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Yamana Gold (AUY) Provides FY09, FY10 Outlook; Cuts Dividend Payment from Monthly to Quarterly

http://www.streetinsider.com/Special+Reports/Yamana+Gold+(AUY)+Provides+FY09,+FY10+Outlook%3B+Cuts+Dividend+Payment+from+Monthly+to+Quarterly/4297013.html

January 13, 2009 7:53 AM EST

Yamana Gold Inc. (NYSE: AUY) today announced its operating outlook including production, cost and capital expenditure guidance for 2009 and 2010, as well as its Q4 operational highlights and update.

Gold production is expected to be in the range of 1.3-1.4 million gold equivalent ounces in 2009. Yamana had previously guided in October 2008 a specific production expectation with a +/-7% variance and this range is consistent with this past guidance. Production is projected to increase to approximately 1.4-1.5 million GEO in 2010 from mines currently in production.

Capital expenditures for 2009 and 2010 are expected to be approximately $350-$400 million, respectively, including sustaining capital of approximately $130 million each year. The majority of capital costs in 2009 is allocated for the expansion at Chapada, for development work at El Penon, for development of the satellite deposits Amelia Ines and Magdalena and initial work on QDD Lower West at Gualcamayo, for the purchase of certain additional mining concessions and for further development at Jacobina. The decision to develop each of C1 Santa Luz and Mercedes is expected to be made mid-year pending a cost review for improved economics at C1 Santa Luz and an initial feasibility study and further exploration at Mercedes. Capital expenditures shown above assume a modest amount for these projects and would increase mostly in 2010 once a construction decision is made. The decision to advance Ernesto/Pau-a-Pique and/or Pilar will depend on further evaluation of economics into 2009. Results at Pilar are very promising and indicate that the resource has grown substantially with more tonnes and comparatively high grade. Additional capital would be required to advance these development stage projects to production.

Exploration expenses in 2009 are expected to total a minimum $56 million ($37 million capitalized and the remainder expensed). Yamana's exploration program in 2009 will focus on mine and near-mine exploration primarily in Chile, Brazil, Mexico and Argentina as the Company concentrates in 2009 on expansions and advanced projects for near development.

Yamana remains well financed to fund its strategic growth plan where enhancements, expansions, improvements and development of existing assets are expected to drive production towards the Company's objective to produce 2.0 million GEO in 2012. The Company will continue to evaluate the further expansions at each of El Penon (for 600,000 GEO) and Minera Florida (for 150,000 GEO). With these expansions and the development of Mercedes, Pilar, C1 Santa Luz and Ernesto/Pau-a-Pique, the Company would achieve production levels in excess of this target. The Company has approximately $160 million in cash and cash equivalents as at December 31, 2008 and $500 million of available credit under revolving credit lines of which approximately $250 million remains undrawn. The Company has a modest net debt position of approximately $407 million.

For 2009, Yamana has approximately 50 million pounds of copper sold forward at an average of approximately $3.00/lb. Yamana expects to derive more than 80 percent of its revenue, cash flow and profit from precious metals production this year and estimates this number will increase into 2010 and beyond.

Yamana provided the following operational update for Q408. Total production during Q4 from all mines owned by Yamana was approximately 255,000 GEO at cash costs on a co-product basis is estimated to be approximately $385 per GEO which compares very favourably to costs in the third quarter of 2008. For the month of December 2008, production increased from November to approximately 89,000 GEO (including Alumbrera although not including any production from either Gualcamayo or Sao Vicente) and cash costs decreased to approximately $356 per GEO on a co-product basis, further confirming a downward trend in costs. Copper production at Chapada for Q408 was approximately 37 million pounds at a cash cost of approximately $0.90 per pound of copper.

For FY08, production totaled approximately 1,000,000 GEO (including Alumbrera) at cash costs of approximately $385 per GEO on a co-product basis plus approximately 140 million pounds of copper at Chapada at a cash cost estimated to be approximately $1.00 per pound on a co-product basis.

Yamana expects production to increase from Q109 with costs trending lower as production increases and input costs continue to decline. Aggregate production for Q1 is expected to be approximately 290,000 GEO. Cash costs per GEO on a co-product basis are expected to be approximately $345-$375 per GEO for 2009.

The Board of Directors has elected to reduce Yamana's dividend payments from the current $0.01 per share on a monthly basis to $0.01 per share on a quarterly basis. Yamana's divided yield has been comparatively high and the reduction will bring the dividend yield in line with its peer group. This reduction will save the Company approximately $58 million in 2009 which will be reallocated to development and exploration programs.

Yamana Gold, Inc. engages in the acquisition, exploration, development, and operation of gold properties.