FOR: YAMANA GOLD INC.
TSX SYMBOL: YRI
NYSE SYMBOL: AUY
LSE SYMBOL: YAU
August 6, 2008
Yamana Gold Reports Second Quarter Results-Double Digit Growth in Revenue, Adjusted Earnings and Cash Flow
TORONTO, ONTARIO--(Marketwire - Aug. 6, 2008) - YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY)(LSE:YAU) today announced
its financial and operating results for the second quarter ended June 30, 2008. All dollar amounts are
expressed in US dollars unless otherwise specified.
2008 SECOND QUARTER HIGHLIGHTS
Highlights from the period of April 1, 2008 to June 30, 2008 include the following:
- Total revenue of $336.9 million.
- Mine operating earnings of $174.9 million.
- Adjusted earnings of $102.7 million or $0.15 per share.
- Cash flow from operations of $176.5 million before changes in non-cash working capital representing $0.26 per
share.
- Total production of 257,498 gold equivalent ounces (GEO) at average cash costs after by-product credits of
$(140) per GEO.
Financial and Operating Summary
Revenue for the second quarter 2008 was $336.9 million, representing an 83% increase from the second quarter
last year. Revenue for the six months ended was $693 million, representing a 111% increase from the comparative
period last year.
Mine operating earnings for the second quarter 2008 were $174.9 million, representing a 64% increase from the
second quarter last year. Mine operating earnings for the six months ended were $370.2 million, representing a
102% increase from the comparative period last year.
Adjusted earnings for the second quarter 2008 were $102.7 million, representing a 34% increase from the second
quarter last year. On a per share basis, adjusted earnings for the quarter were $0.15 per share. Adjusted
earnings for the six months ended were $237.4 million, representing an 89% increase from the comparative period
last year. Adjusted earnings per share were $0.35 for the six months ended in 2008.
Net earnings of $42.1 million are adjusted to reflect the economic impact of copper hedges. Adjusted earnings
best compares to analyst consensus estimates for earnings as the non-cash loss or gain impact of mark-to-market
for future delivery of copper sold forward do not impact the particular quarter for which financial results are
given. Adjusted earnings take into account only the gain or loss actually realized in the period. Certain non-
recurring items for the quarter are not included in adjusted earnings such as unrealized exchange gains and
losses and similar changes.
Cash flow from operations for the second quarter 2008 was $176.5 million before changes in non-cash working
capital items, representing a 94% increase from the second quarter last year. On a per share basis, cash flow
from operations was $0.26 before changes in non-cash working capital items, unchanged from the second quarter
last year. Cash flow from operations for the six months ended was $333.7 million before changes in non-cash
working capital items, representing a 109% increase from the comparative period last year. On a per share
basis, cash flow from operations for the six months ended was $0.49 before changes in non-cash working capital
items, representing a 9% increase from the comparative period last year.
Total production for the second quarter 2008 was 257,498 gold equivalent ounces (GEO), representing a 122%
increase from the second quarter last year. Total production for the first six months ended was 492,718,
representing a 108% increase from the comparative period last year. In addition, in the second quarter 2008
Yamana produced 44.8 million pounds of copper, representing a 42% increase from the second quarter last year.
Copper production for the six months ended was 85.7 million pounds, representing a 46% increase from the
comparative period last year.
By-product cash costs for the second quarter of 2008 were $(140) per GEO, compared to $(125) per GEO in the
first quarter of 2008, and $(434) per GEO in the second quarter last year. By-product cash costs for the six
months ended were $(133) per GEO, compared to $(267) per GEO for the comparative period last year.
Overview of Financial Results
The following table presents a summary of financial information for the three and six months ended June 30,
2008:
/T/
Three months Six months
ended ended
(in thousands of dollars) June 30, 2008 June 30, 2008
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Revenues $ 336,938 $ 692,998
Cost of sales (109,921) (219,886)
Depreciation, amortization and depletion (50,721) (100,351)
Accretion of asset retirement obligations (1,354) (2,571)
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Mine operating earnings 174,942 370,190
Expenses
General and administrative and other expenses (23,287) (39,630)
Other losses (3,042) (11,086)
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Operating earnings 148,613 319,474
Other expenses (77,838) (106,733)
Unrealized loss on derivatives 869 (102,479)
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Earnings before income taxes and equity
earnings 71,644 110,262
Income tax provision (38,828) (35,573)
Equity earnings from Minera Alumbrera 9,273 30,519
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Net earnings $ 42,089 $ 105,208
Earnings Adjustments:
Stock-based compensation 2,648 2,648
Foreign exchange loss 40,522 42,372
Unrealized (gain) or loss on derivatives (869) 102,479
Future income tax expense on foreign currency
translation of inter corporate debt 18,918 20,424
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Adjusted Earnings before income tax effects 103,308 273,131
Income tax effect of earnings adjustments (606) (35,764)
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Adjusted Earnings $ 102,702 $ 237,367
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Adjusted earnings per share $ 0.15 $ 0.35
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Cash flow from operating activities (before
changes in non-cash working capital items) 176,457 337,728
Cash flow from operating activities per share $ 0.26 $ 0.49
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Capital expenditures 158,708 275,441
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Cash and cash equivalents (end of period) $ 238,377 $ 238,377
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Average realized gold price per ounce $ 893 $ 911
Average realized silver price per ounce $ 17.20 $ 17.49
Chapada average realized copper price per lb $ 3.81 $ 3.73
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Gold sales (ounces) 193,150 380,350
Silver sales (millions of ounces) 2.9 5.3
Chapada payable copper contained in
concentrate sales (millions of lbs) 35.2 68.4
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/T/
The Company previously provided information on production and costs on an aggregate basis and by mine for Q2
2008 in its press release dated July 9, 2008. Further detail is available in Yamana's Q2 2008 Financial
Statements and Management's Discussion & Analysis. For complete financial disclosure and further detail about
the financial results and operations please see Yamana's Q2 2008 Financial Statements and Management's
Discussion & Analysis at www.yamana.com or www.sedar.com.
SECOND HALF 2008 GUIDANCE
Production for the second half of 2008 is expected to be 610,000 to 685,000 GEO. Production guidance for 2008
has been impacted by reduced expectations for Sao Francisco and Jacobina and increased expectations at El
Penon, Chapada and Gualcamayo which will be contributing more ounces and comparatively lower costs. At El
Penon, planned production remains on track to be at an annualized level of 500,000 GEO by the end of 2008. At
Chapada, production in the second half of the year is expected to exceed production in the first half.
Gualcamayo is expected to commence production by year end. Production for the balance of 2008 will in part also
depend on Alumbrera and Rossi, in which the Company has minority interests, establishing levels of production
that are not less than those reported for Q1. Both mines are expected to contribute a total of 22,000 GEO per
quarter. Copper production for 2008 is expected to be 190 to 200 million pounds, of which 155 to 160 million
pounds is expected to be from Chapada.
STRATEGIC OUTLOOK
Yamana has previously guided that its production range is expected to be 1.95 to 2.5 million GEO in 2012. Based
on existing reserves and resources, sustainable production of 1.95 million GEO is supported for and from 2012.
Assuming all projects are developed as planned and on schedule, the maximum production is expected to increase
to the higher end of the range. Based on existing reserves and resources and proposed increases at projects now
being evaluated, the Company has formed a strategic objective of 2.2 million GEO in 2012. As the Company
matures its projects, increases its reserves and resources and continues with feasibility work, the Company
will upgrade its strategic plan into a more formalized mine plan for each project under evaluation.
LOOKING AHEAD
Upcoming Events
/T/
----------------------------------------------------------------------------
Event Expected Date
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Ongoing drill programs at Mercedes and El Penon Throughout 2008
Production commences at Gualcamayo Late 2008
Begin operations at Sao Vicente Late 2008
Completion of Phase Two expansion at Jacobina Late 2008
Complete Minera Florida expansion Late 2008
Complete throughput increases at El Penon Late 2008
Gualcamayo feasibility level study update (QDD Lower West) Late 2008
Feasibility level study for Mercedes Late 2008
Complete internal study on Chapada pyrite and oxide project By late 2008
Complete feasibility level study for Chapada expansion By late 2008
Complete scoping study for El Penon mine and plant expansion By late 2008
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CONFERENCE CALL
A conference call and audio webcast is scheduled for August 7, 2008 at
11:00 a.m. E.T. to discuss the 2008 second quarter results.
Conference Call Information:
----------------------------
Local and Toll Free (North America): 866-696-5896
International: +1 416-641-6108
Participant Audio Webcast: www.yamana.com
Conference Call REPLAY:
-----------------------
Toll Free Replay Call: 800-408-3053 Passcode 3266333#
Replay Call: +1 416-695-5800 Passcode 3266333#
/T/
The conference call replay will be available from 1:00 p.m. EST on August 7, 2008 until 11:59 p.m. E.T. on
August 21, 2008.
Presentation Slides
Presentation slides will be available 30 minutes prior to the call and can be found on Yamana's website at
www.yamana.com.
For further information on the conference call or audio webcast, please contact the Investor Relations
Department or visit our website, www.yamana.com.
About Yamana
Yamana is a Canadian-based gold producer with significant gold production, gold development stage properties,
exploration properties, and land positions in Brazil, Argentina, Chile, Mexico, Central America and the United
States. Yamana is producing gold and other precious metals at intermediate company production levels in
addition to significant copper production. The company continues to build on this base through existing
operating mine expansions and throughput increases, the advancement of its exploration properties and by
targeting other gold consolidation opportunities in Brazil, Argentina, Chile and elsewhere in the Americas.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release contains certain "forward-looking
statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended
and "forward-looking information" under applicable Canadian securities laws. Except for statements of
historical fact relating to the company, information contained herein constitutes forward-looking statements,
including any information as to the Company's strategy, plant or future financial or operating performance.
Forward-looking statements are characterized by words such as "plan," "expect,", "budget", "target", "project,"
"intend," "believe," "anticipate", "estimate" and other similar words, or statements that certain events or
conditions "may" or "will" occur. Forward-looking statements are based on the opinions, assumptions and
estimates of management considered reasonable at the date the statements are made, and are inherently subject
to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or
results to differ materially from those projected in the forward-looking statements.
These factors include possible variations in ore grade or recovery rates, fluctuating metal prices (such as
gold, copper, silver and zinc), currency exchange rates (such as Brazilian Real versus the US Dollar), changes
in the Company's hedging program, changes in accounting policies, changes in the Company's corporate resources,
changes in project parameters as plans continue to be refined, changes in project development and production
time frames, risk related to joint venture operations, the possibility of project cost overruns or
unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other consumables
contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes
to operate as anticipated, unexpected changes in mine life, final pricing for concentrate sales, unanticipated
results of future studies, seasonality and unanticipated weather changes, 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, assumptions or opinions should
change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-
looking statements. The forward-looking information contained herein is presently for the purpose of assisting
investors in understanding the Company's expected financial and operational performance and results as at and
for the periods ended on the dates presented in the Company's plans and objectives and may not be appropriate
for other purposes.
NON-GAAP MEASURES
The Company has included certain non-GAAP measures including cash cost per gold equivalent ounce ("GEO") data,
adjusted net earnings (loss) and adjusted net earnings (loss) per share to supplement its financial statements,
which are presented in accordance with Canadian GAAP. Non-GAAP measures do not have any standardized meaning
prescribed under Canadian GAAP, and therefore they may not be comparable to similar measures employed by other
companies. The data is intended to provide additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance with Canadian GAAP.
The Company has included cash cost per ounce information data because it understands that certain investors use
this information to determine the Company's ability to generate earnings and cash flow for use in investing and
other activities. The Company believes that conventional measures of performance prepared in accordance with
Canadian GAAP do not fully illustrate the ability of its operating mines to generate cash flow. The measures
are not necessarily indicative of operating profit or cash flow from operations as determined under Canadian
GAAP. Cash costs are calculated on a by-product and co-product basis. Cash costs are determined in accordance
with the Gold Institute's Production Cost Standard. By-product cash costs are computed by deducting by-product
copper and zinc revenues from operating cash costs. Cash costs on a co-product basis are computed by allocating
operating cash costs separately to metals based on an estimated or assumed ratio. Where cost per ounce data is
computed by dividing GAAP operating cost components by ounces sold, the Company has provided a formal
reconciliation of these statistics in the Company's Management's Discussion and Analysis for the quarter ended
June 30, 2008 available at www.sedar.com or on the Company's website at www.yamana.com.
The Company uses the financial measures "Adjusted Earnings or Loss" and "Adjusted Earnings or Loss per share"
to supplement information in its consolidated financial statements. The presentation of adjusted measures are
not meant to be a substitute for net earnings (loss) or net earnings (loss) per share presented in accordance
with GAAP, but rather should be evaluated in conjunction with such GAAP measures. Adjusted Earnings or Loss and
Adjusted Earnings or Loss per share are calculated as net earnings excluding (a) stock-based compensation, (b)
foreign exchange (gains) losses, (c) unrealized (gains) losses on commodity derivatives, (d) impairment losses,
(e) future income tax expense (recovery) on the translation of foreign currency inter corporate debt, (f) debt
repayment expense, (g) non-controlling interest and (h) internal transaction costs. The terms "Adjusted
Earnings (Loss)" and "Adjusted Earnings (Loss) per share" do not have a standardized meaning prescribed by
Canadian GAAP, and therefore the Company's definitions are unlikely to be comparable to similar measures
presented by other companies. Management believes that the presentation of Adjusted Earnings or Loss and
Adjusted Earnings or Loss per share provide useful information to investors because they exclude non-cash and
other charges and are a better indication of the Company's profitability from operations. The items excluded
from the computation of Adjusted Earnings or Loss and Adjusted Earnings or Loss per share, which are otherwise
included in the determination of net earnings or loss and net earnings or loss per share prepared in accordance
with Canadian GAAP, are items that the Company does not consider to be meaningful in evaluating the Company's
past financial performance or the future prospects and may hinder a comparison of its period to period
profitability.
The Company uses the financial measure "cash flow from operations before changes in non-cash working capital"
or "cash flow from operating activities before changes in non-cash working capital" to supplement its
consolidated financial statements. The presentation of cash flow from operations before changes in non-cash
working capital is not meant to be a substitute for cash flow from operations or cash flow from operating
activities presented in accordance with GAAP, but rather should be evaluated in conjunction with such GAAP
measures. Cash flow from operations before changes in non-cash working capital excludes the non-cash movement
from period to period in working capital items including accounts receivable, advances and deposits, inventory,
accounts payable and accrued liabilities. The terms "cash flow from operations before changes in non-cash
working capital" do not have a standardized meaning prescribed by Canadian GAAP, and therefore the Company's
definitions are unlikely to be comparable to similar measures presented by other companies. The Company's
management believes that the presentation of cash flow from operations before changes in non-cash working
capital provides useful information to investors because it excludes the non-cash movement in working capital
items is a better indication of the Company's cash flow from operations and considered to be meaningful in
evaluating the Company's past financial performance or the future prospects. The Company believes that
conventional measure of performance prepared in accordance with Canadian GAAP does not fully illustrate the
ability of its operating mines to generate cash flow.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Yamana Gold Inc.
Letitia Wong
Director, Investor Relations
(416) 815-0220
Email: investor@yamana.com
Website: www.yamana.com
OR
MEDIA INQUIRIES:
Mansfield Communications Inc.
Hugh Mansfield
(416) 599-0024
-0-
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