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Shares in Yamana Gold Inc. surged the most in two years on Friday, after the mid-tier gold company swept past analyst expectations in its latest quarter and sounded a bullish tone on future production.

The bump in Yamana’s shares, which closed up 9.1 per cent on the Toronto Stock Exchange on Friday, comes the day after heavy selling in senior producers Barrick Gold Corp., Goldcorp Inc. and Agnico Eagle Mines Ltd., all of which missed quarterly earnings estimates.

Yamana’s second-quarter adjusted profit came in at 5 cents a share, 3 cents better than analysts were expecting, thanks to higher production and lower costs. On a net basis, the Toronto-based miner earned US$18-million in profit.

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Among Yamana’s best performing properties in the quarter were its Chapada mine in Brazil and Canadian Malartic in the Abitibi region of Quebec, which is one of Canada’s biggest-producing gold mines.

Yamana said it will likely exceed its 2018 production forecast of 900,000 ounces of gold, thanks in part to ramping up production at its new Cerro Moro mine in Argentina.

Credit Suisse Securities (Canada) Inc. analyst Anita Soni increased her price target for the stock on Thursday to US$4.25 a share from US$4, based on Yamana’s improving production profile.

Barrick closed up 1.4 per cent on Friday afternoon, after falling 6.3 per cent on Thursday, its worst selloff in nine months. The world’s biggest gold producer swung to a US$98-million loss in the second quarter, after booking a number of one-time charges, including US$28-million related to laying off an unspecified number of employees.

However, shares in both Agnico Eagle and Goldcorp came under pressure for the second straight session, falling 1.9 and 0.4 per cent respectively on Friday, after weak earnings reports on Wednesday evening. Goldcorp’s adjusted second quarter profit was 2 cents a share lighter than expected. Agnico missed estimates by 7 cents.

Over the past few years, gold companies have seen a noticeable uptick in share price volatility during earnings season, in part because investors are being increasingly blindsided by so-called “misses” or “beats” that analysts don’t see coming. In a report earlier this year, RBC Dominion Securities Inc. analyst Dan Rollins called for companies to disclose more information to offset such volatility.

This year, the entire Canadian gold sector has been grappling with investor concerns over falling bullion prices, stemming in part from the strengthening U.S. dollar. Since gold is priced in U.S. dollars, the higher value of the greenback makes the precious metal pricier for non-U.S. investors. On Friday, gold was trading around US$1,225 an ounce, down 6 per cent in 2018.

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Canadian gold companies are also facing the steep challenge of declining reserves. At the end of last year, Yamana held 13.7 million ounces in its reserves, down 26 per cent from 17.7 million ounces at the end of 2012.

Barrick, Goldcorp and Kinross Gold Corp. have all seen their reserves fall too over the past five years, as a result of the declining gold price, the sale of various non-core assets and the inability to find large new deposits.

Some observers have predicted that falling reserves will nudge the industry into a new round of mergers and acquisitions. Yamana itself participated in one of the biggest M&A deals in recent memory. In 2014, it teamed up with Agnico Eagle to buy Osisko Mining Corp., the owner and developer of the Canadian Malartic mine, for $3.9-billion.

Detour Gold Corp., which operates another of Canada’s biggest gold mines, is seen as one possible takeover candidate. While not officially for sale, its management recently said it was willing to consider selling itself if the right suitor shows up.

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