FOR: YAMANA GOLD INC.
TSX SYMBOL: YRI
AMEX SYMBOL: AUY
LSE SYMBOL: YAU
January 19, 2004
Yamana Reports Profit
TORONTO, ONTARIO--
(all figures in US$ unless otherwise stated)
Yamana Gold Inc. (TSX: YRI; AMEX: AUY; LSE (AIM): YAU) announces a net profit for the quarter ended
November 30, 2003 of $2.1 million on sales of $9.4 million. This compares to a loss for the previous
quarter of $1.35 million and a loss of $0.3 million for the third quarter in the pervious year. Net
profit for the nine month period ended November 30, 2003 was approximately $0.4 million as compared to
a loss in the previous period of $1.3 million. No gold sales occurred prior to the most recently
completed quarter. Earnings per share for the three month period ended November 30, 2003 were $0.03
per share as compared to a loss of $0.06 per share in the previous quarter.
Yamana's President and CEO Peter Marrone stated "We are delighted to report a profit for the quarter.
Our profitability is underpinned by our production and cost control efforts. We have a diversified
portfolio of mining assets comprising of a producing mine, several production stage properties and an
unparalleled exploration land position in Brazil. We anticipate being able to demonstrate operational
and financial success at our other properties.
Yamana produces at an annual rate of 100,000 ounces gold per year and will generate significant
additional value by bringing its development projects to production.
We are in a strong cash position with a working capital surplus of $17.6 million as of November 30,
2003. The Company closed an equity financing of Cdn. $27.7 (US$21.3) million on December 23, 2003. The
cash balance as of December 31, 2003 is $35 million and the company has no debt."
Yamana is a Canadian gold producer with significant gold production, gold and copper-gold development
stage properties, exploration properties and land positions in most major mineral areas in Brazil.
Yamana expects to produce gold at intermediate company production levels by 2006 in addition to adding
significant copper production by 2007. Yamana also holds gold exploration properties in Argentina
subject to earn-in by Peruvian gold producers Buenaventura and Hochshild. Company management plans to
build on this base by targeting other gold consolidation opportunities in Brazil and elsewhere in
Latin America.
FORWARD-LOOKING STATEMENTS: This news release contains certain "forward-looking statements" within the
meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. All
statements, other than statements of historical fact, included in this release, and Yamana's future
plans are forward-looking statements that involve various risks and uncertainties. There can be no
assurance that such statements will prove to be accurate, and actual results and future events could
differ materially from those anticipated in such statements. Forward-looking statements are based on
the estimates and opinions of management on the date the statements are made, and Yamana does not
undertake any obligation to update forward-looking statements should conditions or management's
estimates or opinions change.
THIRD QUARTER 2003/2004
MANAGEMENT'S DISCUSSION AND ANALYSIS
(US dollars, in accordance with Canadian GAAP)
The following discussion and analysis should be read in conjunction with the Management's Discussion
and Analysis (MD&A) for the year ended February 28, 2003, the Company's annual audited consolidated
financial statements, the notes relating thereto, supplementary financial information contained in the
Company's Annual Report, and the quarterly financial statements and notes contained in this report.
a. Overview
Since the year-end the Company has undergone a major transformation. The principal changes from
February 28, 2003 are:
1. Acquired the operating mine Fazenda Brasileiro in Brazil for cash consideration of $20.9 million,
2. Acquired the advanced stage projects in Brazil from Santa Elina: Sao Francisco, Sao Vicente,
Fazenda Nova/Lavrinha and Chapada, for share consideration,
3. Raised Cdn$55.5 ($42.7) million cash through the issue of common shares and an additional Cdn $27.7
($21.3) million subsequent to the quarter end,
4. Company name changed from Yamana Resources Inc. to Yamana Gold Inc., and
5. Consolidated shares on the basis of one new share for each 27.86 shares held.
These changes effectively re-created the company by:
1. Providing gold production at an annual rate of more than 100,000 oz of gold per year,
2. Providing late-stage development projects to ramp up future production levels,
3. Providing a large exploration portfolio, and
4. Establishing a firm financial base to move forward with cash of $16.3 million and no debt.
b. Financial results of operations
The consolidated net profit for the nine and three months ending November 30, 2003 were $368,791 and
$2,112,827, an increase of $1,666,555 and $2,433,829, respectively over the corresponding previous
periods. The increase is principally due to strong operating earnings from the Fazenda Brasileiro
mine. However these earnings were reduced by: 1) severance costs of $709,815 during the period to date
and; 2) increases in general and administrative costs of $1,211,166 and $1,053,234 for the nine and
three months respectively. The severance charges arise from the closing of the head office in Spokane
and establishment of the corporate office in Toronto. The increase in general and administrative
expenses is due to duplication of costs of having a Spokane and Toronto office for an overlapping
period and the opening of a corporate office in Brazil.
The Company took over the operations at the Fazenda Brasileiro mine effective August 15, 2003. Gold
sales were delayed until late September 2003 when a reasonable gold inventory was built up and shipped
to Sao Paulo for refining. During the quarter, 23,373 ounces of gold were sold from 27,127 ounces of
gold production from the Fazenda Brasileiro mine. In addition 1,050 ounces of gold produced from bulk
sampling at Sao Francisco were also sold. A total of 168,567 tonnes were milled during the third
quarter and the mill recovery rate was 95.5%. In addition 60,512 tonnes of open pit material was heap
leached. The total cash costs per ounce at the time of acquiring the mine were approximately $240 per
ounce of gold. Various costs cutting measures have been implemented and the average total cash costs
for the third quarter were $220 per ounce.
The significant exchange gain of $820,634 is primarily due to holding the majority of cash balances in
the Canadian dollars. As the Company's policy is to translate non US dollar monetary items at period
end rates, an unrealized gain is recognized during periods that the Canadian dollar appreciates vis-a-
vis the US dollar. The US/Cdn dollar exchange rate at the beginning of the period was 1.39 and the
Canadian dollar strengthened during the quarter to end the third quarter at 1.30.
c. Financial condition, liquidity and capital resources
During the nine months ended November 30, 2003 the Company received $36.2 million, net of issue costs
of $3.3 million, from the issue of 46,250,000 common shares and 23,125,000 warrants. One warrant
entitles the holder to purchase a common share of the Company for Cdn$1.50 until July 31, 2008.
Proceeds were used to purchase the Fazenda Brasileiro mine for $20.9 million. These changes allowed
the Company to increase its cash position to $16.3 million as at November 30, 2003 and improve its
working capital position from a deficit of $371,820 as at February 28, 2003 to a positive working
capital balance of $17,614,207 at period end.
The Company has no debt which provides the Company with significant future financing flexibility.
The Company generated cash flow from operations of $3.2 million for the nine months ended November 30,
2003 and $3.9 million for the three months then ended. Prior to the current quarter there was no
mining operations as the Brasileiro mine was acquired in the middle of August 2003 and the first gold
sales did not take place until September 2003.
For the third quarter capital expenditures on fixed assets and mineral properties totaled
approximately $1.8 million. Approximately $1 million of this was for exploration at Fazenda
Brasileiro, $400,000 for capital assets at Fazenda Brasileiro and approximately $400,000 for
development/feasibility work at Chapada.
d. Business and asset acquisitions
On August 12, 2003, the Company acquired the Sao Francisco, Sao Vicente and Fazenda Nova/Lavrinha gold
properties ("Santa Elina assets") and the Chapada copper-gold ("Chapada") project in Brazil from Santa
Elina Mines Corporation ("Santa Elina"). In consideration, the company issued 34,885,713 common shares
and 17,442,856 share purchase warrants. The Santa Elina assets have been recorded in the financial
statements of Yamana at Santa Elina's historical cost base.
On August 15, 2003 the Company acquired the Fazenda Brasileiro mine in Brazil from Companhia Vale do
Rio Doce ("CVRD") for $20.9 million cash.
These acquisitions resulted in the Company becoming a significant gold producer in Brazil and one of
Brazil's largest gold exploration landholders. Upon completion of the acquisitions, Santa Elina held
83.4% of the issued and outstanding common shares prior to the Cdn. $55.5 million financing and 38.8%
after the financing.
e. Strategic update and outlook
Management intends to focus on cost reduction at the Fazenda Brasileiro mine. The average cash costs
per ounce for the third quarter was $220 per ounce. The cash costs for the month of December were less
than $195 per ounce, bringing the average cash cost per ounce of production through to December 31,
2003 to approximately $210 per ounce. During the quarter the Company negotiated an increase in the
daily mine shift hours from 6 to 8 hours. This proposal has been accepted by the union and should
result in an increase in productivity and the reduction of transportation and other costs. Also as the
level of mine development has had diminished under the previous operator, efforts will be made to
increase the drilled development work to increase the flexibility in the production plan. The benefits
of these efforts are expected to be realized in the fourth quarter going forward.
The work on the final feasibility study for the Fazenda Nova project was completed during the quarter
and a construction decision was made. The mine plan provides for an initial 143,000 ounces of gold
production over a three year production period. The construction cost will be approximately $6.6
million and production would begin mid-2004. Capital requirements for the construction of the Fazenda
Nova project will be funded from the company's existing cash position.
The company continues to look for potential gold mine acquisitions in South America which would allow
the company to leverage the strength in the company's Brazilian operating team and expertise.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Except for statements of historical fact relating to the company, certain information contained herein
constitutes forward-looking statements. Forward-looking statements are frequently characterized by
words such as "plan," "expect," "project," "intend," "believe," "anticipate" and other similar words,
or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are
based on the opinions and estimates of management at the date the statements are made, and are subject
to a variety of risks and uncertainties and other factors that could cause actual events or results to
differ materially from those projected in the forward-looking statements. These factors include the
inherent risks involved in the exploration and development of mineral properties, the uncertainties
involved in interpreting drilling results and other ecological data, fluctuating metal prices, the
possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to
the availability and costs of financing needed in the future and other factors. The Company undertakes
no obligation to update forward-looking statements if circumstances or management's estimates or
opinions should change. The reader is cautioned not to place undue reliance on forward-looking
statements.
YAMANA GOLD INC.
CONSOLIDATED BALANCE SHEETS
Prepared by management
(In U.S. dollars)
November 30, February 28,
2003 2003
-------------------------------------------------------------------
(Unaudited) (Audited)
ASSETS
Current
Cash and cash equivalents $ 16,260,248 $ 722,344
Amounts receivable 1,223,783 216,330
Inventory (Note 3) 4,834,763 -
Advances and deposits 354,099 39,940
-------------------------------------------------------------------
22,672,893 978,614
Fixed
Fixed assets (Note 4) 12,287,902 443,067
Mineral properties (Note 5) 37,848,699 5,199,125
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$ 72,809,494 $ 6,620,806
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-------------------------------------------------------------------
LIABILITIES
Current
Accounts payable and accrued
liabilities $ 5,016,272 $ 709,815
Accrued liabilities payable in stock - 603,311
Note payable 42,414 37,308
-------------------------------------------------------------------
5,058,686 1,350,434
Long Term
Environmental liability accrual 5,790,000 -
Future income tax liabilities 1,500,357 1,500,357
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12,349,043 2,850,791
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CAPITAL SOURCES
Capital stock
Authorized
Unlimited number of first preference
shares without par value issuable in
series
Unlimited number of common shares
without par value
Issued and outstanding
86,378,671 common shares (Note 6)
(February 28, 2003 - 2,910,501 shares) 54,449,203 3,515,544
Shares to be issued - 1,285,913
Share purchase warrants and other 9,170,036 2,459,147
Deficit (3,158,788) (3,490,589)
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60,460,451 3,770,015
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$ 72,809,494 $ 6,620,806
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YAMANA GOLD INC.
CONSOLIDATED STATEMENTS
OF OPERATIONS AND DEFICIT
Unaudited-prepared by management
(In U.S. dollars)
Three months ended Nine months ended
November 30, November 30, November 30, November 30,
2003 2002 2003 2002
---------------------------------------------------------------------
SALES $ 9,358,676 $ - $ 9,358,676 $ -
COST OF SALES 4,581,140 - 4,581,140 -
DEPRECIATION AND
AMORTIZATION 1,127,002 - 1,127,002 -
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MINE OPERATING
EARNINGS 3,650,534 - 3,650,534 -
EXPENSES
General and
administrative 1,364,084 310,850 2,120,875 909,709
General exploration - 17,408 3,436 20,723
Mineral property
and other asset
write-offs - 12,651 73,740 174,419
Options expense 385,000 - 385,000 -
Foreign exchange
(gain) / loss (820,634) - (820,634) -
Severance costs - - 709,815 -
---------------------------------------------------------------------
OPERATING PROFIT
(LOSS) 2,722,084 (340,909) 1,178,302 (1,104,851)
Investment and
other business
income 142,599 70,227 193,739 107,876
Interest and
financing expense (6,487) (50,320) (257,881) (300,789)
---------------------------------------------------------------------
PROFIT (LOSS) BEFORE
TAX 2,858,196 (321,002) 1,114,160 (1,297,764)
INCOME TAX EXPENSE (745,369) - (745,369) -
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NET INCOME (LOSS) 2,112,827 (321,002) 368,791 (1,297,764)
DEFICIT, BEGINNING
OF THE PERIOD (5,271,615) (615,175) (3,490,589) -
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(3,158,788) (936,177) (3,121,798) (1,297,764)
INTEREST ON
CONVERTIBLE NOTES - (24,660) (36,990) (73,980)
---------------------------------------------------------------------
DEFICIT, END OF
THE PERIOD $ (3,158,788) $ (960,837) $(3,158,788) $(1,371,744)
---------------------------------------------------------------------
---------------------------------------------------------------------
BASIC AND DILUTED
PROFIT (LOSS)
PER SHARE $ 0.03 $ (0.13) $ 0.01 $ (0.61)
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted average
number of
Shares outstanding
(in thousands) 67,574 2,382 27,449 2,264
Note: In the opinion of management of Yamana, all adjustments of a
normal recurring nature have been included in these financial
statements to provide a fair statement of results for the periods
presented. The results of those periods are not necessarily
indicative of the results for the full year.
YAMANA GOLD INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
Unaudited-prepared by management
(In U.S. dollars)
Three months ended Nine months ended
November 30, November 30, November 30, November 30,
2003 2002 2003 2002
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net profit
(loss) for
the period $ 2,112,827 $ (321,002) $ 368,791 $ (1,297,764)
Items not
involving
cash
Services paid
in common
shares - 196,733 837,985 196,733
Depreciation
and depletion 1,123,700 1,822 1,127,002 8,309
Options expense 385,000 - 385,000 -
Mineral property
and other asset
write-offs - 12,651 73,740 174,419
Liabilities
payable in
common shares - 196,733 - -
Interest expense
on First
Preference
Shares,
Series 1 - 50,320 - 300,789
---------------------------------------------------------------------
3,621,527 137,257 2,792,518 (617,514)
Net change
in non-cash
working capital 273,222 (36,313) 387,082 (130,655)
---------------------------------------------------------------------
3,894,749 100,944 3,179,600 (748,169)
---------------------------------------------------------------------
---------------------------------------------------------------------
FINANCING ACTIVITIES
Issue of common
shares and
warrants for
cash (419,046) 172,500 39,475,716 609,500
Issue costs (156,911) - (3,268,761) -
Interest expense
on convertible
notes - - (36,990) -
---------------------------------------------------------------------
(575,957) 172,500 36,169,965 609,500
---------------------------------------------------------------------
---------------------------------------------------------------------
INVESTING ACTIVITIES
Business
acquisition
of Brasileiro,
net of cash - - (21,165,000) -
Expenditures
on mineral
properties (1,247,014) (32,509) (1,342,930) (32,509)
Purchase of
equipment and
fixed assets (553,938) - (1,303,731) -
Return of deposit - - - 200
---------------------------------------------------------------------
(1,800,952) (32,509) (23,811,661) (32,309)
---------------------------------------------------------------------
---------------------------------------------------------------------
INCREASE (DECREASE)
IN CASH 1,517,840 240,935 15,537,904 (170,978)
CASH, BEGINNING
OF THE PERIOD 14,742,408 (1,605) 722,344 213,575
---------------------------------------------------------------------
CASH, END OF THE
PERIOD $ 16,260,248 $ 239,330 $ 16,260,248 $ 42,597
SUPPLEMENTARY INFORMATION
REGARDING OTHER NON-CASH
TRANSACTIONS
Financing Activities
Extinguishment
of loan and
accrued interest
payable on sale
of mineral
properties and
related assets - - - (3,293,185)
Issue of common
shares on
conversion
of First
Preference
Shares - - - 10,521
Issue of common
shares for Santa
Elina assets - - 18,325,385 -
Equity component of
convertible notes
Accrued interest
charged to deficit - 24,660 36,990 49,320
Payment of interest
in common shares - - (49,320) (49,320)
Payment of principal
in common shares - - (1,479,600) -
Purchase of First
Preference Shares
for common shares
Liability
component of
First Preference
Shares - - - (7,293)
Equity component
of First
Preference
Shares - - - (3,228)
Investing Activities
Sale of mineral
properties and
related assets - - - 3,293,185
Expenditures
on mineral
properties - - (18,325,385) -
Notes to the Unaudited Interim Consolidated Financial Statements
As at November 30, 2003 and for the nine months ended November 30,
2003 and 2002
(in U.S. dollars)
1. Basis of presentation
The accompanying interim consolidated financial statements have been prepared in accordance with
accounting principles generally accepted ("GAAP") in Canada. These interim financial statements do not
contain all the information required by generally accepted accounting principles for annual financial
statements and therefore should be read in conjunction with the most recent annual financial
statements of the Company. These financial statements follow the same accounting policies and methods
of their application as the most recent annual financial statements.
Significant new accounting policies
Provision for reclamation and closure
Reclamation and closure costs have been estimated based on the Company's interpretation of current
regulatory requirements. The fair value of the estimated reclamation and closure expenses for Fazenda
Brasileiro and Sao Vicente were recorded as a liability on acquisition. Fair value was determined as
the discounted future cash expenditures. Additional charges to operations on a unit-of-production
basis are made to fully accrue reclamation and closure expenses over the useful lives of the
operations.
In management's opinion, all adjustments necessary for fair presentation have been included in these
financial statements. Readers are advised that the operating results for the nine months ended
November 30, 2003 may not be indicative of the results that might be expected for the full year ended
February 29, 2004.
Certain amounts for fiscal 2003 have been reclassified to conform with the current year's
presentation.
On July 30, 2003 the name of the Company was changed to Yamana Gold Inc.
On August 12, 2003 the outstanding common shares then outstanding were consolidated on the basis of
one new common share for 27.86 existing common shares. The share and per share information is
presented as if the consolidation took place March 1, 2002.
Stock option plan
The Company stock option plan includes a stock appreciation right and as such the Company expenses the
fair value of options at the time of the grant. No adjustment for subsequent changes in the price of
the Corporation's shares will be recorded. The value of the options will be included in remuneration
expense and reflected as an increase in contributed surplus.
2. Business acquisition
Purchase of Mineracao Fazenda Brasileiro S.A. ("Fazenda Brasileiro")
On August 12, 2003, the Company acquired all of the outstanding shares of Fazenda Brasileiro. On
August 15, 2003 Fazenda Brasileiro acquired all of the assets of the Fazenda Brasileiro gold mine
("Brasileiro") from Companhia Vale do Rio Doce for $20,900,000 in cash. Acquisition costs of $265,000
were incurred by the Company. The acquisition was accounted for using the purchase method with the
results of Brasileiro being included with those of the Company from August 15, 2003.
The allocation of the purchase price is based upon the fair values of the net assets of Brasileiro at
the date of acquisition and is summarized as follows:
(dollars in thousands)
Purchase price:
Cash $ 20,900
Acquisition costs 265
--------------------------------------------------------------------
$ 21,165
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--------------------------------------------------------------------
Net assets acquired:
Inventory $ 2,237
Property, plant and equipment 11,663
Mineral properties 12,547
Other long-term liabilities (5,282)
--------------------------------------------------------------------
$ 21,165
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--------------------------------------------------------------------
3. Inventories
November 30, February 28,
2003 2003
Metal in circuit $ 506,747 $ -
Ore stockpiles 558,796 -
Materials and supplies 1,823,656 -
Product inventories 1,945,564 -
-
--------------------------------------------------------------------
Inventories $ 4,834,763 $ -
--------------------------------------------------------------------
4. Fixed assets
As at
November 30, February 28,
2003 2003
Property plant and equipment:
Fazenda Brasileiro $ 11,248,690 $ -
Other fixed assets 1,039,212 443,067
--------------------------------------------------------------------
$ 12,287,902 $ 443,067
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5. Mineral properties
Mineral properties are comprised as follows:
As at
November 30, February 28,
2003 2003
Fazenda Brasileiro (note 2) $ 14,146,653 $ -
Santa Elina 10,320,473 -
Chapada properties 8,400,008 -
Argentine properties 4,974,985 5,063,290
Other 6,580 135,835
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$ 37,848,699 $ 5,199,125
--------------------------------------------------------------------
The Company acquired the Santa Elina properties and the Chapada properties from Santa Elina Mines
Corporation and its affiliates for common shares resulting in Santa Elina Mines Corporation holding
83.4% of the issued and outstanding common shares. After the exchange of the 46,250,000 subscription
receipts for common shares, Santa Elina and its affiliate held approximately 38.8% of the issued and
outstanding common shares of the Company. After the closing of additional share issue on December 23,
2003, Santa Elina and its affiliates held approximately 35% of the issued and outstanding common
shares of the Company.
Santa Elina Properties
On August 12, 2003, Yamana acquired the rights to the Santa Elina properties through the acquisition
of all of the shares of Mineracao Bacilandia Ltda. and Santa Elina Desenvolvimento Mineral S.A.
("Santa Elina Companies"), companies incorporated to acquire the Santa Elina properties. The Company
issued 14,677,380 common shares and 7,338,690 share purchase warrants for the Santa Elina properties.
The properties have been recorded at the carrying cost of the vendor. Costs of acquisition are
estimated to be $192,000.
Chapada Properties
On August 12, 2003, Yamana acquired all of the shares of Mineracao Maraca Industria e Comercio S.A.
("Mineracao Maraca"), an affiliate of Santa Elina, and the holder of the Chapada properties. The
aggregate consideration paid by Yamana was the issuance of 20,208,333 common shares and 10,104,166
share purchase warrants for the Chapada properties. The properties have been recorded at the carrying
cost of the vendor. Costs of acquisition are estimated to be $192,000.
6. Capital stock
Common shares issued and outstanding:
Number of
Common Shares Amount
--------------------------------------------------------------------
Balance at February 28, 2003 post
consolidation 2,910,501 $ 3,515,544
Private placements (note i) 28,780 35,344
Payment of accounts payable (note ii) 842,236 810,633
Exercise of options 8,076 22,818
Issued on redemption of First
Preference Shares (note iii) 388,457 1,285,913
Issued on conversion of convertible
notes (note iv)
Principle 1,027,242 1,479,600
Interest 37,666 49,320
Issue for Santa Elina assets (note v) 34,885,713 18,325,385
Public issue for cash (note vi) 46,250,000 32,193,407
Issue costs -- (3,268,761)
--------------------------------------------------------------------
Balance at November 30, 2003 86,378,671 $ 54,449,203
--------------------------------------------------------------------
--------------------------------------------------------------------
i) During the nine month period ended November 30, 2003, Yamana completed the following private
placements
a) 7,178 units at a price of C$4.18 per unit. Each unit consisted of one common share of Yamana and
one common share purchase warrant of Yamana exercisable for three years from the closing date at an
exercise price of C$5.57. Yamana also issued 718 underwriter's warrants exercisable up to 2 years from
the closing date at an exercise price of C$5.29.
b) 21,602 shares at a price of C$1.57 per share. In addition, warrants totaling 21,601 and 2,601
broker warrants exercisable for up to four years from the closing date, at an exercise price of
Cdn$2.09 per share, were issued.
ii) The Company settled various liabilities by the issue of common shares including the issue of
350,000 shares to a director.
iii) During the year ended February 28, 2003, Yamana agreed to purchase 5,560,000 preference shares
and the rights to dividends in exchange for 388,457 post-consolidation common shares. The preference
shares were purchased for common shares on the basis of 0.046 post-consolidation common shares for
each preference share and one post-consolidation common share for each $2.72 of accrued dividends.
Yamana also agreed to grant a 2% NSR on La Paloma, a Yamana gold property in Santa Cruz province,
Argentina for the surrender of 1,000,000 preference shares. The common shares were issued in April.
Warrants that were originally issued with the preferred shares that were purchased or surrendered were
amended such that the expiration date was extended from February 9, 2004 to December 31, 2004 and the
exercise price was reduced from Cdn$4.18 to Cdn$3.48 per share.
iv) Pursuant to the trust indenture, the Company issued common shares for principle and interest on
maturity of the 8% convertible notes.
v) See note 5.
vi) On July 31, 2003 the Company accepted subscriptions for 46,250,000 subscription receipts at a
price of Cdn$1.20 per receipt. Each subscription receipt entitled the holder to exchange the receipt
for one common share and one half of a warrant. One warrant entitles the holder to purchase one common
share for Cdn$1.50 until July 31, 2008. On October 7, 2003 the subscription receipts where exchanged
for 46,250,000 common shares and 23,125,000 warrants. The proceeds of $39.8 (Cdn$55.5 million) were
recorded as $32.2 million as share capital and $7.6 million share purchase warrants before issue costs
of $3.3 million.
On July 31, 2003, 5,000,000 options were allocated and issued to management and a consultant at a
strike price of Cdn$1.67 for a 10 year period. The Company agreed to grant these options with an
exercise price equal to the issue price of the subscription receipts. As these options were
subsequently granted at an exercise price of $1.67 per share, to accommodate the difference in value,
the Company has committed to issue 808,000 Common Shares to certain optionees on a pro rata basis. The
issuance of these common shares is subject to shareholder approval.
The Company has expensed the value of the share purchase options granted as compensation expense in
the amount of $385,000 with a corresponding increase in contributed surplus.
The compensation expense is determined using an option-pricing model assuming no dividends are to be
paid, a weighted average volatility of the Company's share price of 35%, an annual risk free interest
rate of 3.0% and expected service lives of 3 years.
7. Segmented information
Yamana considers its business to consist of one reportable operating segment, the acquisition,
exploration and development of mineral properties, primarily in Brazil and Argentina. Fixed assets
referred to below consist of land, buildings and equipment, and mineral properties.
As at
November 30, February 28,
2003 2003
--------------------------------------------------------------------
Fixed assets at the end of the quarter
Argentina 5,406,541 $ 5,496,847
Brazil 44,645,564 129,228
Other 84,496 16,117
--------------------------------------------------------------------
$ 50,136,601 $ 5,642,192
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--------------------------------------------------------------------
Profitability broken down by primary segments is as follows:
For the three months ended November 30, 2003
--------------------------------------------
Brazil Corporate/ Total
Canada
Mine profit $ 3,650,534 $ - $ 3,650,534
Net income $ 2,467,773 $ (354,946) $ 2,112,827
For the nine months ended November 30, 2003
-------------------------------------------
Mine profit $ 3,650,534 $ - $ 3,650,534
Net income $ 2,467,773 $ (2,098,982) $ 368,791
8. Related party transactions
Related party transactions, not disclosed elsewhere in these
financial statements, during the nine month period were as
follows:
Nine months ending
November 30, 2003
Reimbursement of financing and acquisition cost
incurred by Santa Elina on behalf of the Company $438,000
Legal fees to a law firm that had partners who
are either a director or an officer of the Company $295,253
Directors fees and consulting fees to associates
thereof $ 27,933
Consulting fees paid to an officer prior to
becoming an officer $ 71,654
9. Subsequent event
The Company issued 8,665,000 common shares at a price of C$3.20 per share, for aggregate gross
proceeds of C$27.7 ($21.3) million under a public offering, which closed on December 23, 2003.
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FOR FURTHER INFORMATION PLEASE CONTACT:
Yamana Gold Inc.
Peter Marrone
President & Chief Executive Officer
(416) 815-0220
E-mail: investor@yamana.com
OR
Yamana Gold Inc.
Chuck Main
Chief Financial Officer
(416) 945-7354
E-mail: cmain@yamana.com
OR
Yamana Gold Inc.
Jane Jackson
Investor Relations-Europe
+44 7793145779
E-mail: investor@yamana.com
Yamana Gold Inc