Yamana revises 2008 gold production forecasts, increases capex to $595m

Yamana Gold has revised gold production forecasts both for the second half of this year as well as gold equivalent production predictions beginning in 2012.

RENO, NV - 

Yamana Gold Wednesday revised its forecast gold production to a range of 610,000 ounces to 685,000 ounces for the remainder of this year, citing reduced expectations for the São Francisco and Jacobina gold mines in Brazil and increased expectations at the El Peñon gold operation in Chile, the Chapada copper-gold mine in Brazil and the Gualcamayo gold project in Argentina.

During 2008, copper production is anticipated to be 190 million to 200 million pounds of which 155 million to 160 million pounds is expected to be from Chapada.

In a news release Wednesday, Yamana announced gold production for the second quarter of this year as 205,000 ounces of gold and 2.8 million ounces of silver for a 9.5% GEO increase quarter over quarter. Copper production from Chapada increased 18% to 36.6 million pounds during the second quarter while total copper production including Yamana's 12.5% interest in Alumbrera totaled 44.8 million pounds, a 9.5% increase over the previous quarter.

Cash costs after by-product credits for the second quarter were negative US$81 per gold equivalent ounce (GEO). Costs were impacted by currency fluctuations, particularly the appreciation of the Brazilian Real against the U.S. dollar, as well as higher costs for steel, fuel, power, labor and consumables, which have increased across the mining sector.

Yamana warned that second-quarter revenue will be adjusted by a net amount of US$12 million in mark-to-market and certain other pricing adjustments. The company has also recorded US$7 million in treatment and refining charges for the second quarter for Chapada.

Depreciation for the second quarter was $55 million and is anticipated to range from U$210 million to $220 million for the full year. Preliminary capex was reported to be $150 million for the second quarter, while exploration was reported to be $17 million.

The company said it has accelerated plans for the increase of production at El Peñon, which requires increasing the 2008 capital expenditure budget to $595 million, up from the previously announced capex budget of $575 million.

In its strategic outlook, Yamana had planned to have annual gold equivalent ounce production ranging from 1.95 million to 2.5 million ounces in 2012. However, the company has now specified that it plans to have sustainable production of 1.95 million ounces and a range of 1.95 million to 2.5 million ounces from 2012. The company still has a strategic objective of 2.2 million GEO in 2012, based on existing resources and proposed project increases now being evaluated.

Yamana hopes to release resource updates for the La Pepa, Jeronimo and Amancaya exploration projects in Chile this month. The company also hopes to commence operations at the São Vicente gold project in Brazil at the end of the year as well as complete the expansion of the Minera Florida gold-silver-zinc mine in Chile. Second quarter financial results will be released on August 6^th.

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