YAMANA
GOLD INC.
(TSX:
YRI; AMEX: AUY; LSE (AIM): YAU) is pleased to announce its operating outlook
for
2006 and beyond.
Gold
production is expected to exceed 340,000 ounces in 2006 increasing to more
than
500,000 ounces in 2007 from mines currently in production and mines under
construction. For 2008, total gold production is expected to increase to
almost
600,000 ounces.
Estimated
gold production to 2008 from Yamana’s properties (shown pro forma assuming the
completion of the acquisition of RNC Gold Inc. which includes the acquisition
of
the San Andres mine in Honduras by March 1, 2006) is detailed
below.
|
Gold
Production Estimates
|
|
2006E
|
|
2007E
|
|
2008E
|
| |
|
|
|
|
|
|
|
Fazenda
Brasileiro
|
|
80-85,000
|
|
80-85,000
|
|
80-85,000
|
|
Fazenda
Nova
|
|
30-33,000
|
|
30-33,000
|
|
25-30,000
|
|
São
Francisco
|
|
120-126,000
|
|
125-135,000
|
|
125-135,000
|
|
Chapada
|
|
15-19,000
|
|
160-176,000
|
|
190-210,000
|
|
San
Andres
|
|
50-60,000
|
|
55-65,000
|
|
55-65,000
|
|
La
Libertad
|
|
45-50,000
|
|
50-60,000
|
|
50-60,000
|
| |
|
|
|
|
|
|
|
Total
|
|
340-373,000
|
|
500-554,000
|
|
525-585,000
|
| |
|
|
|
|
|
|
|
Average
Projected Total Cash Costs/Ounce
|
|
$260-275
|
|
$70-90
|
|
$50-70
|
Cash
costs assume copper will be treated as a by-product credit starting in 2007
with
an assumed copper price of $1.25\lb.
Potential
gold production from advanced projects including São
Vicente,
Ernesto, C1 Santa Luz or from RNC’s Cerro Quema property have not been included
in the above table as these projects are subject to completion of feasibility
studies or favorable construction decisions. However, current internal estimates
and completed scoping studies suggest that these properties could contribute
in
excess of an additional 225,000 ounces of gold production beginning late
2007 or
early 2008.
Gold
production at
Chapada
in 2006
will mainly depend on whether or not mine construction is completed in September
2006. Commercial production is assumed around 1st
quarter
2007. Copper production at Chapada is expected to be 15M pounds, 128M pounds
and
185M pounds for 2006, 2007 and 2008, respectively.
Production
in 2006 includes the first year of operations for São
Francisco and assumes commercial production around March 2006.
Information
relating to production ounces includes ounces produced before a mine is
considered in commercial production. Commercial production is a convention
for
determination of the point at which a mine is producing at a sustainable
commercial level, after which costs are no longer capitalized and are considered
to be operating costs. Commercial production will vary from mine to mine
and
differs amongst various companies. Cash costs shown above reflect operating
costs after declaration of commercial production.
Gold
production information for San Andres and La Libertad has been provided by
RNC
and adjusted to reflect Yamana’s current view of the respective mine plans.
Yamana continues to evaluate these mines as part of its transition plan relating
to the integration of these operations. Further, while Yamana believes the
purchases of San Andres and RNC will be completed as originally contemplated,
a
shareholder vote of RNC is scheduled for mid-February 2006 relating to the
approval of the transactions. RNC has completed the purchase of San Andres
and
Yamana has advanced funds in that regard. Yamana has the option of applying
the
advanced funds to purchase San Andres in certain circumstances including
in the
event that RNC shareholder approval is not obtained as
previously announced.
RNC
gold
production is shown effective as of the acquisition date of March
2006.
Production
estimates for Fazenda Brasileiro incorporate only limited production
in
2006
and 2007 resulting from access to the higher grade C Quartz and E-Deep areas.
Mining of lower grade material at Fazenda Brasileiro will continue throughout
2006 and part of 2007 to permit access to higher grade lower areas at E-Deep.
There
are
considerable ordinary course start-up adjustments of a heap leach mine operation
such as Sao Francisco which may affect production levels in 2006. Actual
production for 2006 may also be affected by rainfalls which could delay the
start-up of operations.
Construction
of Chapada is on track with start-up expected in September 2006.
Yamana’s
cash balance (together with loan receivable relating to the purchase of San
Andres) as at December 31, 2005 was approximately $170 million and together
with
cash flow from operations is expected to be sufficient to finance construction
and sustaining capital costs for its mines under construction and existing
mines.
Cash
costs have assumed a Reais to US Dollar exchange rate in 2006 of 2.43 to
1.0 and
in 2007 and 2008 of 2.6 to 1.0 which is a more favorable US Dollar exchange
rate
than the current rate, but in line with Brazilian consensus estimates for
these
years. All dollar amounts shown herein are US Dollars.
On
the
exploration front, Yamana has allocated approximately $9 million in 2006
to an
exploration program focusing primarily on the Itapicuru greenstone belt north
of
Fazenda Brasileiro and on the Santa Elina Gold Belt primarily in areas
between São
Francisco and São Vicente. Yamana is evaluating an exploration program for RNC
properties.
The
focus
for Yamana for 2006 and 2007 will continue to include the
following.
| · |
Advance
exploration and development
projects
|
| · |
Complete
construction of Chapada
|
| · |
Increase
reserves at São
Francisco from a current infill program to establish a mine life
of over
ten years
|
| · |
Pursue
acquisition targets
|
| · |
Continue
its extensive exploration program in Brazil and Central
America
|
Once
the
RNC transactions are completed, Yamana will have five mines in operation
with
Chapada operations beginning later this year. Yamana will also have four
advanced exploration and development stage projects along with an extensive
Brazilian and Central American exploration portfolio. Yamana’s objective remains
to achieve a sustainable annual production rate of at least 750,000 ounces
of
gold per year beginning in 2008.
Yamana
is
a Canadian gold producer with significant gold production, gold and copper-gold
development stage properties, exploration properties and land positions in
all
major mineral areas in Brazil. Yamana expects to produce gold at intermediate
company production levels by 2006 in addition to significant copper production
by 2007. Yamana also holds gold exploration properties in Argentina. Company
management plans to build on this base by targeting other gold consolidation
opportunities in Brazil and elsewhere in Latin America.
For
further information, contact
|
Peter
Marrone
President
& Chief Executive Officer
(416)
815-0220
E-mail:
investor@yamana.com
|
|
FORWARD-LOOKING
STATEMENTS: This
document contains “forward-looking statements” that involve a number of risks
and uncertainties. Forward-looking statements include, but are not limited
to,
statements with respect to the future price of gold, the estimation of mineral
reserves and resources, the realization of mineral estimates, the timing
and
amount of estimated future production, costs of production, capital
expenditures, costs and timing of the development of new deposits, success
of
exploration activities, permitting time lines, currency fluctuations,
requirements for additional capital, government regulation of mining operations,
environmental risks, unanticipated reclamation expenses, title disputes or
claims, limitations on insurance coverage and timing and possible outcome
of
pending litigation. Often, but not always, forward-looking statements can
be
identified by the use of words such as “plans”, “expects”, or “does not expect”,
“is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”,
“anticipates”, or “does not anticipate”, or “believes”, or variations of such
words and phrases or state that certain actions, events or results “may”,
“could”, “would”, “might” or “will” be taken, occur or be achieved.
Forward-looking statements are based on the opinions and estimates of management
as of the date such statements are made, and they involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any
other future results, performance or achievements expressed or implied by
the
forward-looking statements. Such factors include, among others: the actual
results of current exploration activities; actual results of current reclamation
activities; conclusions of economic evaluations; changes in project parameters
as plans to continue to be refined; future prices of gold; possible variations
in ore grade or recovery rates; failure of plant, equipment or processes
to
operate as anticipated; accidents, labour disputes and other risks of the
mining
industry; delays in obtaining governmental approvals or financing or in the
completion of development or construction activities, fluctuations in metal
prices, as well as those risk factors discussed or referred to in the Company’s
annual Management’s Discussion and Analysis and Annual Information Form filed
with the securities regulatory authorities in all provinces of Canada and
available at www.sedar.com,
and the Company’s Annual Report on Form 40-F filed with the United States
Securities and Exchange Commission. Although the Company has attempted to
identify important factors that could cause actual actions, events or results
to
differ materially from those described in forward-looking statements, there
may
be other factors that cause actions, events or results not to be anticipated,
estimated or intended. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. The Company undertakes
no
obligation to update forward-looking statements if circumstances or management’s
estimates or opinions should change. Accordingly, readers are cautioned not
to
place undue reliance on forward-looking statements.