TIDMYAU
Yamana Gold Provides QDD Lower West Update
FOR: YAMANA GOLD INC.
TSX SYMBOL: YRI
NYSE SYMBOL: AUY
LSE SYMBOL: YAU
January 26, 2009
Yamana Gold Provides QDD Lower West Update
TORONTO, ONTARIO--(Marketwire - Jan. 26, 2009) - YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY)(LSE:YAU) today announced
the results of its studies relating to the mining of Gualcamayo's QDD Lower West underground deposit. Two
alternative approaches to mining the deposit were considered with the conclusion that QDD Lower West is
feasible as an underground operation under either approach. The approaches were evaluated based on overall
project cost, complexity, total gold recovery, value and return maximization and the potential for further
upside. Under the first approach, mining would be by shrinkage fill with production targeted to begin in 2011.
Under the second approach, a front caving with pillar recovery method would be used with targeted production
expected to begin in 2015. The latter approach would effectively extend Gualcamayo's expected mine life from
nine years to 13 years.
The Gualcamayo property is located in northern San Juan Province, Argentina, approximately 270 km north of the
provincial capital, San Juan City. It consists of three main mineral deposits, the main QDD deposit, the Amelia
Ines and Magdalena (AIM) satellite deposits and the QDD Lower West underground zone. The QDD Lower West deposit
is located at least 500 metres below QDD, towards the west and continued drilling on the deposit is expected to
increase reserves, particularly in the western extension.
The property is situated within a complex structural block of Cambrian/Ordovician carbonate sediments in the
Pre-cordillera formed by the Andean deformational east-west compression. Gold mineralization is disseminated
within carbonate sediments. The project has been evaluated based on approximately 15,000 metres of drilling,
although considerable drilling and other related exploration is ongoing in the western extension, extensive
geological, geotechnical and metallurgical test work, feasibility level design and engineering and initial
underground development to improve knowledge of the deposit and provide access for underground exploration. The
metallurgical testwork supports heap leaching recovery of approximately 80% within 30 days.
The QDD Lower West mineral resource estimate, based on a cut off grade of 1.0 g/t Au using sample data received
as of September 30, 2008, includes measured and indicated resources of 8.26 million tonnes grading 2.90 g/t Au
containing 769,000 ounces of gold, and inferred resources of 1.60 million tonnes grading 2.66 g/t Au containing
136,000 ounces of gold. This compares to previously announced (March 25, 2008 press release) measured and
indicated resources using a cut off grade of 1.0 g/t Au of 4.46 million tonnes grading 2.63 g/t Au containing
376,800 ounces of gold, and inferred resources of 2.81 million tonnes grading 2.59 g/t Au containing 234,100
ounces of gold. The table below shows a breakdown of the currently defined mineral resources using different
cut off grades between 1.0 and 2.0 g/t Au.
/T/
---------------------------------------------------------------------
Measured Indicated Measured and Indicated
=--------------------------------------------------------------------------
Tonnes Tonnes Tonnes
greater greater greater
than or than or than or
Cutoff equal in- equal in- equal in-
(g/t to Au situ to Au situ to Au situ
Au) Cutoff g/t ounces Cutoff g/t ounces Cutoff g/t ounces
=--------------------------------------------------------------------------
1.0 486,000 3.075 48,000 7,775,000 2.885 721,000 8,261,000 2.896 769,000
1.2 468,000 3.152 47,000 7,684,000 2.906 718,000 8,151,000 2.919 765,000
1.4 443,000 3.253 46,000 7,379,000 2.971 705,000 7,823,000 2.987 751,000
1.6 410,000 3.396 45,000 6,895,000 3.074 681,000 7,304,000 3.092 726,000
1.8 373,000 3.562 43,000 6,264,000 3.212 647,000 6,637,000 3.232 690,000
2.0 341,000 3.719 41,000 5,623,000 3.362 608,000 5,964,000 3.382 648,000
=--------------------------------------------------------------------------
Inferred
=---------------------------
Tonnes
greater
than or
Cutoff equal in-
(g/t to Au situ
Au) Cutoff g/t ounces
=---------------------------
1.0 1,595,000 2.657 136,000
1.2 1,595,000 2.657 136,000
1.4 1,591,000 2.659 136,000
1.6 1,563,000 2.680 135,000
1.8 1,436,000 2.766 128,000
2.0 1,214,000 2.923 114,000
=---------------------------
The results of the evaluation using the comparative approaches to mining are summarized as follows:
---------------------------------------------------
Shrinkage Fill Front Caving
---------------------------------------------------
Au
Tonnes Au g/t Oz Tonnes g/t Oz
=---------------------------------------------------------------------------
Proven 192,257 2.88 17,775 431,703 2.54 35,254
=---------------------------------------------------------------------------
Probable 3,484,625 2.63 294,671 6,872,156 2.46 543,525
=---------------------------------------------------------------------------
Internal Dilution
(Probable) 3,246,574 1.04 108,533 4,167,853 1.05 140,700
=---------------------------------------------------------------------------
Total Contained Reserves 6,923,456 1.89 420,979 11,471,712 1.95 719,479
=---------------------------------------------------------------------------
=-------------------------------------------------------
Mine Life (years) 4.5 7
=-------------------------------------------------------
Capex (US$ MM) $62 $62
=-------------------------------------------------------
Timing of Construction 2010-2011 2013-2015
=-------------------------------------------------------
Cash Costs (US$/Oz) $365 $293
=-------------------------------------------------------
After-tax IRR 20% 37%
=-------------------------------------------------------
/T/
The financial analysis for the studies used a gold price of US$725 per ounce. At the current gold price of
US$900 per ounce, the after-tax IRR for the QDD Lower West project using the front caving approach increases to
over 50% and the project would have an after-tax net present value (5% discount rate) of approximately US$100
million.
Production expectations under the two alternatives, adding production from the other Gualcamayo operations,
would be as follows:
/T/
PRODUCTION PROFILE (000 oz)(i)
--------------------------------------------------------
Shrinkage Fill Front Caving
--------------------------------------------------------
QDD LW QDD AIM TOTAL QDD LW QDD AIM TOTAL
=------------------------------------------------------------
2009 144 51 195 144 51 195
2010 140 80 220 140 80 220
2011 40 124 39 203 124 39 163
2012 79 156 33 268 156 33 188
2013 95 153 32 279 153 32 184
2014 102 140 32 275 140 32 172
2015 21 181 32 233 54 181 32 267
2016 192 5 197 108 192 5 305
2017 104 1 105 92 104 1 198
2018 92 92
2019 92 92
2020 74 74
2021 63 63
=------------------------------------------------------------
Total 337 1,333 305 1,975 576 1,333 305 2,214
=------------------------------------------------------------
(i)Variance range of plus/minus 7% for total production.
/T/
Both mining methods are feasible although the front caving mining alternative increases total minable ounces,
reduces costs, provides significantly improved returns, allows for the expansion of resources and better
addresses geotechnical constraints and provides for a longer mine life and a higher return and value. The
shrinkage fill method would accelerate production from QDD Lower West. Based on these results, the Company has
decided to advance the front caving mining method. Further, the Company will continue drilling with the goal of
proving up the QDD Lower West western extension which has the potential to significantly expand reserves. With
additional drilling and assuming an extension of QDD Lower West, the Company believes that it may accelerate
the production schedule under the front caving alternative by beginning mining in the western extremity,
thereby advancing production, further increasing the value of QDD Lower West and its return on investment.
Based on results of the study, advantages of pursuing the front caving alternative include:
- improved project returns and net present value;
- improved cash costs relating to the underground mining thereby decreasing the average cash costs for
Gualcamayo;
- significant increase in mineable and recoverable reserves;
- higher average head grade; and
- increased mine life for Gualcamayo to approximately 13 years from its current mine life of nine years.
The financial analysis of both alternatives suggests that the value of and the return for QDD Lower West are
more sensitive to gold price and operating costs than capital expenditures. As drilling continues, the Company
will continue to evaluate opportunities to further enhance project economics including the potential to reduce
operating costs, increase mineable reserves through extension to the west and accelerate production.
The current analysis for the front caving approach considers mining beginning in the area below the main QDD
open pit which is the area with the most defined resources. The Company continues to evaluate advancing
production before 2015 by beginning mining in the western extension using the same front caving mining
approach. The Company has allocated almost its entire US $6 million exploration budget for Gualcamayo in 2009
toward further exploration of QDD Lower West. The exploration program includes about 100 metres of underground
development and 10,000 metres of diamond drilling to extend the QDD Lower West deposit along strike to the
west. Any defined extension at the end of 2009 would allow the Company to further consider the merits of
beginning mining operations at QDD Lower West in the western extension, the result of which would be to capture
all the benefits of a longer mine life, better costs, more minable ounces, and better value and return from the
front caving approach while also adding the benefit of advancing production earlier than 2015.
LOOKING AHEAD
The Company is expecting to deliver an initial feasibility study for the Mercedes project in Mexico and also a
scoping study for the Ernesto/Pau-a-Pique project in Brazil in mid-February.
Qualified Person
Evandro Cintra, P. Geo., Senior Vice President, Technical Services of Yamana Gold Inc., has reviewed and
approved the contents of this press release and serves as the "Qualified Person" as defined by National
Instrument 43-101.
About Yamana
Yamana is a Canadian gold producer with significant gold production, gold development stage properties,
exploration properties, and land positions in Brazil, Argentina, Chile, Mexico and Central America. Yamana is
producing gold and other precious metals at intermediate company production levels in addition to significant
copper production. Company management plans to continue 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 and elsewhere in the Americas.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release contains certain "forward-looking
statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and
"forward-looking information" under applicable Canadian securities legislation. 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, plans 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, but are not limited to, the advantages determined based on findings of the various
studies conducted on the QDD Lower West underground deposit proving to be accurate, the impact of general
business and economic conditions, global liquidity and credit availability on the timing of cash flows and the
values of assets and liabilities based on projected future conditions, possible variations in ore grade or
recovery rates, fluctuating metal prices (such as gold, copper, silver and zinc), currency exchange rates (such
as the Brazilian Real and the Chilean Peso versus the United States 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, costs and timing of the development of new deposits, success of
exploration activities, permitting time lines, 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 and labour disputes, 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 the Company's plans and
objectives and may not be appropriate for other purposes.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Yamana Gold Inc.
Jodi Peake, Vice President,
Corporate Communications & Investor Relations
(416) 815-0220
Email: investor@yamana.com
OR
Yamana Gold Inc.
Letitia Wong
Director, Investor Relations
(416) 815-0220
Email: investor@yamana.com
Website: www.yamana.com
OR
MEDIA CONTACT:
Mansfield Communications Inc.
Hugh Mansfield
(416) 599-0024
Yamana Gold Inc.
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