TIDMYAU
YAMANA GOLD ANNOUNCES FIRST QUARTER 2011 RESULTS
PRODUCTION INCREASED 11%, REVENUES INCREASED 37%, CASH FLOW INCREASED 73% AND
ADJUSTED EARNINGS INCREASED 110%
(Based on IFRS and in United States dollars unless otherwise specified)
TORONTO, May 3 /CNW/ - YAMANA GOLD INC. (TSX:YRI; NYSE:AUY; LSE:YAU) ("Yamana"
or "the Company") today announced its financial and operating results for the
first quarter of 2011.
HIGHLIGHTS FOR THE FIRST QUARTER 2011
- Production of 267,368 per gold equivalent ounce (GEO)(1)(3)at cash
costs of $14/GEO(1)(2)
- Gold production of 221,489 ounces
- Silver production of 2.3 million ounces
- Generated cash margin of $1,373 per ounce(4)
- Significant financial and operational increases over the first
quarter of 2010
- Production increased 11% to 267,368 GEO with record production
from El Penon
- Revenues up 37% to $476 million
- Net earnings up 11% to $0.20 per share
- Adjusted earnings(1) up 110% to $0.21 per share
- Cash flow generated from operations(1) up 73% to $0.38 per share
- Cash balance increased to $460 million from $330 million, a 39%
increase since 2010 year end
- Announced value enhancing deal with respect to Agua Rica with Xstrata
and Goldcorp
"Yamana's first quarter results continued to demonstrate our commitment to, and
focus on, the delivery of predictable and reliable production and costs. We
delivered production growth in the first quarter and record production from El
Penon. Our cash costs continued to be one of the lowest in the industry"
commented Peter Marrone, Chairman and CEO. "We continue to advance our new
projects, the first of which, Mercedes, is expected to start production by the
middle of 2012. C1 Santa Luz and Ernesto Pau-a-Pique will begin contributing by
the end of 2012 and Pilar is expected to be in production in early 2013. All of
the projects can be fully funded directly from our cash flow. These projects
will contribute to our 60% production growth expected in the next three years."
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(1) Refers to a non-GAAP measure. Reconciliations can be found at the end
of this press release.
(2) Cash costs are shown on a by-product basis including Alumbrera unless
otherwise noted.
(3) Gold equivalent ounces include silver production at a ratio of 50:1.
(4) Cash margin is the difference from the average realized gold price
received in the period less the by-product cash costs.
KEY STATISTICS
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For the quarter ended March 31
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In millions of US dollars except where noted 2011 2010
-----------------------
Revenues $ 476.1 $ 346.3
Cost of sales excluding depletion, depreciation
and amortization 157.1 145.1
Depletion, depreciation and amortization 80.5 70.0
General and administrative expenses 27.4 25.3
Exploration expenses 6.5 6.7
Operating Earnings 212.7 111.5
Equity earnings form Alumbrera 11.7 11.6
Adjusted earnings 152.2 75.9
Adjusted earnings per share 0.21 0.10
Cash flow generated from operations after changes
in working capital 228.9 141.4
Per share 0.31 0.19
Cash flow generated from operations before changes
in working capital 282.3 163.1
Per share 0.38 0.22
Average realized gold price per ounce $ 1,387 $ 1,114
Average realized silver price per ounce $ 33.99 $ 17.07
Average realized copper price per pound $ 4.28 $ 3.25
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PRODUCTION SUMMARY
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For the quarter ended March 31
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2011 2010
Total gold equivalent ounces - produced 267,368 239,838
Gold produced 221,489 190,663
Silver produced (millions of ounces) 2.3 2.7
Total gold equivalent ounces - sold 265,500 247,035
Total copper produced - Chapada (millions of
pounds) 38.5 29.7
Total copper sold - Chapada (millions of pounds) 29.7 29.1
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For the quarter ended
March 31
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2011 2010
Co-product cash costs per gold equivalent ounce $ 449 $ 423
Cash cost per pound of copper - Chapada $ 1.21 $ 1.24
By-product cash costs per gold equivalent ounce $ 14 $ 86
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FINANCIAL AND OPERATING SUMMARY
Revenues were $476 million in the first quarter from the sale of 208,135 ounces
of gold, 2.3 million ounces of silver, and 29.7 million pounds of copper
compared with $346 million in the same quarter of 2010. Sales quantities for
the quarter were lower than production particularly in copper resulting in an
increase in inventory at the end of the quarter which will positively impact
earnings in the second quarter.
Adjusted Earnings were $152 million or $0.21 per share, an increase of 110%, in
the first quarter of 2011 compared with $75.9 million or $0.10 per share in the
same quarter of 2010.
Net earnings for the quarter were $148 million compared with net earnings of
$132 million for the first quarter of 2010, which included earnings from
discontinued operations of $7.4 million. Earnings per share were $0.20 on a
basic and diluted basis for the first quarter of 2011, compared with basic and
diluted earnings per share of $0.18 for the same quarter in 2010.
Cash flow generated from operations before changes in working capital were
$282.3 or $0.38 per share compared with $163.1 million for the first quarter of
2010, which has been restated to reflect the composition of the revised measure
for cash flows under IFRS.
The increase in cash flows generated from operations was primarily due to an
increase in metal prices generating higher sales revenues, lower cash costs
after credits and positive pricing adjustments for copper in concentrate.
Cash and cash equivalents as at March 31, 2011 were $460 million, representing
an increase of $130 million since December 31, 2010.
In the three months ended March 31, 2011, production of gold equivalent ounces
(GEO) totaled 267,368 compared with 239,838 GEO in 2010, representing a
quarter-to-quarter increase of 11%.
In the first quarter, copper production of 38.5 million pounds from Chapada
increased by 30% over production of 29.7 million pounds in the first three
months of 2010. Additionally, 7.1 million pounds of copper produced from
Alumbrera were attributable to the Company in the first three months of 2011,
compared to 11.8 million pounds in the same quarter of 2010.
For the quarter, by-product cash costs from operations were $14 per GEO, an 84%
decrease from the $86 per GEO in the same period in 2010. By-product cash costs
take into account the natural hedge of by-product metal prices for the
Company's production cost structure. By-product credits inherently offset
mining inflation during periods of high metal prices. The Company believes that
by-product cash costs are a better representation of its cost structure. Lower
by-product cash costs compared to last year reflect strong cost containment and
strong copper prices which mitigated cost pressures due to mining industry
inflation and the appreciation of currencies in the countries where the
Company's mines are located.
Average co-product cash costs for the quarter were $449 per GEO. This compares
to co-product cash costs of $423 per GEO for the quarter ended March 31, 2010.
The increase in average co-product costs was mainly due to the strengthened
exchange rates for the Brazilian Reais and Chilean Pesos.
Co-product cash costs per pound of copper were $1.21 for the quarter from
Chapada, compared with $1.24 in the first quarter of 2010. Co-product cash
costs per pound of copper including the Company's interest in the Alumbrera
mine, were $1.31 per pound of copper, compared with $1.14 for the same quarter
in 2010.
OPERATING MINES
A summary of mine-by-mine operating results can be found on the final page of
this press release.
Chapada, Brazil
Chapada produced a total of 33,392 ounces of gold in the first quarter compared
with 27,794 ounces of gold in the same quarter of 2010, representing a
quarter-over-quarter increase of 20%. Production of copper from Chapada of 38.5
million pounds was 30% higher than the production of 29.7 million pounds of
copper during the comparable period in 2010.
Higher production of both gold and copper in the quarter compared with the
first quarter of 2010 was mainly due to an increase in ore mined and ore
processed. The Company began operating a new fleet of large trucks in the first
quarter of 2010. Operating efficiency has developed since then with experience
in operating the large trucks which has contributed to the increase in
productivity. The Company also took measures to improve operating efficiencies
during the rainy season compared to that of the prior year.
Subsequent to the quarter end, a $32.5 million shipment comprised of 11,000
tonnes of metal concentrate was made, which will positively impact second
quarter earnings.
Production of gold and copper at Chapada in 2011 is expected to be in line with
guidance.
By-product cash costs for the quarter were negative $2,615 per GEO, compared
with negative $1,876 per GEO for the same quarter of 2010. Higher by-product
cash costs credits reflect the continuous strength of copper prices resulting
in lower by-product cash costs.
Co-product cash costs for the quarter were $286 per gold ounce and $1.21 per
pound of copper which compared with $346 per gold ounce and $1.24 per pound of
copper for the same quarter of 2010.
Jacobina, Brazil
Production at Jacobina was 30,319 ounces of gold in the first quarter, an
increase of 21% from production of 25,022 ounces of gold in the first quarter
of 2010. Higher production was mainly due to increased volume of ore mined and
ore processed accompanied by improved grade and recovery rate.
The recovery rate at Jacobina for the first quarter was 93.5% compared to 91.9%
for the first quarter of 2010. This is the result of the Company's effort to
modify the leaching cycle to improve recoveries which have trended upwards
since the start-up of higher throughput levels. Gold grade for the quarter
averaged 1.91 g/t also showing a 10% improvement over 1.73 g/t for the first
quarter of 2010.
Production at Jacobina for 2011 is expected to be in line with guidance. Given
the positive upward trend in production and the significant increase in mineral
reserve grade, the Company will evaluate opportunities to increase production
levels in 2011.
Cash costs averaged $611 per ounce of gold for the first quarter compared with
$687 per ounce of gold in the first quarter of 2010, representing a
quarter-over-quarter improvement of 11%. Cash costs progressively improved
throughout the first quarter. The Company completed the first quarter with cash
costs of $606 per ounce of gold in March, presenting a cost trend consistent
with that of the prior year.
Fazenda Brasileiro, Brazil
The Fazenda Brasileiro mine produced 11,252 ounces of gold in the quarter ended
March 31, 2011. This compares to 14,738 ounces of gold in the first quarter of
2010. Cash costs for the first quarter were $968 per ounce compared with $622
per ounce for the same period in 2010.
Production at Fazenda Brasileiro for 2011 is expected to be in line with
guidance.
At Fazenda Brasileiro, the two new mineralization zones CLX2 and Lagoa do Gato,
both discovered in 2009, are identified as having significant potential for
high-grade sources of ore for the mill. Both infill and extension drilling
confirm the continuity of mineralization in both areas. In 2011, the Company
continues to develop the high-grade reserves at CLX2, and improve mine fleet
costs using road trucks and focus on continuing to extend Fazenda Brasileiro's
mine life and lower costs. Improvement is expected and largely dependent on how
quickly development of CLX2 can be advanced.
El Penon, Chile
El Penon had record quarterly production of 115,798 GEO during the first
quarter of 2011. Production for the quarter consisted of 73,568 ounces of gold
and 2.1 million ounces of silver, compared with 108,437 GEO, which consisted of
60,977 ounces of gold and 2.6 million ounces of silver produced in the first
quarter of 2010. This represents a 7% quarter-over-quarter increase in 2011
versus 2010 production on a GEO basis.
Higher gold production was mainly due to improved gold grades and recovery
rates compared with the same quarter of 2010. Higher gold grade areas including
Al Este and Bonanza contributed to the increase in gold production. Since
conversion to owner-mining, operational dilution has decreased and feed grade
has improved. This, combined with increased capacity and the mining of higher
grade veins including North Block area and Bonanza, has led to increased
production. The decrease in silver production was primarily the result of
mining lower planned silver grade areas, which was offset by improvements in
gold.
GEO production at El Penon for 2011 is expected to be in line with guidance.
Cash costs were $397 per GEO in the quarter ended March 31, 2011, compared with
$384 per GEO in the first quarter in 2010. The appreciation of the Chilean Peso
was the main contributing factor to the increased cash costs. The average
currency exchange rate of the Chilean Peso versus the United States Dollar went
up by 9% from the first quarter of 2010.
Minera Florida, Chile
Minera Florida produced a total of 27,635 GEO in the current quarter compared
with 20,630 GEO in the first quarter of 2010. The 34% quarter-over-quarter
increase was mainly the result of higher volume of ore mined and ore processed
and more effectively mining in narrower veins; production at Minera Florida for
the first quarter of 2010 was interrupted as a result of the earthquake in
Chile. Cash costs for the first quarter were $476 per GEO compared with $363
per GEO in the same quarter in 2010 due primarily to the appreciation of the
Chilean Peso and mining inflation.
Gold grade for the quarter averaged 3.78 g/t which is lower than the 4.38 g/t
for the first quarter of 2010. The lower gold grade was part of the mine plan
for production from veins with better gold grade such as Tribuna and Victoria,
which is expected to commence shortly.
Production at Minera Florida for 2011 is expected to be in line with guidance.
The Company's expansion project at Minera Florida, which involves the
processing of historic tailings, has advanced ahead of schedule. Completion is
now planned for late 2011. Tailings re-processing is expected to contribute an
additional 40,000 GEO per year for five years to current production at Minera
Florida.
Gualcamayo, Argentina
Gualcamayo produced 37,597 ounces of gold in the first quarter compared with
29,462 ounces produced in the first quarter of 2010, representing a 28%
quarter-over-quarter improvement.
Gold grade increased at Gualcamayo to 0.95 g/t from 0.89 g/t in the previous
quarter and from 0.68 g/t in the first quarter of 2010. Gold recovery rate at
Gualcamayo was 66.4% for the first quarter compared to 76% for the comparative
quarter of 2010. The decrease in recovery is due to an increase in inventory
residing on the pads and will normalize to an average yearly recovery rate
expected to reach a sustainable 70% - 75%. The Company is taking steps to
improve recoveries and minimize carbon fines as it progresses into Valle Norte
later this year.
Production at Gualcamayo for 2011 is expected to be in line with guidance.
Cash costs were $507 per ounce in the quarter, compared with $443 per ounce in
the first quarter of 2010. Management continued to reduce cash costs from the
$662 per ounce level in the fourth quarter of 2010 down to the current level.
In 2011, the Company will focus on a number of operational initiatives,
including efforts in sustaining the 1,500 tonne per hour feed through the
mills, fleet expansion, underground development of QDD Lower West and expansion
of heap leach pad at Valle Norte. In addition, the Company will continue to
work on reducing reliance on contractors for increased cost predictability.
Gold production for the second half of 2011 is expected to increase based on
continuing higher grades, increases in crusher availability and throughput
tonnage, and, by the end of the year, improved recovery at the new heap leach
pad.
Alumbrera, Argentina
The Company's interest in the Alumbrera Mine is accounted for as an equity
investment. The Company recorded earnings from its 12.5% interest in Alumbrera
Mine of $11.7 million for the first three months ended March 31, 2011, similar
to the earnings reported for the first quarter of 2010. The Company received
$20.0 million in cash distributions during the three months ended March 31,
2011 compared with $12.9 million cash received in the first quarter of 2010.
Attributable production from Alumbrera was 11,374 ounces of gold and 7.1
million pounds of copper for the quarter. This compares with attributable
production of 13,755 ounces of gold and 11.8 million pounds of copper for the
first quarter of 2010.
Agua Rica, Argentina
The Company recently announced an agreement with Xstrata Queensland Limited and
Goldcorp Inc. that would facilitate the ultimate integration of Agua Rica into
Minera Alumbrera. Subject to Xstrata and Goldcorp exercising their option to
have Alumbrera acquire the assets of Agua Rica, and following the integration
of the projects, Xstrata, Goldcorp and Yamana would own interests in the
combined project of 50%, 37.5% and 12.5% respectively, consistent with their
current interest in Alumbrera.
In addition, the Company will receive a combination of initial and option
payments and deferred consideration which allows Yamana to retain positive
exposure to the majority of the significant gold resources at the Agua Rica
project. The integration of Agua Rica with Alumbrera provides the greatest
value potential for Yamana and the best opportunity for the development of Agua
Rica in the Catamarca province of Argentina.
Development Projects Update
Yamana has four development projects which are expected to commence production
throughout 2012 and 2013 which are Mercedes, C1 Santa Luz, Pilar and Ernesto/
Pau a Pique. Cumulatively, these projects will contribute an additional average
annual production of 440,000 GEO.
Mercedes
The construction of Mercedes began in mid 2010 and is progressing as expected.
During the quarter the mill was received on site. Concrete works and the first
phase of the tailings dam development were almost completed. The bulk
excavation and access roads were also completed. Mercedes is on track to be in
production by mid 2012 with average annual production of 120,000 GEO.
Exploration at Mercedes continued to confirm the continuation and high grades
of Lagunas Norte in the Barrancas system, increasing the strike length of the
Barrancas zone to 1.1 kilometres. Development of Lagunas Norte has been
accelerated to potentially enhance production levels at the project. Drilling
also confirmed the continuation of significant widths within the Diluvio zone
of the Lupita vein structure. The results of this exploration are expected to
continue to increase and upgrade the total mineral resources at Mercedes. These
new areas and additional exploration will provide additional accesses to the
ore bodies. This increases the prospects that the Company will be able to
increase production and extend mine life.
Pilar
Development at Pilar continued in the quarter with production expected to begin
in the first quarter of 2013. Exploration confirmed mineralization along a 2.6
kilometre down dip extension of the current mineral resource. Northwest of the
known Jordino deposit, lies the Ogo deposit: a hole drilled at depth confirmed
mineralization below the previously interpreted footwall, significantly
expanding potential in the 2.2 kilometres of untested strike length to the
North. Additional exploration drilling suggests that growth in mineral reserves
and mineral resources should continue in 2011.
The Pilar project is being built at a capacity level that is 30% higher than
that contemplated in the feasibility study. The Company expects to utilize the
increased capacity beginning in 2014. The Company expects to utilize the
increased capacity beginning in 2014. Discovery of new resources along with the
decision to advance Caiamar, a deposit located 38 kilometres from Pilar, to
pre-feasibility assuming that ore would be processed at Pilar, is expected to
support the higher capacity level. Studies have been completed confirming the
processing plant at Pilar is suitable to process the Caiamar ore and the higher
grades can offset the costs of transporting the ore. Resource development work
has started at Caiamar, which could positively impact Pilar production rates as
early as 2015.
C1 Santa Luz
Development at C1 Santa Luz continued in the quarter with the completion of all
the engineering studies and construction start up. The project is planned
initially as a conventional open pit with processing to be done through a
carbon-in-leach ("CIL") floatation circuit, which is on track to commence
production in late-2012. Average annual production is expected to be
approximately 100,000 ounces with production in each of the first two years
expected to be approximately 130,000 ounces per year.
Ernesto/Pau-a-Pique
Construction at Ernesto/Pau-a-Pique commenced in the first quarter advancing
the project as expected. Ernesto/Pau-a-Pique is planned as an underground and
open pit operation with conventional processing through a gravity and CIL
circuit. Annual production of approximately 100,000 ounces is expected to
commence in late 2012. Exploration drilling has been initiated at Lavrinha, an
adjacent area to Ernesto, targeted to increase mineable resources and the
project mine life.
Jeronimo
Jeronimo is located in northern Chile approximately 30 kilometres south
southwest of El Salvador at an elevation of 3,800 metres above sea level. The
first mineral reserve estimate was declared of 1.6 million ounces, based on the
pre-feasibility study recently completed on a fully consolidated basis. Based
on the Company's current ownership interest (57%), attributable mineral
reserves are 0.93 million ounces. Approximately one third of the mineral
reserves declared were a direct result of conversion from mineral resources via
infill drilling. The Company is evaluating processing methods for better
recoveries, which are anticipated to optimize the project economics. The
Company will also be incorporating the impact of credits from the sale of
manganese which was not included in the pre-feasibility, as well as the
positive impact of other off-take products. The mineral resource remains open
at depth and has potential to add significantly to resources.
Results of the evaluation of the different processing options and optimizations
will be part of the feasibility study which is expected to be delivered by the
end of 2011. The decision to proceed, after that time, will be based on
continued positive results from a full feasibility and further consolidation of
the ownership of Jeronimo, both of which are expected to occur.
OUTLOOK AND STRATEGY
The Company continues to focus on building sustainable and reliable gold
production through optimizing existing operations, expanding current, near-term
and in-development production plans, developing new operations and advancing
its exploration properties. All of the Company's operating mines are in known,
stable jurisdictions in mining-friendly countries including Brazil, Chile,
Argentina and Mexico. Three of the Company's mines in development are in Brazil
with the fourth new mine located in Mexico, adhering to the corporate strategy
of pursuing growth in mining-friendly and stable jurisdictions. Through the
steady path of organic growth and a disciplined approach in cost management,
the Company expects to succeed in attaining its objectives set for the
near-term and beyond.
The Company is maintaining the production and cost guidance previously stated
in its January 11, 2011 press release.
Production is expected to be in the range of approximately 1.04 million to 1.14
million gold equivalent ounces in 2011. Annual silver production is expected at
approximately 9 million ounces, and copper production is expected to be in the
range of 145 million to 160 million pounds in 2011. In 2012, production growth
continues as three development stage projects, including Mercedes, C1 Santa
Luz, Ernesto/Pau-a-Pique, where construction decisions have already been made,
increase production levels to between 1.2 - 1.32 million GEO in 2012, an
overall increase of 27% from 2011.
Estimated cash costs for 2011 and 2012 are expected to be below $250 per GEO.
Production growth in 2013 is expected to increase by 60% from 2010 levels to
between 1.46 and 1.68 million GEO with new contributions expected from Pilar,
and full year production from Mercedes, C1 Santa Luz, and Ernesto/Pau-a-Pique.
These projects are advancing on schedule and are fully-funded from the
Company's available cash and cash flows generated from operations.
By 2014, production is targeted to be 1.7 million GEO, which represents
production growth over four years of approximately 65% compared to 2010
production levels. This production includes production from existing mines and
projects currently in development for which construction decisions have been
made, and it does not include any additional production from new projects,
expansions and optimizations under current evaluation.
Further details of the 2011 first quarter results can be found in the Company's
unaudited Management's Discussion and Analysis and unaudited Consolidated
Financial Statements at www.yamana.com, in the "Investors" section under
"Financial and Corporate Reports".
TRANSITION TO IFRS
Effective the first quarter of 2011, the Company prepares its financial
statements in accordance with International Financial Reporting Standards
("IFRS"). The comparative financial information of 2010 in this Management
Discussion and Analysis has also been restated to conform to IFRS. This press
release should be read in conjunction with Note 30 "Transition to IFRS" to
consolidated financial statements.
To transition from Canadian GAAP to IFRS, the main adjustment to net earnings
was the revaluation of deferred income tax assets and liabilities related to
non-monetary items using current exchange rates rather than historical exchange
rates as it was the case under Canadian GAAP. Under IFRS, the use of current
exchange rates in the revaluation of deferred income tax assets and liabilities
increases volatility in income tax expense and net earnings period to period.
The calculation of Adjusted Earnings excludes foreign exchange gains and
losses, therefore, the effect of revaluating deferred income tax assets and
liabilities due to movements in foreign currencies is excluded from the
Adjusted Earnings calculation.
Prior to January 1, 2011, the Company used the non-GAAP financial measure "cash
flows from operating activities before changes in non-cash working capital" to
supplement its consolidated financial statements. Coincident with the IFRS
disclosure requirement for finance income received or expense paid and income
tax paid to be presented as separate items in the statement of cash flows, the
Company has determined to replace "cash flows from operating activities before
changes in non-cash working capital" with "cash flows generated from operations
before changes in non-cash working capital" by excluding finance income
received and finance expense paid in the calculation of "cash flows generated
from operations before changes in working capital". Finance income is now
included in the determination of cash flows from investing activities and
finance expense is now included in the determination of cash flows from
financing activities. Additionally, in accordance with IFRS, the Company now
reflects income taxes paid or received in the calculation of operation cash
flows on a cash basis excluding any impact of movements in the income tax
liability or receivable. While changes are effected to comply with the
requirements of IFRS, every possible effort has been made to maintain
consistency between the current composition of cash flows from operating
activities and the version under Canadian GAAP to the extent possible.
Management expects that the measure better reflects the Company's cash flow
generating capabilities for investors.
FIRST QUARTER CONFERENCE CALL
Q1 Conference Call Information:
Toll Free (North America): 888-231-8191
International: 647-427-7450
Participant Audio Webcast: www.yamana.com
Q1 Conference Call REPLAY:
--------------------------
Toll Free Replay Call (North America): 800-642-1687,
Passcode 55286145 followed by the number sign
Replay Call: 416-849-0833, Passcode 55286145 followed by the
number sign
The conference call replay will be available from 12:15 p.m. ET on May 4, 2011
until 11:59 p.m. ET on May 18, 2011.
Annual Meeting of Shareholders
The Annual Meeting of Shareholders will take place on Wednesday, May 4, 2011 at
11:00 a.m. ET at the Four Seasons Centre for the Performing Arts, located at
145 Queen Street West, Toronto, Ontario, Canada. The main entrance is located
at the southeast corner of Queen Street West and University Avenue.
For those unable to attend the meeting in person, a live audio webcast and
slide presentation can be accessed from Yamana's website.
Via Webcast:
Live Audio Webcast:
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 and Colombia. Yamana plans to continue to
build on this base through existing operating mine expansions, throughput
increases, development of new mines, the advancement of its exploration
properties and by targeting other gold consolidation opportunities with a
primary focus in the Americas.
MINE BY MINE OPERATING SUMMARY:
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Chile
Gold Silver Gold Silver
Ore Grade Grade Recovery Recovery
El Penon processed g/t g/t (%) (%)
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Q1 2011 358,013 6.91 227.8 92.0 79.9
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Total 2010 1,522,366 5.74 228.5 91.2 84.1
Q4, 2010 366,424 6.94 229.2 91.3 79.5
Q3, 2010 396,209 5.48 216.8 90.8 83.3
Q2, 2010 392,223 4.97 216.3 92.0 87.1
Q1, 2010 367,509 5.64 253.3 90.4 86.3
Minera
Florida
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Q1 2011 232,284 3.78 35.2 84.6 68.7
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Total 2010 779,836 4.41 33.4 83.7 67.8
Q4, 2010 214,859 4.68 45.1 84.7 70.6
Q3, 2010 207,834 4.3 39.2 84.2 67.0
Q2, 2010 204,512 4.27 21.2 82.0 66.1
Q1, 2010 152,631 4.38 25.2 84.6 67.2
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Chile
Gold Gold Cash
Gold Silver Equivalent Equivalent costs
Ounces Ounces Ounces Ounces per
El Penon Produced Produced Produced Sold GEO(1)
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Q1 2011 73,568 2,111,482 115,798 114,803 $ 397
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Total 2010 256,530 9,427,208 427,934 431,665 $ 428
Q4, 2010 74,785 2,145,809 113,800 114,403 $ 421
Q3, 2010 63,417 2,298,731 105,212 108,204 $ 461
Q2, 2010 57,351 2,372,380 100,485 102,324 $ 449
Q1, 2010 60,977 2,610,289 108,437 106,739 $ 384
Minera
Florida
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Q1 2011 23,986 182,453 27,635 26,798 $ 476
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Total 2010 94,585 606,071 105,604 102,819 $ 416
Q4, 2010 27,787 234,339 32,048 30,525 $ 479
Q3, 2010 24,337 182,332 27,652 27,667 $ 425
Q2, 2010 23,543 95,249 25,274 23,020 $ 370
Q1, 2010 18,918 94,151 20,630 21,608 $ 363
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Brazil
Cash
Gold Gold Gold Gold costs
Ore Grade Recovery Ounces Ounces per
Chapada processed g/t (%) Produced Sold GEO(1)
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Q1, 2011 5,088,739 0.32 64.7 33,392 33,395 ($2,615)
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Total 2010 19,195,578 0.35 62.3 135,613 127,450 ($2,073)
Q4, 2010 4,757,679 0.37 64.9 36,965 31,421 ($2,863)
Q3, 2010 5,246,202 0.38 63.4 40,405 35,591 ($1,856)
Q2, 2010 4,873,077 0.32 60.7 30,450 32,881 ($1,583)
Q1, 2010 4,318,621 0.34 60.0 27,794 27,557 ($1,876)
Jacobina
-------------------------------------------------------------------------
Q1 2011 529,035 1.91 93.5 30,319 31,537 $ 611
-------------------------------------------------------------------------
Total 2010 2,158,097 1.89 93.2 122,160 121,405 $ 535
Q4, 2010 542,055 2.06 94.1 33,718 33,530 $ 495
Q3, 2010 570,799 1.95 93.8 33,637 32,517 $ 463
Q2, 2010 556,376 1.79 93.0 29,785 29,110 $ 534
Q1, 2010 488,865 1.73 91.9 25,022 26,249 $ 687
Fazenda
Brasileiro
-------------------------------------------------------------------------
Q1 2011 205,389 1.93 88.2 11,252 12,891 $ 968
-------------------------------------------------------------------------
Total 2010 1,110,204 2.22 88.6 70,084 72,316 $ 628
Q4, 2010 275,184 2.53 89.4 19,852 18,822 $ 705
Q3, 2010 279,734 2.14 89 17,161 19,208 $ 620
Q2, 2010 273,706 2.36 88.2 18,333 15,801 $ 559
Q1, 2010 281,579 1.84 87.3 14,738 18,485 $ 622
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Argentina
Cash
Gold Gold Gold Gold costs
Ore Grade Recovery Ounces Ounces per
Gualcamayo processed g/t (%) Produced Sold GEO(1)
-------------------------------------------------------------------------
Q1 2011 1,896,533 0.95 66.4 37,597 34,665 $ 507
-------------------------------------------------------------------------
Total 2010 7,528,690 0.82 67.8 135,140 141,734 $ 506
Q4, 2010 1,818,571 0.89 69.5 36,239 36,649 $ 662
Q3, 2010 1,982,929 0.87 57.8 31,972 38,660 $ 480
Q2, 2010 1,940,939 0.85 70.4 37,467 30,283 $ 427
Q1, 2010 1,786,251 0.68 76.0 29,462 36,142 $ 443
Alumbrera
-------------------------------------------------------------------------
Q1 2011 1,131,995 0.45 69.3 11,374 11,412 (1,452)
-------------------------------------------------------------------------
Total 2010 4,509,332 0.46 73.0 50,656 48,940 (1,404)
Q4, 2010 1,160,601 0.50 76.0 14,061 12,951 (1,556)
Q3, 2010 1,102,574 0.42 72.8 11,370 10,095 ($993)
Q2, 2010 1,117,957 0.43 69.9 11,470 15,638 ($1,938)
Q1, 2010 1,128,200 0.51 72.2 13,755 10,256 ($1,142)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash
costs
Copper per
Ore ore Copper Copper Copper pound
Copper processed grade Recovery produced Sold of
Production (tonnes) (%) (%) (M lbs.) (M lbs.) copper
Chapada
-------------------------------------------------------------------------
Q1, 2011 5,088,739 0.39 87.1 38.5 29.7 $ 1.21
-------------------------------------------------------------------------
Total 2010 19,195,578 0.41 86.5 149.4 143.8 $ 1.17
Q4, 2010 4,757,679 0.44 86.2 39.9 39.6 $ 1.20
Q3, 2010 5,246,202 0.43 86.8 42.8 43.5 $ 1.14
Q2, 2010 4,873,077 0.39 87.2 37.0 31.6 $ 1.13
Q1, 2010 4,318,621 0.36 85.5 29.7 29.1 $ 1.24
Alumbrera
-------------------------------------------------------------------------
Q1 2011 1,131,995 0.39 73.1 7.1 7.1 $ 1.85
-------------------------------------------------------------------------
Total 2010 4,509,332 0.50 82.0 38.7 37.0 $ 1.29
Q4, 2010 1,160,601 0.40 81.0 9.3 9.0 $ 1.37
Q3, 2010 1,102,574 0.40 82.2 8.3 7.7 $ 1.53
Q2, 2010 1,117,957 0.44 81.4 9.3 12.1 $ 1.52
Q1, 2010 1,128,200 0.54 84.7 11.8 8.2 $ 0.89
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release
contains "forward-looking statements" within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and 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 the Company's expectations in connection with the projects and
exploration programs discussed herein being met, 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, fluctuating metal prices (such as gold, copper, silver and
zinc), currency exchange rates (such as the Brazilian Real, the Chilean Peso
and the Argentine Peso versus the United States Dollar), possible variations in
ore grade or recovery rates, changes in the Company's hedging program, changes
in accounting policies, changes in the Company's corporate mineral resources,
risk related to non-core mine dispositions, changes in project parameters as
plans continue to be refined, changes in project development, construction,
production and commissioning 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 for the year ended December 31, 2010 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 presented 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 "Co-product cash
costs per gold equivalent ounce", "Co-product cash costs per pound of copper",
"By-product cash costs per gold equivalent ounce", "Adjusted Earnings or Loss
and Adjusted Earnings or Loss per share" to supplement its financial
statements, which are presented in accordance with International Financial
Reporting Standards ("IFRS"). The term IFRS and generally accepted accounting
principles ("GAAP") are used interchangeably throughout this MD&A.
The Company believes that these measures, together with measures determined in
accordance with IFRS, provide investors with an improved ability to evaluate
the underlying performance of the Company. Non-GAAP measures do not have any
standardized meaning prescribed under IFRS, 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 IFRS.
CO-PRODUCT AND BY-PRODUCT CASH COSTS
The Company has included cash costs per GEO and cash costs per pound of copper
information because it understands that certain investors use this information
to determine the Company's ability to generate earnings and cash flows for use
in investing and other activities. The Company believes that conventional
measures of performance prepared in accordance with IFRS do not fully
illustrate the ability of its operating mines to generate cash flows. The
measures are not necessarily indicative of operating profit or cash flows from
operations as determined under IFRS. Cash costs per GEO are determined in
accordance with the Gold Institute's Production Cost Standard and are
calculated on a co-product and by-product basis. Cash costs on a co-product
basis are computed by allocating operating cash costs separately to metals
(gold and copper) 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. Cash costs per GEO and per
pound of copper are calculated on a weighted average basis.
Per Gold Equivalent Ounce ("GEO")
The following tables provide a reconciliation of cost of sales per the
financial statements to (i) Co-product Cash Costs per GEO, (ii) Co-product Cash
Costs per lb of Copper and (iii) By-product Cash Costs per GEO:
Reconciliation of Cost of Sales per the Financial Statements to Co-product Cash
Costs per GEO
-------------------------------------------------------------------------
United States Dollars
In thousands of per gold equivalent
GEO United States Dollars ounce
---------------------- -----------------------
For the three months ended
March 31, 2011 2010 2011 2010
------------------------------------------------- -----------------------
Cost of sales(i)(iii) $ 157,102 $ 145,143 $ 614 $ 642
Adjustments:
Copper contained in
concentrate related cash
costs (excluding related
TCRC's)(ii) (42,185) (32,032) (165) (142)
Treatment and refining
costs (TCRC) related to
Chapada gold 908 1,032 4 5
Inventory movements and
adjustments 8,368 (10,757) 33 (48)
Commercial selling costs (7,015) (5,182) (28) (23)
------------------------------------------------- -----------------------
Total GEO co-product cash
costs (excluding
Alumbrera) $ 117,178 $ 98,204 $ 458 $ 434
Minera Alumbrera (12.5%
interest) GEO cash costs 2,779 3,365 244 245
------------------------------------------------- -----------------------
Total GEO co-product cash
costs(iii) $ 119,957 $ 101,569 $ 449 $ 423
------------------------------------------------- -----------------------
Commercial GEO produced
excluding Alumbrera 255,994 226,083
-------------------------------------------------
Commercial GEO produced
including Alumbrera 267,368 239,838
-------------------------------------------------
(i) Cost of sales includes non-cash items including the impact of
the movement in inventory.
(ii) Costs directly attributed to a specific metal are allocated to
that metal. Costs not directly attributed to a specific metal
are allocated based on relative value. As a rule of thumb, the
relative value has been 70-75% copper and 30-25% gold. TCRC's
are defined as treatment and refining charges.
(iii) Depletion, depreciation and amortization is excluded from both
total cash costs and cost of sales from continuing operations
for the comparative period.
Reconciliation of Cost of Sales per the Financial Statements to Co-product Cash
Costs per Pound of Copper
-------------------------------------------------------------------------
Copper In thousands of United States Dollars
United States Dollars per pound of copper
---------------------- -----------------------
For the three months
ended March 31, 2011 2010 2011 2010
------------------------------------------------- -----------------------
Cost of sales(i)(iii) $ 157,102 $ 145,143 $ 4.08 $ 4.88
Adjustments:
GEO related cash costs
(excluding related
TCRC's)(ii) (116,271) (97,172) (3.02) (3.27)
Treatment and refining
costs (TCRC) related to
Chapada copper 4,277 4,831 0.11 0.16
Inventory movements and
adjustments 8,368 (10,757) 0.22 (0.36)
Commercial selling costs (7,015) (5,182) (0.18) (0.17)
------------------------------------------------- -----------------------
Total Copper co-product
cash costs (excluding
Alumbrera) $ 46,461 $ 36,863 $ 1.21 $ 1.24
Minera Alumbrera (12.5%
interest) Copper cash
costs 13,185 10,467 1.85 0.89
------------------------------------------------- -----------------------
Total Copper co-product
cash costs(iii) $ 59,646 $ 47,330 $ 1.31 $ 1.14
------------------------------------------------- -----------------------
Copper produced excluding
Alumbrera (millions of lbs) 38.5 29.7
-------------------------------------------------
Copper produced including
Alumbrera (millions of lbs) 45.6 41.5
-------------------------------------------------
(i) Cost of sales includes non-cash items including the impact of
the movement in inventory.
(ii) Costs directly attributed to a specific metal are allocated to
that metal. Costs not directly attributed to a specific metal
are allocated based on relative value. As a rule of thumb, the
relative value has been 70-75% copper and 30-25% gold. TCRC's
are defined as treatment and refining charges.
(iii) Depletion, Depreciation and Amortization is excluded from both
total cash costs and cost of sales from continuing operations
for the comparative period.
Reconciliation of cost of sales per the financial statements to by-product cash
costs per GEO
-------------------------------------------------------------------------
United States Dollars
In thousands of per gold equivalent
GEO United States Dollars ounce
---------------------- -----------------------
For the three months ended
March 31, 2011 2010 2011 2010
------------------------------------------------- -----------------------
Cost of sales(i) $ 157,102 $ 145,143 $ 614 $ 642
Adjustments:
Chapada treatment and
refining costs related to
gold and copper 5,185 5,863 20 26
Inventory movements and
adjustments 8,368 (10,757) 33 (48)
Commercial selling costs (7,015) (5,182) (27) (23)
Chapada copper revenue
including copper pricing
adjustment (143,324) (98,650) (560) (436)
------------------------------------------------- -----------------------
Total GEO by-product cash
costs (excluding
Alumbrera) $ 20,316 $ 36,417 $ 79 $ 161
Minera Alumbrera (12.5%
interest) by-product cash
costs (16,519) (15,708) (1,452) (1,142)
------------------------------------------------- -----------------------
Total GEO by-product cash
costs(i) $ 3,797 $ 20,709 $ 14 $ 86
------------------------------------------------- -----------------------
Commercial GEO produced
excluding Alumbrera 255,994 226,083
-------------------------------------------------
Commercial GEO produced
including Alumbrera 267,368 239,838
-------------------------------------------------
(i) Depletion, Depreciation and Amortization is excluded from both
total cash costs and cost of sales from continuing operations
for the comparative period.
The terms "Adjusted Earnings (Loss)" and "Adjusted Earnings (Loss) per share"
do not have a standardized meaning prescribed by IFRS, 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 IFRS, 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. A
reconciliation of Adjusted Earnings to net earnings as well as a discussion of
the adjusting items is provided in Section 4 of the Company's Management
Discussion and Analysis "Overview of Financial Results" for both the yearly and
quarterly reconciliations, filed on SEDAR and on the Company's website.
(in thousands of United States Dollars) Three months ended
----------------------
March 31, March 31,
2011 2010
-------------------------------------------------------------------------
Revenues $ 476,077 $ 346,341
Cost of sales excluding depletion, depreciation
and amortization (157,102) (145,143)
-------------------------------------------------------------------------
Gross margin 318,975 201,198
Depletion, depreciation and amortization (80,511) (70,049)
-------------------------------------------------------------------------
Mine operating earnings 238,464 131,149
-------------------------------------------------------------------------
Expenses
General and administrative (27,436) (25,324)
Exploration (6,478) (6,758)
Equity earnings from Minera Alumbrera 11,732 11,652
Other operating (expenses) income (3,614) 825
-------------------------------------------------------------------------
Operating earnings 212,668 111,544
-------------------------------------------------------------------------
Finance income 5,335 4,586
Finance expense (11,528) (29,474)
-------------------------------------------------------------------------
Net finance expense (6,194) (24,888)
-------------------------------------------------------------------------
Earnings from continuing operations before
income taxes, and non-controlling interest 206,475 86,656
-------------------------------------------------------------------------
Income tax (expense)recovery (58,227) 37,529
-------------------------------------------------------------------------
Earnings from continuing operations 148,248 124,185
Earnigns from discontinued operations(i) - 7,352
-------------------------------------------------------------------------
Net earnings $ 148,248 $ 131,537
-------------------------------------------------------------------------
Earnings Adjustments(ii):
Non-cash unrealized foreign exchange losses on
income taxes (1,493) (60,233)
Other non-cash unrealized foreign exchange gains 259 8,240
Non-cash unrealized gains on derivatives (32) (4,586)
Share-purchase warrant mark-to-market gain (140) (3,508)
Stock-based and other compensation 2,844 6,049
Future income tax expense (recovery) on translation
of intercompany debt 2,251 (3,772)
Other non-recurring loss 263 1,966
-------------------------------------------------------------------------
Adjusted Earnings before income tax effects 152,200 75,693
Income tax effect of adjustments 8 231
-------------------------------------------------------------------------
Adjusted Earnings(ii) $ 152,208 $ 75,924
-------------------------------------------------------------------------
Earnings per share - basic and diluted $ 0.20 $ 0.18
Adjusted Earnings per share - basic and
diluted(ii) $ 0.21 $ 0.10
-------------------------------------------------------------------------
(i) Results of San Andrés, Sao Vincente and Sao Franciso mines have been
reclassified as discontinued operations (in accordance with IFRS)
with restatement of prior period comparatives.
(ii) A cautionary note regarding non-GAAP measure is included in Section
6 providing a discussion on Adjusted Earnings and its definition.
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 related to
revaluation of deferred income tax asset and liability on non-
monetary items, (c) foreign exchange (gains) losses related to other
items, (d) unrealized (gains) losses on commodity derivatives, (e)
impairment losses, (f) future income tax expense (recovery) on the
translation of foreign currency inter-corporate debt, (g) write-down
of investments and other assets and any other non-recurring
adjustments, (h) mark-to-market (gains) losses on share-purchase
warrants. Non-recurring adjustments from unusual events or
circumstances are reviewed from time to time based on materiality
and the nature of the event or circumstance. Earnings adjustments
reflect both continuing and discontinued operations.
For further information: Lisa Doddridge, Vice President, Corporate
Communications and Investor Relations, (416) 945-7362, Email: lisa.doddridge
(at)yamana.com; Linda Armstrong, Director, Investor Relations, (416) 945-7357,
Email: linda.armstrong(at)yamana.com; www.yamana.com
(YRI. AUY YAU)
END
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