- Record quarterly production increasing seven percent at declining
and industry low cash costs - TORONTO, Aug. 4
/PRNewswire-FirstCall/ -- YAMANA GOLD INC. (TSX:YRI; NYSE:AUY;
LSE:YAU) today announced its financial and operating results for
the second quarter ended June 30, 2009. All dollar amounts are
expressed in United States dollars unless otherwise specified.
SECOND QUARTER HIGHLIGHTS Financial and Operating Highlights
Highlights for the three- and six-month periods ended June 30, 2009
include: - Revenues of $269.8 million and $514.0 million,
respectively; - Mine operating earnings of $94.9 million and $169.8
million, respectively; - Adjusted earnings of $95.8 million or
$0.13 per share and $160.1 million or $0.22 per share,
respectively; - Net earnings of $9.6 million or $0.01 per share and
$95.6 million or $0.13 per share, respectively;
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Three months Six months ended ended June 30, June 30, Thousands of
Dollars 2009 2009
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Net Earnings $ 9,639 $ 95,632 Stock based compensation 4,471 5,182
Foreign exchange loss (gain) 28,541 (50,260) Unrealized loss (gain)
on derivatives 34,117 81,840 Future income tax expense (recovery)
on foreign currency translation of inter corporate debt 31,779
35,088
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Adjusted earnings before income tax effect 108,547 167,482 Income
tax effect of adjustments (12,735) (7,413)
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Adjusted Earnings $ 95,812 $ 160,069
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- Cash flow from operations before changes in non-cash working
capital items of $117.9 million or $0.16 per share, representing a
51 percent increase from the first quarter of 2009, and $196.0
million or $0.27 per share, respectively; - Total production from
all mines of 289,574 gold equivalent ounces (GEO) and 561,056 GEO,
respectively; - By product cash costs of $213 per GEO and $318 per
GEO, respectively; - Average co-product cash costs (excluding
non-core mines under sale) of $352 per GEO and $351 per GEO,
respectively. Co-product cash costs per pound of copper of $0.91
per pound and $0.92 per pound, respectively. Development,
Exploration and Corporate Highlights Highlights for the three-month
period ended June 30, 2009 include: - Delivered an update to
Pilar's resource estimate demonstrating an approximate 50 percent
increase in both resource and grade; - Announced sale of certain
non-core mines, Sao Francisco, Sao Vicente and San Andr s, for more
than $240 million; - Completed Jacobina expansion to 6,500 tonnes
per day; - On track for 20 million tonne per day expansion at
Chapada for completion in the third quarter of 2009; - Announced
positive exploration results at Mercedes, Pilar and Minera Florida.
Highlights subsequent to the quarter include: - Declared commercial
production at Gualcamayo effective July 1, 2009; - Made
construction decisions for the development of the C1 Santa Luz
project in Brazil, the Mercedes project in Mexico and the tailings
reprocessing project at Minera Florida, for start-up in 2012,
representing an initial annualized production increase of 290,000
GEO in 2012 at forecast cash costs of approximately $360 per GEO; -
Increased 2009 exploration budget to $66 million; - Acquired
extensive exploration concession, Caiamar, located in Brazil. "Our
core mines achieved record quarterly production and are expected to
continue to perform in the second half of 2009. During the second
quarter, we continued to show strong operating margins and cash
flow due to our industry low cash costs," said Yamana's chairman
and chief executive officer, Peter Marrone. "Supplementing our
steady state operations at our core mines is a robust portfolio of
low-cost, advanced development projects which distinguishes Yamana
as one of the most attractive growth companies in the industry."
FINANCIAL AND OPERATING SUMMARY Revenues for the three-month period
ended June 30, 2009 were $269.8 million and for the six-month
period ended were $514.0 million. Approximately 15,000 GEO were
produced but not sold during the second quarter due to timing and
will be sold during the third quarter. Revenue from non-precious
metals represented less than 26 percent of total revenue in the
second quarter, and is expected to continue to decline as precious
metals production increases for the balance of 2009 and thereafter.
Mine operating earnings for the three-month period ended June 30,
2009 were $94.9 million and for the six-month period ended were
$169.8 million. Adjusted earnings for the three-month period ended
June 30, 2009 were $95.8 million, or $0.13 per share. Adjusted
earnings for the six-month period ended June 30, 2009 were $160.1
million, or $0.22 per share. Net earnings for the three-month
period ended June 30, 2009 were $9.6 million, or $0.01 per share,
and for the six-month period ended were $95.6 million, or $0.13 per
share. Cash flow from operations for the three-month period ended
June 30, 2009 was $117.9 million or $0.16 per share before changes
in non-cash working capital items, representing a 51 percent
increase from the first quarter of 2009. Cash flow from operations
for the six-month period ended June 30, 2009 was $196.0 million or
$0.27 per share. Total production for the three-month period ended
June 30, 2009 was 289,574 GEO, up seven percent from 271,482 GEO in
the first quarter of 2009. Total production for the six-month
period ended was 561,056 GEO, representing a 14 percent increase
from the comparative six-month period last year. Total commercial
production for the three-month period ended was 256,763 GEO and for
the six-month period ended was 496,622 GEO. Average co-product cash
costs for the three-month period ended June 30, 2009 (excluding
non-core mines under sale) were $352 per GEO and for the six-month
period ended were $351 per GEO. Average co-product cash costs for
all mines for the three-month period ended June 30, 2009 were $387
per GEO and for the six-month period were $385 per GEO. By-product
cash costs for the three-month period ended June 30, 2009 were $213
per GEO and for the six-month period were $318 per GEO. "The second
quarter reflects our continued focus on operating and financial
performance," said Chuck Main, Yamana's senior vice president
finance and chief financial officer. "Production increases at four
key mines contributed to increased revenue of 10 percent and
increased mine operating earnings of 27 percent compared to the
first quarter. Despite lower metal prices from the comparable
period last year which impacted revenue, our cash flow and
operating margins increased. With by-product cash costs of $213 per
GEO, we remain one of the lower cost gold producers, if not the
lowest cost gold producer, in the industry." Chapada, Brazil
Chapada continued to demonstrate quarter over quarter improvements.
Production at Chapada increased during the second quarter of 2009
to more than 40,500 ounces of gold, representing an increase of
more than five percent from the first quarter. Cash costs for the
second quarter were $260 per ounce, down six percent from the first
quarter of 2009 and 25 percent from the second quarter of 2008.
Yamana continued with the planned expansion to 20 million tonnes
per year with completion expected in the third quarter of 2009. El
Penon, Chile Total production at El Penon increased to more than
92,000 GEO for the second quarter of 2009, up about 10 percent from
approximately 84,000 GEO for the first quarter of 2009. Due to the
nature of the ore body at El Penon, the grade is subject to
short-term variation. Yamana has undertaken a plan to improve grade
control and dilution, increase capacity and develop newer
higher-grade veins and anticipates grade and throughput
improvements to continue in the second half of 2009. The grade in
the second quarter of 2009 increased eight percent from the first
quarter of 2009, and is expected to further improve for the balance
of this year. Cash costs for the second quarter were $339 per GEO,
down more than seven percent from the first quarter of 2009.
Jacobina, Brazil Second quarter production at Jacobina continued at
record levels, increasing to more than 27,500 ounces of gold.
Recovery rates were approximately 92 percent in the second quarter,
an increase over the first quarter, and are expected to increase to
94 percent in the second half of 2009 as leach tank capacity
reaches planned levels with the addition of two tanks in the second
quarter. Expected lower grade compared to the first quarter was
offset by throughput and recovery increases, thereby maintaining a
steady state of production quarter over quarter. Gualcamayo,
Argentina Gualcamayo reached commercial production effective July
1, 2009. Pre-commercial production for the second quarter of 2009
was more than 24,000 ounces of gold and more than 44,800 for the
first half of 2009. Cumulative weighted average cash costs from
February to June 2009 were less than $450 per ounce (which were
pre-commercial and therefore capitalized). Commercial production
for the remainder of 2009 is expected to be approximately 75,000
ounces of gold from the main QDD open pit deposit. Minera Florida,
Chile Production in the second quarter of 2009 was approximately
23,000 GEO, up from approximately 14,000 GEO for the comparable
period last year and approximately 19,000 GEO for the first quarter
of 2009, confirming the planned ramp up in production with the
completion of the expansion in the first quarter. Cash costs for
the second quarter of 2009 were $414 per GEO, down from $471 per
GEO for the comparable period last year although higher than the
first quarter of 2009 mainly due to the strengthening local
currency. Minera Florida has the potential to increase annual
production toward a target of up to 120,000 GEO beginning in 2010
with a change in the mining method to accommodate the completed
expansion and more effectively mine in narrower veins. Fazenda
Brasileiro, Brazil Second quarter production of more than 18,400
ounces of gold was in line with Company expectations. Yamana
expects production in the second half of the year to exceed
production in the first half. Overview of Financial Results The
following table presents a summary of financial and operating
information for the three and six months ended June 30, 2009: Three
months Six months ended ended (in thousands of United States
Dollars; June 30, June 30, unaudited) 2009 2009
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Revenues $ 269,756 514,049 Cost of sales (120,939) (240,524)
Depreciation, amortization and depletion (53,370) (102,338)
Accretion of asset retirement obligations (572) (1,373)
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Mine operating earnings 94,875 169,814 Expenses General and
administrative (22,991) (38,953) Exploration (2,109) (7,542) Other
1,232 1,209
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Operating earnings 71,007 124,528 Foreign exchange gain Other
business (expense) income (29,392) 52,167 Realized gain on
derivatives 8,327 31,702 Unrealized loss on derivatives (34,117)
(81,840)
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Earnings before income taxes and equity earnings 15,825 126,557
Income tax expense (9,950) (41,729) Equity earnings from Minera
Alumbrera 3,764 10,804
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Net earnings $ 9,639 95,632 Stock based compensation $ 4,471 5,182
Foreign exchange loss (gain) 28,541 (50,260) Unrealized loss (gain)
on derivatives 34,117 81,840 Future income tax expense (recovery)
on foreign currency translation of inter corporate debt 31,779
35,088
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Adjusted earnings before income tax effect 108,547 167,482 Income
tax effect of adjustments (12,735) (7,413) Adjusted earnings $
95,812 160,069
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Cash flow from operations (before changes in non-cash working
capital items) $ 117,936 195,975 Cash flow from operations (after
changes in non-cash working capital items) $ 121,662 188,052
Capital expenditures $(127,373) (232,167) Cash and cash equivalents
(end of period) $ 94,375 170,137 Average realized gold price per
ounce $ 922 914 Average realized silver price per ounce $ 14.03
13.31 Chapada average realized copper price per lb $ 2.06 1.80 Gold
sales (ounces) 197,474 391,939 Silver sales (millions of ounces)
2.4 4.8 Chapada payable copper contained in concentrate sales
(millions of lbs) 34.2 66.6
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Further details of the 2009 second quarter results can be found in
the Company's unaudited Management's Discussion and Analysis and
Interim Consolidated Financial Statements at
http://www.yamana.com/, in the "Investors" section under "Financial
and Corporate Reports". OUTLOOK AND STRATEGY The Company focused on
its core assets, generating cash flow, preserving capital,
maximizing cash balances and maintaining maximum flexibility across
its various interests including its development stage and near
development stage projects. The Company continues to be committed
to prudent and disciplined growth and will continue to improve the
value and returns of its various projects. It will also continue to
focus on containing costs and ensuring effective management of
capital expenditures. The Company's production plan is targeting
approximately 1.1 million gold equivalent ounces in 2009, not
including non-core mines under sale, an increase of 12% over 2008
and approximately 1.2 million gold equivalent ounces in 2009
including only the attributable portion of production from non-core
mines under sale. The Company continues to evaluate the further
expansion of its mines and development projects as follows:
Expected Initial Annual Status Contribution (GEO) Expected
Start-date
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Mercedes Construction 120,000 Production targeted decision made to
begin late 2012 C1 Santa Construction 130,000 Production targeted
Luz* decision made to begin in mid-2012 Pilar/ Feasibility study
Over 100,000 Pending Caiamar underway Ernesto/ Scoping study
100,000 Pending Pau-a-Pique completed Minera Advanced plan to
40,000 Production targeted Florida process to begin in early
historical 2012 tailings; construction decision made QDD Lower
Updated 90,000 Pending West feasibility study expected fourth
quarter of 2009
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* In the first two full years of production at C1 Santa Luz,
average annual production is expected to exceed 130,000 ounces of
gold, which would accelerate payback, and average 104,000 ounces of
gold per year life of mine. The Company continues to advance the
Agua Rica project and has received the environmental license early
in 2009. The Company is now advancing efforts relating to sectoral
permits which are expected within 18 months. In the context of
current metal prices, the Company is continuing to advance the
prospects of a strategic partnership in respect of Agua Rica. With
total cash and available credit at approximately $313 million,
supplemented by robust cash flow, Yamana is well positioned
financially to fund its strategic growth plans. SECOND QUARTER
CONFERENCE CALL A conference call and audio webcast is scheduled
for August 5, 2009 at 11:00 a.m. E.T. to discuss 2009 second
quarter results. Q2 Conference Call Information:
------------------------------- Toll Free (North America):
800-732-1073 International: +1 416-915-5762 Participant Audio
Webcast: http://www.yamana.com/ Q2 Conference Call REPLAY:
-------------------------- Toll Free Replay Call (North America):
877-289-8525, Passcode: 21310486 followed by the number sign.
Replay Call: +1 416-640-1917, Passcode: 21310486 followed by the
number sign. The conference call replay will be available from 1:00
p.m. ET on August 5, 2009 until 11:59 p.m. EST on August 19, 2009
For further information on the conference call or audio webcast,
please contact the Investor Relations Department or visit our
website, http://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 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, 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, 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.
NON-GAAP MEASURES The Company believes that in addition to
conventional measures prepared in accordance with Canadian GAAP,
the Company and certain investors and analysts use certain other
non-GAAP financial measures to evaluate the Company's performance
including its ability to generate cash flow and profits from its
operations. The Company has included certain non-GAAP measures
including "cash cost per gold equivalent ounce", "Adjusted Earnings
or Loss and Adjusted Earnings or Loss per share" and "cash flow
from operations before changes in non-cash working capital" or
"cash flow from operating activities before changes in non-cash
working capital" to supplement its financial statements, which are
presented in accordance with Canadian GAAP. Non-GAAP measures do
not have any standardized meaning prescribed under Canadian GAAP,
and therefore they may not be comparable to similar measures
employed by other companies. The data is intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with Canadian GAAP. The Company has also provided a reconciliation
of cost of sales to co-product cash costs and adjusted earnings to
net earnings in the Company's Management's Discussion and Analysis
for the quarter ended June 30, 2009. For additional disclosure on
the cautionary note regarding Non-GAAP measures, reference should
be made to Section 6 of the Company's Management's Discussion and
Analysis for the quarter ended June 30, 2009 available at
http://www.sedar.com/ or on the Company's website at
http://www.yamana.com/. DATASOURCE: Yamana Gold Inc. CONTACT: 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: ; MEDIA
INQUIRIES: Mansfield Communications Inc., Hugh Mansfield, (416)
599-0024
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