- Reports Progress on Advanced Development Stage Projects, Provides
Exploration Update - TORONTO, July 22 /PRNewswire-FirstCall/ --
YAMANA GOLD INC. (TSX: YRI; NYSE: AUY; LSE: YAU) announced that it
has declared commercial production at its Gualcamayo mine effective
July 1, 2009. Located in the province of San Juan, Argentina, the
Gualcamayo mine is expected to contribute significantly to Yamana's
overall production and be one of its core mines. The Gualcamayo
mine primary ore pass, conveyor system and processing facilities
were constructed in less than 20 months following receipt of a
positive feasibility study and the start up of construction in
August 2007. The ore pass and primary crushing facilities were
commissioned in late April 2009, although processing of ore at
Gualcamayo began in late December 2008. A list of key milestones is
provided below:
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Key Milestones Status
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Mining Commissioned
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Primary ore pass Commissioned
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Primary & secondary crusher Commissioned
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Conveyor system Commissioned
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ADR plant Commissioned
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In declaring commercial production, the Company took into account
the following: - Increased production from approximately 20,000
ounces in the first quarter of 2009 to approximately 24,000 ounces
in the second quarter; - Cumulative weighted average cash costs
from February to June 2009 below US$450 per ounce (capitalized as
related production was not commercial); - Recovery is expected to
increase progressively to the level of 76% to 80% into the fourth
quarter of 2009; - Sustained operation of ore pass and crushing
facilities; - Expected commercial production for 2009 of
approximately 75,000 ounces of gold. Production subsequent to 2009
is expected to include ore from the Amelia Ines and Magdalena (AIM)
satellite deposits supplementing the main ore body at Quebrada del
Diablo (QDD). The contribution to production from the AIM satellite
deposits after 2009 is currently being evaluated. The three main
mineral deposits at Gualcamayo include the main QDD deposit, the
AIM satellite deposits and the QDD Lower West underground zone. The
total reserve and resource base is approximately 3.9 million ounces
of gold including 2.9 million ounces of reserves. ADVANCED
DEVELOPMENT PROJECTS UPDATE Yamana also announced that it has made
a construction decision for the development of its C1 Santa Luz
project in Brazil and its Mercedes project in Mexico, and also
reported further progress on its other advanced development stage
growth projects and provided an exploration update. These advanced
development stage growth projects are part of Yamana's core
philosophy of focusing on quality as well as quantity of production
at comparatively low cash costs and in stable mining jurisdictions.
Construction and Development Projects
------------------------------------- C1 Santa Luz, Brazil Yamana
has made a construction decision for C1 Santa Luz. The construction
decision is based on an economic update to a previously completed
feasibility study which shows improved economics and a longer mine
life. C1 Santa Luz is planned as a conventional open pit mine with
processing through a floatation and CIL circuit. Key parameters of
the feasibility study and economic update include: Reserves (Proven
and Probable): 23.8 mt grading 1.55 g/t Au containing 1.2 M ounces
Resources (Measured and Indicated)*: 45.82 mt grading 1.56 g/t Au
containing 2.5 M ounces Capital Cost: US$143M Operating Cost:
US$17.78 per tonne Cash Cost (per ounce): US$465 Average
Throughput: 6,800 tonnes per day Average Production (per year):
104,000 ounces Initial Mine Life: 10 years After-tax IRR: 27.9%
*Resources include reserves The updated financial analysis is based
on a gold price of US$900 per ounce and a 5% discount rate
resulting in an initial after-tax net present value of
approximately US$142 million. In the first two full years of
production, average annual production is expected to exceed 130,000
ounces, which should accelerate payback. The mine life for the
project has increased from the initial 2007 feasibility study
estimate of approximately seven years to 10 years. The level of
certainty of capital and operating costs along with metallurgical
recovery and engineering has increased with further work done since
2007. The capital cost estimate assumes owner mining which can be
further reduced using contractor mining. The majority of the
estimated capital cost will be incurred in 2011 and 2012. The C1
Santa Luz project is located in the state of Bahia, Brazil,
approximately 60 kilometres north of Yamana's Fazenda Brasileiro
mine and 160 kilometres east of its Jacobina mine. The C1 Santa Luz
gold deposit lies within the Rio Itapicuru Greenstone Belt, a
deformed and metamorphosed greenstone-granite terrain of
paleoproterozoic age. The gold deposits are closely associated with
small porphyritic dacite intrusions and extensive zones of breccia
hosted in carbonaceous meta-sedimentary rocks, with associated
hydrothermal alteration centred on the intrusions. Yamana has
advanced C1 Santa Luz from a grassroots exploration prospect to an
advanced development stage project. The carbonaceous nature of the
ore and strip ratio for the project increase the sensitivity of the
project to operating cost increases and, for these reasons
significant efforts have been undertaken since the feasibility
study in 2007 to increase the level of certainty on recoveries and
the understanding of associated cash cost per ounce. Synergies
between Yamana's Fazenda Brasileiro mine and C1 Santa Luz have not
been used in assessing the associated costs for the project
although these synergies will be reviewed during the permitting
process. The Company anticipates that the permitting process will
take approximately nine months. During that period, Yamana intends
to further advance detailed engineering and order longer lead time
items. Production at C1 Santa Luz is expected to begin in mid-2012.
Mercedes, Mexico The Company has also made a decision for the
development and construction of the Mercedes gold-silver project.
This decision is based on positive project economics from a study
earlier this year, the results of which were announced in February,
and recent drilling results which add further certainty to the
extension of the initial mine life. In addition, since earlier this
year, Mercedes has been further advanced with the construction of a
development ramp. The ramp has accelerated development of the
Mercedes vein and confirmed continuity in the grade over
approximately 600 metres of length, plus approximately 300 metres
in two cross-cuts and vein levels. Earlier this year, the Company
also acquired a mill which when refurbished would be suitable for
the project. The permitting process is also in progress. Key
parameters of the February 2009 study include: Reserves (Proven and
Probable): 2.65 mt grading 7.10 g/t Au and 72.43 g/t Ag (7.58 g/t
AuEq) containing 604,402 Au ounces and 6,163,221 Ag ounces (645,490
GEO) Resources (Measured and Indicated)*: 2.39 mt grading 8.62 g/t
Au and 85.14 g/t Ag (9.19 g/t AuEq) containing 661,830 Au ounces
and 6,536,394 Ag ounces (705,000 GEO) Construction Capital Cost:
US$152M Cash Cost (per GEO): US$264 Average Production (per year):
120,000 GEO Initial Mine Life: 6 years After-tax IRR: 22.4%
*Resources include reserves The financial analysis provided in
February 2009 was based on a gold price of US$814 per ounce and a
silver price of US$13 per ounce. The study also included an upside
scenario adding three years to the original initial mine life based
on current resources and recent exploration results. The Company's
further economic analysis with cash flow based on US$900 per ounce
of gold and US$15 per ounce of silver and assuming the upside mine
life scenario results in a 5% net present value of approximately
US$181 million and an IRR of 29%. Further drilling results not
included in the pre-feasibility study are expected to increase the
resource estimate for the Barrancas area and the newly discovered
Lupita vein zone areas. These drilling results were previously
announced by the Company in its June 17, 2009 news release,
highlighting drill hole M09-449D intersecting 7.70 metres of 17.48
g/t gold and 66.0 g/t silver at Las Barrancas and L09-021D
intersecting 7.64 metres of 28.15 g/t gold and 52 g/t silver at
Lupita which support the upside mine life scenario referred to
above. A new resource estimate based in part on these drilling
results is in progress. The Mercedes mine will be developed by two
accesses from surface, including the previously mentioned
development ramp. The main pre-production development activities
during the permitting process now underway include: - Main ramp
excavation; - Completion of ore/waste pass for Corona de Oro; -
Ramp development for main stopes; - Completion of main ventilation
system; - Creation of an ore stockpile; - Development of
underground infrastructure and services including water pumping
system, electrical distribution, backfill distribution and
administrative installations; and - Detailed engineering and
procurement. The Mercedes project is located in northern Sonora,
Mexico approximately 200 kilometres south of Tucson, Arizona. The
deposit consists of a complex gold-silver hydrothermal
low-sulphidation vein/stockwork system. The Company expects to
receive permitting in mid-2010 with production targeted to begin in
late-2012. Ernesto/Pau-a-Pique, Brazil In February 2009, the
Company completed a scoping study with positive results for
Ernesto/Pau-a-Pique. Key parameters of the study include: Resources
(Indicated): 3.95 mt grading 4.67 g/t Au containing 593,000 ounces
Resources (Inferred): 3.14 mt grading 3.02 g/t Au containing
305,000 ounces Capital Cost (2010-2011): US$86M Cash Cost (per
ounce): US$356 Average Production (per year): 100,000 ounces
Initial Mine Life: 8 years After-tax IRR: 38% The financial
analysis is based on a gold price of US$825 per ounce and a 5%
discount rate resulting in an initial after-tax net present value
of approximately US$138 million. The Company's further analysis
with cash flow based on US$900 per ounce of gold results in a value
of approximately US$173 million and an IRR of 44%. At
Ernesto/Pau-a-Pique, Yamana has continued driving an exploration
tunnel for determining continuity of grade and accelerating
development work. In addition, the Company plans on focusing on
infill drilling to upgrade inferred resources to the indicated
category, with 7,000 metres of drilling planned for 2009. The
infill program planned is to support a feasibility study. The
Ernesto/Pau-a-Pique project is located in southwest Mato Grasso
state, near Pontes e Lacerda in Brazil. The Pau-a-Pique deposit is
approximately 56 kilometres by road south of the Ernesto deposit.
The significant existing infrastructure including paved roadways
supports the development of Ernesto/Pau-a-Pique as two mines with a
common plant. A formal construction decision is expected to be made
by the end of the year. Minera Florida, Chile At Minera Florida,
Yamana has advanced a plan to process historical tailings of
approximately six million tonnes with an average gold grade of 1.2
g/t and average silver grade of 12 g/t for a gold equivalent grade
of approximately 1.4 g/t. Key parameters of the study include:
Capital Cost: US$43 million Cash Cost (per GEO): US$290 Average
Production (per year): 40,000 GEO Initial Mine Life: 6 years IRR:
33% Implementation of the project and ramp up is estimated to be
achieved with 24 months. Yamana has made a decision to proceed with
a basic engineering study and expects to make a final decision to
proceed with the project by year-end. The project would add another
40,000 GEO to current expected production at Minera Florida
beginning in early 2012. Growth Projects to Add 365,000 New GEO C1
Santa Luz, Mercedes and Ernesto/Pau-a-Pique are advanced
development projects which along with the expected further
production at Minera Florida are expected to collectively add
approximately 365,000 GEO of new production at a weighted average
cash cost of approximately US$350 per GEO which is consistent with
the Company's current cost structure. This does not include
expected production from the Pilar/Caiamar projects or from QDD
Lower West, the underground area of mineralization at Gualcamayo,
which Yamana continues to advance. "We have reached an exciting
growth stage for Yamana," said Ludovico Costa, Yamana's chief
operating officer. "These new organic growth projects represent
significant additional production at industry low cash costs with
robust returns, consistent with Yamana's core philosophy of
focusing on quality as well as quantity of production at
comparatively low cash costs in stable mining jurisdictions." Agua
Rica, Argentina -------------------- Yamana continues to increase
the value of Agua Rica. The Company received the environmental
license early in 2009, dependent on compliance with certain
conditions and sectoral permits which are expected within 18
months. The Company is also updating components to the feasibility
study delivered in October 2006. In the context of current metal
prices, Yamana is currently re-evaluating the prospects of a
strategic partnership. EXPLORATION UPDATE Pilar and Caiamar
Exploration Concessions Yamana recently acquired an extensive
exploration concession and project called Caiamar located
approximately 38 kilometres from Yamana's Pilar project and just
east of the Crixas Greenstone Belt. Caiamar is located in the
northern portion of a regional Shear Zone in the Guarinos
Greenstone Belt and mineralization consists of arserno-pyrite rich
quartz breccias hosted in metagraywacke layers. A total of 16,000
metres of drilling and 2,000 metres of underground development in 2
metre x 2 metre sections and three levels (55 metres, 110 metres
and 150 metres) were conducted by previous companies.
Mineralization is opened down plunge and along strike. A total of
US$3.4 million has been budgeted for regional exploration and
25,000 metres of drilling at Caiamar. The objective of the drill
program for the first year will be to assess the potential of the
deposit and evaluate the regional potential inside the Caiamar
concessions, in addition to define the ore bodies' geometry and
grade. As part of the drill program, Yamana is re-logging and
re-sampling the previous holes and expects to start an underground
panel sampling and initial extension drilling program of 3,700
metres. The Company believes that it can rapidly validate and
extend the existing resource. At Pilar, Yamana has budgeted US$4.1
million for exploration in 2009 and 11,000 metres of drilling is
currently in progress along with an exploration ramp for continuity
of grade and accelerating development work. A new resource estimate
based on drilling in 2009 is expected in the fourth quarter of
2009, with a feasibility study and construction decision expected
in the first quarter of 2010. The Pilar and Caiamar projects share
similar geology and prospectivity and the Company believes that the
combination of these two areas will meaningfully increase the
potential for increased resources and rapid advancement of project
development. In addition, Pilar and Caiamar are located
approximately 78 kilometres and 50 kilometres, respectively, from
Yamana's Chapada mine and the Company believes there would be
synergies resulting from the operations at Chapada. Increased 2009
Exploration Budget Consistent with the previously disclosed
strategy of the Company, Yamana has increased its 2009 exploration
budget from US$56 million to US$66 million based on exploration
successes to date. The exploration program will continue to focus
on high margin, high quality ounces at and near its mines. The
US$10 million increase will be allocated to the following projects:
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PROJECT ORIGINAL BUDGET INCREASE TOTAL (US$M) (US$M) (US$M)
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El Penon $12.6 $2.7 $15.3
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Mercedes $4.5 $1.5 $6.0
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Caiamar $0 $3.4 $3.4
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Minera Florida $8.6 $2.4 $11.0
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TOTAL $25.7 $10.0 $35.7
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The objective of Yamana's exploration program is to advance new
2009 discoveries to indicated resources for El Penon, Minera
Florida and Mercedes, to advance the Pilar and Caiamar projects to
the feasibility stage and more generally to add high margin, high
quality ounces. The Company will evaluate any additional increases
in its exploration budget depending on further successes. Quality
Assurance and Quality Control Yamana incorporates a rigorous
Quality Assurance and Quality Control program for all of its mines
and exploration projects which conforms to industry Best Practices
as outlined by the CSE and National Instrument 43-101. All
exploration diamond drill cores are split in half by mechanical or
electrical sawing techniques and sampled at appropriate intervals
for assay. The remaining core is stored on-site pending assay
results. Quality Assurance standards, duplicates and blanks are
routinely inserted into the sample stream as a control for assay
accuracy, precision and contamination. The results of these checks
are tracked and failures are reanalyzed. Results are incorporated
into resource models following approval of the QAQC Manager.
Qualified Person Evandro Cintra, P.Geo., Senior Vice President,
Technical Services for Yamana Gold Inc. has reviewed and confirmed
the data contained within this news release and serves as the
Qualified Person as defined in National Instrument 43-101. 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 Central America. 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.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news
release contains or incorporates by reference "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 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 and the Chilean 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 resources, changes in project parameters
as plans continue to be refined, changes in project development,
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, 2008 filed with the securities
regulatory authorities in all provinces of Canada and available at
http://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. CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING
ESTIMATES OF MEASURED, INDICATED AND INFERRED MINERAL RESOURCES
This news release uses the terms "Measured", "Indicated" and
"Inferred" Mineral Resources. United States investors are advised
that while such terms are recognized and required by Canadian
regulations, the United States Securities and Exchange Commission
does not recognize them. "Inferred Mineral Resources" have a great
amount of uncertainty as to their existence, and as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an Inferred Mineral Resource will ever be upgraded to a
higher category. Under Canadian rules, estimates of Inferred
Mineral Resources may not form the basis of feasibility or other
economic studies. United States investors are cautioned not to
assume that all or any part of Measured or Indicated Mineral
Resources will ever be converted into Mineral Reserves. United
States investors are also cautioned not to assume that all or any
part of an Inferred Mineral Resource exists, or is economically or
legally mineable. DATASOURCE: Yamana Gold Inc. CONTACT: MEDIA
INQUIRIES: Mansfield Communications Inc., Hugh Mansfield, (416)
599-0024; Jodi Peake, Vice President, Corporate Communications
Investor Relations, (416) 815-0220, Email: ,
http://www.yamana.com/; Letitia Wong, Director, Investor Relations,
(416) 815-0220, Email:
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