294
  -7,688
  -8,100
  -8,532
  -8,984
  -9,458
  -9,955
  -10,476
  -11,023
  -11,596
  -12,197
  -12,827
  -13,488
  -14,182
  -14,910
  -15,673
  -16,475
Prev. year cash balance distribution, $m
 
  105
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  -3,295
  -3,622
  -3,850
  -4,087
  -4,335
  -4,593
  -4,863
  -5,144
  -5,438
  -5,746
  -6,068
  -6,404
  -6,756
  -7,124
  -7,510
  -7,914
  -8,337
  -8,780
  -9,244
  -9,731
  -10,241
  -10,776
  -11,337
  -11,926
  -12,543
  -13,190
  -13,869
  -14,582
  -15,329
  -16,114
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
PV of cash for distribution, $m
 
  -3,141
  -3,276
  -3,288
  -3,278
  -3,246
  -3,192
  -3,116
  -3,018
  -2,899
  -2,762
  -2,607
  -2,438
  -2,257
  -2,067
  -1,873
  -1,676
  -1,482
  -1,292
  -1,112
  -942
  -786
  -645
  -521
  -412
  -320
  -244
  -181
  -132
  -94
  -65
Current shareholders' claim on cash, %
  100
  54.1
  29.3
  15.9
  8.6
  4.7
  2.5
  1.4
  0.7
  0.4
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Yamana Gold Inc. is a gold producer with gold production, gold development stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile and Argentina. The Company's segments include Chapada mine in Brazil; El Penon mine in Chile; Canadian Malartic mine in Canada; Gualcamayo mine in Argentina; Minera Florida mine in Chile; Jacobina mine in Brazil; Brio Gold Inc. (Brio Gold), and Corporate and other. The Company's development projects include Cerro Moro, Argentina; Agua Rica, Argentina, and Gualcamayo, Argentina. Its exploration projects include Chapada, Brazil; El Penon, Chile; Gualcamayo, Argentina; Minera Florida, Chile; Jacobina, Brazil; Cerro Moro, Argentina; Canadian Malartic Corporation, Canada; Monument Bay, Canada; Brio Gold Exploration; Pilar, Brazil; Fazenda Brasileiro, Brazil; RDM, Brazil, and C1 Santa Luz, Brazil.

FINANCIAL RATIOS  of  Yamana Gold Inc. (YRI)

Valuation Ratios
P/E Ratio -7.8
Price to Sales 1.3
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 3.6
Price to Free Cash Flow 14.1
Growth Rates
Sales Growth Rate 3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 40%
Cap. Spend. - 3 Yr. Gr. Rate -12.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 36.6%
Total Debt to Equity 38.7%
Interest Coverage -5
Management Effectiveness
Return On Assets -2.9%
Ret/ On Assets - 3 Yr. Avg. -10.6%
Return On Total Capital -4.7%
Ret/ On T. Cap. - 3 Yr. Avg. -15.9%
Return On Equity -6.6%
Return On Equity - 3 Yr. Avg. -21.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 42.4%
Gross Margin - 3 Yr. Avg. 42.1%
EBITDA Margin -3.2%
EBITDA Margin - 3 Yr. Avg. -35.4%
Operating Margin -26.5%
Oper. Margin - 3 Yr. Avg. -63.2%
Pre-Tax Margin -34.5%
Pre-Tax Margin - 3 Yr. Avg. -68.6%
Net Profit Margin -17.2%
Net Profit Margin - 3 Yr. Avg. -71.8%
Effective Tax Rate 52.8%
Eff/ Tax Rate - 3 Yr. Avg. 10.6%
Payout Ratio -9.1%

YRI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the YRI stock intrinsic value calculation we used $2415 million for the last fiscal year's total revenue generated by Yamana Gold Inc.. The default revenue input number comes from 2016 income statement of Yamana Gold Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our YRI stock valuation model: a) initial revenue growth rate of 6.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.9%, whose default value for YRI is calculated based on our internal credit rating of Yamana Gold Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Yamana Gold Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of YRI stock the variable cost ratio is equal to 219.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for YRI stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.3% for Yamana Gold Inc..

Corporate tax rate of 27% is the nominal tax rate for Yamana Gold Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the YRI stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for YRI are equal to 444.5%.

Life of production assets of 18.1 years is the average useful life of capital assets used in Yamana Gold Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for YRI is equal to 0%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6096 million for Yamana Gold Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 948.328 million for Yamana Gold Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Yamana Gold Inc. at the current share price and the inputted number of shares is $3.2 billion.

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Financial statements of YRI
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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