TIDMYAU
Yamana Gold provides 2010 and 2011 operating outlook
TORONTO, Jan. 12 /CNW/ - YAMANA GOLD INC. (TSX: YRI; NYSE: AUY; LSE: YAU)
today announced its operating outlook including production, cash costs and
capital expenditure guidance for 2010 and 2011. All amounts are expressed in
United States Dollars unless otherwise indicated.
"Our objective has been to create consistency and reliability in our
operations with a sustainable production platform of approximately 1.1 million
gold equivalent ounces at consistent cash costs," said Peter Marrone, Yamana's
chairman and chief executive officer. "Our outlook for the next few years
maintains that objective. Going forward, our development stage and exploration
projects, in addition to further value enhancing opportunities, will provide
Yamana with a superior organic growth profile and value proposition."
2010 AND 2011 OPERATING OUTLOOK
Production from continuing operations is expected to be in the range of
1,030,000 to 1,145,000 gold equivalent ounces (GEO) in 2010 and 1,045,000 to
1,150,000 GEO in 2011, representing an overall increase of up to 12 percent in
production from continuing operations in 2009. Production from discontinued
operations is expected to be approximately 40,000 GEO in the first quarter of
2010, which is not included in the estimated production ranges set forth
above. No further production from discontinued operations is expected after
the first quarter of 2010.
Estimated gold and copper production on a mine by mine basis for 2010 and
2011 is detailed below.
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Gold Production Estimates (GEO) 2010E 2011E
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Chapada 140-155,000 135-145,000
El Penon (GEO) 400-420,000 410-430,000
Gualcamayo 165-180,000 165-180,000
Jacobina 105-125,000 110-130,000
Minera Florida (GEO) 100-125,000 110-130,000
Fazenda Brasileiro 70-85,000 70-85,000
Alumbrera (12.5%) 50-55,000 45-50,000
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Total GEO(x) 1,030-1,145,000 1,045-1,150,000
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Copper (lbs) (Chapada) 150-160 million 135-145 million
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(x) GEO calculations are based on an assumed gold to silver ratio of 55:1
which is a long term historical average. Silver production of
approximately 10 million ounces for 2010 and 2011 is treated as a
gold equivalent on this basis.
Growth is expected to ramp up substantially in 2012 as four development
stage projects including C1 Santa Luz, Mercedes and Minera Florida tailings
project, where construction decisions have already been made, in addition to
Ernesto/Pau-a-pique, where a feasibility study is pending, are expected to
begin production. These four projects are expected to contribute an additional
approximately 390,000 GEO annually. Production in 2012 is expected to be
approximately 1.3 million GEO as these projects commence operations and begin
to ramp up, with production by the end of 2012 expected to be at a planned
annual run rate of approximately 1.5 million GEO, which represents a 46
percent increase in production from 2009.
A summary of expected gold production on a year by year basis is as
follows:
--------------------------------
Year Production (GEO)
--------------------------------
2010 Approx. 1.1 million
--------------------------------
2011 Approx. 1.1 million
--------------------------------
2012 Approx. 1.3 million
--------------------------------
2013 Approx. 1.5 million
--------------------------------
These estimates do not include any additional production from Agua Rica
or new discoveries at El Penon, where updates are expected in the first
quarter of 2010, or QDD Lower West, where an update is expected in the second
half of 2010.
By-product cash costs(1) from continuing operations (excluding Alumbrera)
are expected to be below $200 per GEO in each of 2010 and 2011 based on
assumed metal prices set forth below. Co-product cash costs(1) from continuing
operations (excluding Alumbrera) are expected to be in the range of $360 to
$400 per GEO in 2010 and $370 to $400 per GEO in 2011. Co-product cash costs
per pound of copper at Chapada are expected to be $1.00 to $1.10 in 2010 and
$1.10 to $1.20 in 2011.
Estimated cash costs for gold on a mine by mine basis for 2010 and 2011
are detailed below.
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Co-Product Cash Cost Estimates per GEO 2010E 2011E
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Chapada $280-$300 $320-$350
El Penon (per GEO) $350-$390 $340-$360
Gualcamayo $340-$380 $350-$390
Jacobina $500-$525 $500-$550
Minera Florida (per GEO) $350-$390 $340-$370
Fazenda Brasileiro $500-$550 $500-$550
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By-product cash costs(2) Below $200 Below $200
-------------------------------------------------------------------------
Chapada, Brazil
Production at Chapada is expected to be in the range of 140,000 to
155,000 ounces of gold per year in 2010 and 135,000 to 145,000 ounces of gold
in 2011. Co-product cash costs are expected to be $280 to $300 per ounce in
2010 and $320 to $350 per ounce in 2011. Yamana has begun with plant
optimizations scheduled to increase throughput to up to 22 million tonnes per
year before 2012.
El Penon, Chile
Production at El Penon is expected to be in the range of 400,000 to
420,000 GEO in 2010 with production in the first quarter of 2010 expected to
be lower than production in the fourth quarter of 2009, but higher than levels
in the first quarter of 2009. Production is anticipated to ramp up quarter
over quarter in 2010 similar to the trend in 2009. Grade is also expected to
improve throughout 2010 with a significant increase expected in the fourth
quarter of 2010 and into 2011 as the development of Bonanza is completed and
begins to contribute to production. Production at El Penon in 2011 is expected
to be 410,000 to 430,000 GEO.
Exploration results to date at Bonanza have been better than expected and
continuing exploration efforts in 2010 will focus on extending the known
deposits, infill drilling to upgrade certain inferred mineral resources,
continuing with efforts at new discoveries and a broader regional exploration
program.
Cash costs are expected to average between $350 and $390 per GEO in 2010.
Cash costs are expected to be higher in the first quarter of 2010 and to
decline throughout the year as production ramps up.
In the fourth quarter of 2009, the Company began a transition to
owner-mining at El Penon. This is expected to modestly impact production and
cash costs in the fourth quarter of 2009 and the first quarter of 2010 as the
transition to owner-mining is completed. Cash costs and production are then
expected to improve going forward.
Yamana had contemplated transitioning to owner-mining for some time as
all other mines operated by Yamana are owner-mined. Cash costs are expected to
decline substantially in the fourth quarter of 2010 and cash costs in 2011 are
expected to average between $340 and $360 per GEO as Bonanza begins to
contribute to production and the longer term benefits of owner-mining are
realized.
Gualcamayo, Argentina
Production at Gualcamayo is expected to be in the range of 165,000 to
180,000 ounces of gold in each of 2010 and 2011. Going forward, the Company
believes sustainable production at Gualcamayo will be approximately 180,000
ounces. Production in 2010 and 2011 is expected to come solely from the main
QDD open pit deposit. Further production increases are expected to come from
Yamana's continued plans to increase throughput to 1,500 tonnes per hour and
processing ore from AIM and QDD Lower West. The expansion to 1,500 tonnes per
hour is planned to be completed by the end of 2010.
Metallurgical testwork continues at the AIM deposit to create more
reliability and certainty in the ore metallurgy. In addition, QDD Lower West
feasibility study results are expected in the second half of 2010.
The Company is currently also conducting metallurgical testwork at
Salamanca, which is the newest discovery at Gualcamayo. Positive drill results
in 2009 support Yamana's view that Salamanca may represent an important source
of further gold ounces for Gualcamayo. Drilling continues in 2010 with the
objective of providing a mineral resource estimate for Salamanca in the first
half of 2010.
Cash costs at Gualcamayo are expected to be in the range of $340 to $380
per ounce in 2010 and $350 and $390 per ounce in 2011.
Jacobina, Brazil
Production at Jacobina is expected to be in the range of 105,000 to
125,000 ounces of gold in 2010 increasing to 110,000 to 130,000 ounces in
2011. Yamana expects to process ore at 6,000 tonnes per day in 2010 consistent
with the fourth quarter of 2009 and at the increased rate of 6,200 tonnes per
day by early 2011. Yamana continues with drilling to increase certainty of
grade and better layout of the drilling stopes.
The Company remains focused on improving dilution and recovery as well as
exploring, discovering and developing higher grade areas including
Canavieiras. Jacobina will have a period of lower grades in 2010 and 2011 as
compared to 2009. Production in these years is expected to come mostly from
Joao Belo with modest contributions from Basal.
Positive drill results continue to confirm the high grade at Canavieiras
and the significant sample results at Moro do Vento show the potential for new
inferred mineral resource ounces.
Exploration upside is in areas with grade higher than the current mine
grade. With the new discovery of Serra da Lagartixa in 2009, exploration
efforts in 2010 will be focused on near mine drilling in this target and more
aggressively pursuing higher grade areas of mineralization for future mining.
Cash costs in 2010 are expected to be $500 to $525 per ounce of gold and
$500 to $550 per ounce of gold in 2011.
Minera Florida, Chile
Production at Minera Florida is expected to be in the range of 100,000 to
125,000 GEO in 2010, an increase of up to 35% from 2009 production levels
reflecting the first full year of production following the expansion.
Production in 2011 is expected to be 110,000 to 130,000 GEO. Cash costs are
expected to be $350 to $390 per GEO in 2010 and $340 to $370 per GEO in 2011.
Fazenda Brasileiro, Brazil
Production at Fazenda Brasileiro is expected to be 70,000 to 85,000
ounces of gold for each of 2010 and 2011. Cash costs are expected to be $500
to $550 per ounce for each of 2010 and 2011. As Fazenda Brasileiro reaches the
end of its known mine life based on mineral reserves, exploration efforts
continue to focus on two newly discovered areas, CLX2 and Lagoa do Gato, which
Yamana believes represent significant potential to increase the mine life.
Yamana's exploration focus at Fazenda Brasileiro has been the replacement of
mineral reserves and mineral resources and the Company intends to continue
these efforts to meaningfully increase mineral reserves and mineral resources
in these new areas.
FULLY FUNDED GROWTH
Capital expenditures for 2010 and 2011 are expected to be approximately
$515 million and $455 million, respectively. This includes sustaining capital
expenditures of $230 million in 2010 which includes the purchase of machinery
and equipment as Yamana transitions to owner-mining at El Penon (representing
approximately $60 million). Sustaining capital expenditures in 2011 are
expected to be $155 million. The majority of the expansionary capital costs
for the two years are allocated to the development of Yamana's growth
projects, C1 Santa Luz, Mercedes, the Minera Florida tailings project and
Ernesto/Pau-a-pique (feasibility study to follow in January 2010), all of
which are expected to begin production in 2012.
With approximately $600 million of available cash and immediate and
undrawn credit available in addition to expected robust cash flow, Yamana is
fully funded for its growth.
Yamana continues to focus on exploration with an exploration budget in
2010 of between $75 to $80 million (approximately half of which is
capitalized). Yamana's 2010 exploration program will focus on increasing
mineral reserves and mineral resources while continuing with its near-mine
exploration program and its efforts to look for new opportunities and on the
ground purchases elsewhere in the Americas. The Company is focused on
developing its future based on its exploration successes and organic growth.
ASSUMPTIONS
Assumptions for metal prices and exchange rates are as follows:
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2010 2011
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Gold (US$/oz) 1,050 1,050
Silver (US$/oz) 18.80 18.80
Copper (US$/lb) 2.75 2.75
Zinc (US$/lb) 1.00 1.00
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BRL Real/US$ 1.80 1.80
ARG Peso/US$ 4.00 4.25
CLP Peso/US$ 500 500
----------------------------------------
FOURTH QUARTER AND 2009 OPERATIONAL UPDATE
Yamana provided the following operational update for the fourth quarter
and full year of 2009. Total production during the fourth quarter of 2009
continued to increase to a record level of approximately 325,300 GEO of which
approximately 289,600 GEO was from continuing operations, representing an
increase of eight percent from the third quarter of 2009. Production at
Gualcamayo continued to ramp up to 59,000 ounces in the fourth quarter of 2009
and continues to meet and exceed expectations. At El Penon, Yamana has
undergone a transition to owner-mining in the quarter, which will modestly and
temporarily cause a decrease in production and increase in costs affecting the
fourth quarter of 2009 and the first quarter of 2010. Production in December
at El Penon with the completion of the plant upgrade, although during this
owner-mining transition period, was in excess of 44,000 GEO and over 109,000
GEO for the quarter. For the full year-ended December 31, 2009, total
production for Yamana was approximately 1,201,200 GEO, of which approximately
1,026,000 GEO was from continuing operations.
Production on a mine by mine basis for the fourth quarter of 2009 and for
the full year is summarized in detail below:
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Production (GEO) Q4 2009 2009
-------------------------------------------------------
Chapada 42,200 156,200
El Penon (GEO) 109,900 394,400
Gualcamayo 59,000 143,400
Jacobina 24,800 110,500
Minera Florida (GEO) 24,700 92,400
Fazenda Brasileiro 17,500 76,400
Alumbrera (12.5%) 11,500 52,700
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Total Production from
Continuing Operations 289,600 1,026,000
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Discontinued Operations 35,700 175,200
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Total Production 325,300 1,201,200
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In the fourth quarter of 2009 and for the full year of 2009, every ounce
of gold from continuing operations (excluding Alumbrera) was produced at below
$100 per GEO and below $190 per GEO, respectively, after by-product credits,
realizing a significant margin to the gold price. Cash costs on a co-product
basis from continuing operations (excluding Alumbrera) for the fourth quarter
of 2009 and for the full year of 2009 were $360 per GEO, in line with original
guidance of $345 to $375 per GEO.
FINANCIAL RESULTS
Yamana will release its full fourth quarter financial results including
mineral reserve and mineral resource data after the close of business on March
3, 2010. A conference call will follow on March 4, 2010 at 11:00 a.m. Eastern
Time.
Conference Call Information:
----------------------------
Toll Free (North America): 1-888-231-8191
International: 647-427-7450
Participant Audio Webcast: www.yamana.com
Conference Call REPLAY:
-----------------------
Toll Free Replay Call (North America): 800-642-1687, Passcode: 46908469
Replay Call: 416-849-0833, Passcode: 46908469
The conference call replay will be available from 2:00 p.m. Eastern Time
on March 4, 2009 until 11:59 p.m. Eastern Time on March 18, 2009.
For further information on the conference call or audio webcast, please
contact the Investor Relations Department or visit our website,
www.yamana.com.
Upcoming Events
This press release is a part of a series of announcements and will be
followed by results from the Ernesto/Pau-a-pique feasibility study and an
update on Agua Rica. The following summarizes the upcoming events:
- Ernesto/Pau-a-pique feasibility study: January 2010
- Update on Agua Rica: Q1 2010
- Update on El Penon exploration: Q1 2010
- Update to Yamana's mineral reserves and mineral resources: Q1 2010
- Pilar feasibility study: mid-2010
- Caiamar mineral resource estimate: mid-2010
- Salamanca mineral resource estimate: H1-2010
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 and Colombia. The Company
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 the
Americas.
NON-GAAP MEASURES
The Company believes that in addition to conventional measures prepared
in accordance with Canadian GAAP, the Company and certain investors and
analysts use certain other non-GAAP financial measures to evaluate the
Company's performance including its ability to generate cash flow and profits
from its operations. The Company has included certain non-GAAP measures
including "By-product cash costs per gold equivalent ounce" and "Co-product
cash costs per gold equivalent ounce" throughout this document. Cash costs on
a co-product basis are computed by allocating operating cash costs separately
to metals (copper and gold) based on an estimated or assumed ratio. Cash costs
on a by-product basis are computed by deducting copper by product revenues
from the calculation of cash costs of production per GEO. When reference is
made to "cash costs" in this document, the Company is referring to co-product
cash costs. 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.
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
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 exploration and development of new
areas and deposits, success of exploration activities, successful transition
to owner-mining, permitting timelines, 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.
----------------
(1) Co-product and by-product cash costs are non-GAAP measures. A
definition is provided at the end of this press release.
(2) Excluding cash cost estimates from Alumbrera
For further information: Letitia Wong, Director, Investor Relations, (416)
815-0220, Email: investor(at)yamana.com; MEDIA CONTACT: Mansfield
Communications Inc., Hugh Mansfield, (416) 599-0024
(YRI. AUY YAU)
END
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