http://seekingalpha.com/article/1133...

Yamana Gold Inc.'s (AUY) new C$135-million equity financing doesn't do much for the company's earnings per share in 2009, but according to TD Newcrest analyst Steven Green, it does provide the company with a much needed buffer to fund its project development and debt repayments over the next few years.

"We believe the equity issue was a prudent move to shore up its cash balances given the state of the markets," Mr. Green said in a note to clients.

In addition to the new equity financing, the analyst noted that Yamana Gold also announced an additional C$200-million revolving credit facility and now has C$250-million available in undrawn credit and C$250-million in cash. The company's total debt, meanwhile, stands at C$580-million with a current repayment schedule of approximately C$84.2-million per year.

Mr. Green wrote:

We estimate the company will have plenty of cash flow to fund its debt repayment and project development with free cash flow (prior to debt repayment) of approximately C$850-million over the next four years.

When combined with his lowered copper price forecasts, the equity issue results in a reduction of Yamana's net asset value from C$6.79 to C$6.17. Mr. Green's estimates for earnings per share and cash flow per share in 2009 also dropped from C$0.45 to C$0.31 and from C$0.83 to C$0.69, respectively.

TD Newcrest's new copper price estimate for 2009 is $1.40 per pound, down from $2.25 previously.

As a result of his forecast changes, Mr. Green lowered his price target from $12 to $11 and reduced his rating from "action list buy" to "buy."