AUY Yamana Gold Inc.

RNS Number:3571X
AuIron Energy Ld
17 January 2001


17 January 2001

QUARTERLY REPORT FOR THE PERIOD ENDED 31 DECEMBER 2000

SOUTH AUSTRALIAN STEEL AND ENERGY (SASE) PIG IRON PROJECT
(AUY 90% INTEREST)

Demonstration Plant Operations Commenced

The first operating phase of the Whyalla demonstration plant began in
the Quarter with first pig iron produced on 24 November 2000. The
scheduled shutdown of operations began shortly before Christmas to
allow for employee leave and planned plant modifications during
January 2001. Operations should recommence in early February 2001.

Initial operations were very encouraging with high quality pig iron
produced and high post combustion achieved. Some difficulties were
experienced mainly with ancillary equipment, especially the coal
delivery system. Appropriate modifications have been specified and
will be implemented by the end of this month.

Sase Iron Ore Resources Upgraded Status

During the December Quarter geological consultants Hellman &
Schofield Ltd. ("H&S") completed independent ore resource estimates
for SASE's Kestrel and Buzzard iron ore deposits. located in the
Hawk's Nest area, 115 km southeast of Coober Pedy.

The estimates incorporate all available data, including the complete
results from the drilling undertaken by Aulron's exploration team
during the Year 2000 field programme.


Kestrel Deposit

The table below summarizes the resources for the Kestrel magnetite
banded iron formation deposit as estimated by H&S for a nominal
cutoff grade of 30% total iron using 3D block modeling techniques and
ordinary kriging.

DEPOSIT        CLASS        Mt   Fe  P(2)O(5) SiO(2) Al(2)O(3)   LOI

Kestrel:       Measured    100   37   0.13     37      0.83     0.58
30% Fe Cutoff  Indicated    60   36   0.13     38      1.00     0.79
to 135m below  Inferred     60   36   0.13     39      1.05     0.78
Surface        TOTAL        220  36   0.13     38      0.94     0.69

(Key: Mt - Million tonnes, Fe - % Total iron, P(2)O(5) - % Phosphorus
as oxide, SiO(2) - % Silica as oxide, Al(2)O(3) - % Aluminium as
oxide, LOI - % Loss on Ignition)

The Kestrel resource estimate is based upon 107 drillholes (17
diamond core and 90 reverse circulation percussion drillholes)
drilled at 50 metre intervals on 100 metre spaced drill sections. The
deposit has been drilled over a strike extent of at least 1,200
metres and a maximum width across strike of 300 metres indicated. The
resource has been estimated to a depth of 135 metre from surface.

The final estimated total tonnage and grade for Kestrel compare
favorably with H&S's preliminary inferred resource estimate
previously reported (Release to ASX dated 27th July 2000 entitled
"AuIron Confirms 30 Years Inferred Resources of Iron Ore for the SASE
Project") but upgrades the bulk of the tonnage to Measured and
Indicated status.

A metallurgical testwork programme is underway to determine the
percentage of total iron recoverable and to develop a process flow
chart for beneficiation of iron ore from the Kestrel deposit.

Buzzard Deposit

The Buzzard deposit is a smaller, but higher-grade hematite deposit
having the potential to provide "direct smelting" ore to the proposed
Ausmelt commercial smelter. The table below summarizes the resources
for Buzzard estimated by H&S for a nominal cutoff grade of 55% total
iron using 3D block modeling techniques and ordinary kriging.

DEPOSIT        CLASS      Mt  Fe  P(2)O(5)  SiO(2)  Al(2)O(3)     LOI

Buzzard:       Measured  1.8  62    0.06     9.3      1.2       0.8
55% Fe Cutoff  Indicated 3.1  60    0.09    10.9      1.7       1.4
to 125m below  Inferred  1.8  59    0.15     8.7      2.9       2.5
Surface        Total     6.7  60    0.10     9.9      1.9       1.5

(Key: Mt - Million tonnes, Fe - % Total iron, P(2)O(5) - %
Phosphorous as oxide, SiO(2) - % Silica as oxide, Al(2)O(3) - %
Aluminium as oxide, LOI - % Loss on Ignition)

The resource estimate is based upon results from 55 drillholes
including data from diamond core, RC and 17 RAB drillholes previously
drilled by South Australian Government geologists at Buzzard.

This estimate has indicated a small reduction in tonnage to that
previously reported (Release to ASX dated 27th July 2000) but upgrades
the bulk of the resources to Measured and Indicated status.

The Buzzard hematite mineralisation trends northeast-southwest and is
open along strike in both directions; hence the possibility exists
for further high grade deposits along this trend. During the Quarter
AuIron undertook an extensive detailed geophysical gravity survey to
identify additional drill targets. Data from this survey is currently
being processed and interpreted.

Ingomar Coal Trial Pit Tenders Called

The Company has called tenders for the construction of a trial
exploration pit on the Ingomar portion of the Phillipson coalfield.
The purpose is to extract a bulk sample of coal from the Rankin seam
for testing in the SASE demonstration plant. This seam is the likely
source of coal for commercial operations.

Tenders were called during January with many responses received. The
tender process is being managed by independent mining consultants. A
tender will be awarded shortly. Dewatering of the pit ahead of coal
extraction should commence next week under a separate contract
awarded this week.

Environmental Studies Underway

Environmental work, including flora, fauna and ground water studies
continued during the Quarter. Results from these studies will be used
to set the parameters of comprehensive studies that address
environmental issues for the commercial development decision.



BALLYMONEY NORTHERN IRELAND MINE AND POWER PROJECT (AUY 100%)

Electricity Market Study

A leading UK energy consultancy, Primark WEFA, was appointed during
the Quarter to undertake an independent study of the electricity
market in Northern Ireland and the Republic of Ireland in the context
of an "all island" integrated market.

The study is examining forecast generating capacity requirements in
the context of competitive fuel prices, principally imported natural
gas and imported internationally traded steaming coal. Northern
Ireland is almost wholly dependent on imported power station fuels
and the Republic is about 80% dependent on imports - the latter
forecast by the Irish Government to rise within the next two years to
90% as the country's proven indigenous gas supplies are fully
depleted.

The prices of power station natural gas and steaming coal in the UK
have risen substantially in the past year and further rises are
foreshadowed as both the Republic and the UK increasingly depend upon
imported natural gas. OPEC's decision this week to reduce oil
production should under pin or increase oil prices which is expected
to flow through to gas prices, albeit delayed by up to a year, since
long term gas contracts are increasingly indexed to oil prices.

On 29 December 2000, the Irish Government Electricity Regulator
published (www.cer.ie) forecasts of "Best New Entrant" (CER/00/90)
gas prices for the Republic of Ireland. The report calculates long
term gas prices at over 36 pence per therm and gas combined cycle
(CCGT) power station sent out electricity price at 3.68 pence per
kilowatt hour.

The price of Ballymoney indigenous coal fuel and the sent out price
of power from the proposed Ballymoney station are expected to be
significantly more competitive than these official estimates from the
Republic's Regulator. Similar data have not been recently published
in Northern Ireland, hence the need for the WEFA study to be
commissioned.

The WEFA study will be completed shortly.

Independent Mining Study Update

Independent mining consultants were appointed as previously reported,
to undertake a detailed review of proposed mining strategies and
capital and operating costs for the production of fuel to supply
three different power station capacities. This work will be completed
during January 2001. Preliminary results available last week
demonstrate that estimated mining costs have been significantly
reduced in real terms since our previous work in the last decade.

Power Station Partner

During the Quarter, the Company and ABB Energy ventures amicably
terminated the longstanding 50/50 power station joint venture,
following ABB's decision last year to sell its entire worldwide power
business to Alstom of France.

The Company has been approached by five international power groups to
join the project. Upon completion of the WEFA and mining studies,
negotiations to introduce a new power station partner will begin,
based on the latest competitive market assessments.

Ballymoney Stock Market Listing

The AUY board will receive proposals on this matter shortly.

INDONESIA

Divestment Of Indonesian Gold Interests

On 4 December 2000, AuIron completed negotiations for its withdrawal
from its Indonesian gold and copper exploration projects through the
sale of all shares in its subsidiary MM Gold Pty Ltd, the holding
company for all the Indonesian projects, to mining contractor Icon
Enterprises Ltd. Legal documentation has been completed subsequent to
the end of the Quarter. The company's Indonesian office was closed in
October 2000.

Consideration for the sale is the cash payment of US$250,000, payable
on the earlier of either 4 September 2001 or commencement of
construction of the Way Linggo gold mine, and 2% net smelter
royalties on MM Gold's share of any future production from the
Tapaktuan and Salawati exploration projects located in Sumatra and
Irian Jaya.

Competent Person

The Information contained herein relating to Iron ore mineral
resources is based upon information compiled by Arnold van der
Heyden, who is a member of the Australasian Institute of Mining and
Metallurgy and qualifies as a Competent Person as defined in the
September 1999 edition of the "Australasian Code for Reporting of
Mineral Resources and Ore Reserves". Arnold van der Heyden is an
employee of Hellman & Schofield Pty Ltd.

Hellman & Schofield Pty Ltd has consented and has not withdrawn its
consent to include herein the information in the form and context in
which it appears.

All technical information in respect of the coal, pig iron and
electricity related projects was prepared by Eur Ing Mr N F Arthur, B
E (Chem) Hons, C Eng, FiChe, FAusIMM, FAICD, Managing Director & CEO
and accurately reflects the information compiled by him.


W Higgs
COMPANY SECRETARY

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