Message #9 From:
Jason Date: February 10, 2008 06:03:39 PM
Yamana Gold Reports
TORONTO, ONTARIO--(Marketwire - Jan. 23, 2008) - YAMANA GOLD INC.
(TSX:YRI)(NYSE:AUY)(LSE:YAU) is pleased to report the findings for its
initial feasibility study for the C1 Santa Luz gold project in Brazil,
results of the sulphuric acid market study relating to the scoping
study for its pyrite project at the Chapada Mine in Goias State, Brazil
and an initial resource estimate at Bonanza as well as an updated
estimate at Al Este at its El Penon mine in Chile.
C1 SANTA LUZ FEASIBILITY STUDY
Located in the state of Bahia, Brazil, approximately 60
kilometres north of its Fazenda Brasileiro mine and 160 kilometres east
of its Jacobina mine, C1 Santa Luz is planned as a conventional open
pit mine with throughput of 2.5 million tonnes per year or 6,800 tonnes
per day. Processing will be done through a conventional CIL floatation
circuit. Average annual gold production is estimated at approximately
103,000 ounces. The first full year of production is expected to be
approximately 120,000 ounces and planned production is expected to
commence in early 2010.
Total measured and indicated resources for the project based on
drilling results as of December 2007 are 45.5 million tonnes at an
average grade of 1.57 g/t gold, containing approximately 2.3 million
ounces of gold and additionally an inferred resource of 4.8 million
tonnes a grade of 1.4 g/t gold, containing 0.2 million ounces of gold.
Exploration potential is excellent with several under-explored
satellite targets occurring within a 30 kilometre radius of C1 Santa
Luz. Further, significant potential exists to extend the known ore
bodies, particularly Antas 2, Antas 3 and Mansinha. Yamana's 2008
exploration program will include these areas with the objective of
adding further significant resources to the C1 Santa Luz project.
For purposes of advancing the feasibility, combined proven and
probable mineral reserves of 16.4 million tonnes grading 1.7 g/t and
containing 904,316 ounces was considered (proven reserves of 10.1
million tonnes at 1.81 g/t gold and probable reserves of 6.3 million
tonnes at 1.56 g/t gold, calculated at 0.6 g/t gold cutoff grade and
US$ 575/oz gold). As recommended in the feasibility study, an infill
drill program in addition to exploration aimed at delineating new
satellite ore bodies is ongoing and the company is targeting to add at
least 400,000 new reserve ounces to the current reserve base prior to
the start of production. At a minimum, this would add an additional
three years of mine life. Approximately half of the resources are along
strike and represent excellent potential to increase mine life by an
additional three years. The additional three years is expected to
reduce life of mine (LOM) cash costs.
Key parameters of the project are outlined as follows:
Mineral Reserves: 904,316 ounces (not including additional three years)
Recovery Rate: 80%
Recoverable Reserves: 723,300 ounces (not including additional three years)
Capital expenditures include a contingency of approximately US $8.5
million as well as US $28.6 million for pre-production stripping of
waste. Operating cash costs are based on mining, processing and general
and administrative costs per tonne of ore of US $7.60, US $7.67 and US
$1.58 respectively. Approximately US $35 million of the capital costs
are expected to be spent in 2008 and, in addition, Yamana has allocated
US $2.4 million for further exploration primarily for the purposes of
increasing reserves and mine life. Capex is included in the aggregate
capital costs for 2008 provided in Yamana's January 14, 2008 operating
outlook press release.
The net present value of the project on an after-tax basis
assuming a ten-year mine life is outlined below. This assumes a gold
price of US $700 per ounce for the first two years of production and US
$650 per ounce thereafter.
Discount Base Case + 3 Years Rate (US$MM) -------------------------------------
0% $110.6 3% $72.4 5% $52.6
The after-tax net present value (5 %) of the project assuming a gold
price of US $750 per ounce for the first two years of production and US
$700 per ounce thereafter is approximately US $79 million.
Yamana has approved a construction start-up for C1 Santa Luz
and production is projected for early 2010. Given the large existing
resource base and the significant exploration potential at and
surrounding the mine, Yamana expects that C1 Santa Luz will produce at
levels of more than 100,000 ounces per year for well in excess of 10
years. Management is also reviewing opportunities to reduce operating
costs and believes that cash costs below US $400 per ounce will be
achievable primarily through the integration of services and
administration with Fazenda Brasileiro.
The C1 Santa Luz feasibility study was prepared by GRD Minproc
Limited and Metalica Consultores S.A. under the direction of Renato
Petter, who is a Qualified Person as defined by National Instrument
43-101, and who has reviewed and approved the contents of this press
release as applicable.
CHAPADA PYRITE MARKETING STUDY
Yamana has also completed its sulphuric acid market study which
was undertaken following the scoping study for its pyrite project at
the Chapada mine in Goias State, Brazil. The objective of the market
study was to determine the availability of a local market for sulphuric
acid and what pricing would be appropriate for use in a feasibility
study for the project.
The original scoping study was released in May 2007 and
concluded that additional gold and copper, along with sulphuric acid,
could be recovered from the pyrite concentrate taken from the tailings
of the principal operations at Chapada. By treating approximately
580,000 tonnes per year of concentrate, about 560,000 tonnes of
sulphuric acid could be generated for sale annually. Over the Chapada
mine life, about 10.6 million tonnes of acid would be produced and an
additional 320,000 ounces of gold and 94 million pounds of copper would
be recovered based on current reserves at Chapada.
The sulphuric acid market study concluded that sulphuric acid
prices are expected to remain at current levels in the short term
(which have been in the range of US$ 150 to US $250/t H2SO4), and as
high as US $300/t H2SO4, with prices returning to more usual levels
over the medium to longer term. The estimates for supply and demand for
sulphuric acid in Central Brazil were shown to be growing by
approximately 80 percent over the next five years. The price range
proposed as an appropriate assumption for the medium term and looking
forward was US $75 to US $95/t H2SO4. The study also confirmed a number
of opportunities for the sale of sulphuric acid locally, including to
agriculture/fertilizer businesses and/or to non-ferrous metals
producers. A local source of sulphuric acid would be attractive to
potential end users due to the significant transportation costs
associated with importing sulphuric acid.
Yamana had assumed commodity prices of US $70 per tonne of
sulphuric acid, US $1.50 per pound of copper and US $600 per ounce of
gold in its initial scoping study relating to the Chapada pyrite
project. At these prices, the five percent discounted cash flow value
for the project was US $276 million. Other parameters for the project
were as follows:
Direct Costs : US $151.0 MM Indirect Costs: US $ 17.5 MM Contingency: US $ 26.3 MM ---------
Total Capital Costs: US $194.8 MM
Annual Operating Costs: US $ 7.9 MM (approximately $14.00 per tonne of acid)
Various after-tax net present values for the project based on
updated commodity price assumptions and assuming production beginning
in 2011 are outlined below.
-------------------------------------------------------------- Commodity Prices (USD)(1) ------------------------------------------------------------------------ Discount H2SO4/t Au/oz Cu/lb H2SO4/t Au/oz Cu/lb H2SO4/t Au/oz Cu/lb Rate $95 $650 $1.75 $150 $750 $2.00 $250 $850 $2.50 ------------------------------------------------------------------------ 0% $622 MM $1,039 MM $1,783 MM 5% $260 MM $489 MM $898 MM 7.5% $162 MM $338 MM $652 MM ------------------------------------------------------------------------
(1) Assumes commodity prices for H2SO4 per tonne, gold per ounce and copper per pound respectively.
Given the continued favourable economics for the project, Yamana is
now moving forward with a final feasibility study and will continue to
explore the merits of producing pyrite for sale to end users. The end
buyers of the pyrite would then in turn produce the sulphuric acid.
This would eliminate the required capital expenditures and may be more
attractive from a rate of return perspective.
Mr. Evandro Cintra, P. Geo., Vice President, Technical Services
of Yamana Gold Inc., has reviewed and approved the Chapada pyrite
section of this press release as applicable and serves as the Qualified
Person as defined by National Instrument 43-101.
EL PENON RESOURCE ESTIMATE
2007 was a very successful year for exploration at El Penon. Al
Este was expanded significantly and the Esmeralda and Bonanza veins
were discovered with resources being outlined in both areas. Most of
the new resources are at gold and silver grades that are above current
mine grades. All of the known veins are open along strike to both the
north and south and the new discoveries at Bonanza and Al Este appear
to be open in all directions.
Initial resource estimates have been completed for these new
vein discoveries in the North Block area. More than one million ounces
of high grade gold resource and 27 million ounces of silver resource at
average grades of 13 to 18 g/t gold and 250 to 400 g/t silver have been
identified to date. The Al Este vein, originally discovered in 2006,
has been traced by drilling along a strike length of three kilometres.
During 2007, drilling was focused on the central one kilometre portion
of this vein and added an additional 259,000 ounces of resources.
Reserve calculations are ongoing and Yamana believes a significant part
of the Al Este resource will be converted to reserves. At Bonanza,
drilling was completed on a 60 x 60 metre grid along 800 metres of
strike length which is sufficient for the calculation of inferred
resources.
New indicated and inferred resources are shown in the table below (3.9 g/t gold equivalent cutoff grade).
The new resources confirm this area of El Penon as a new center of
high-grade gold and silver mineralization with exceptional upside that
will significantly transform El Penon. Both the Al Este and Bonanza
deposits remain open along strike, and several other vein systems
including Esmeralda remain to be tested by drilling. During 2008, the
Company has budgeted approximately US$6.5 million for exploration and
130,000 metres of drilling at El Penon, the majority of which will be
completed in the North Block area to add additional resources. Yamana
believes that there is potential to add up to 1.5 million ounces of
reserves and resources. The historical conversion of resources to
reserves at El Penon is approximately 80 percent.
These results further support the Company's continuing view
that there is unrealized value at El Penon derived from the development
of new veins at higher grades. Production is expected to increase from
approximately 425,000 to 435,000 gold equivalent ounces in 2008 (which
is already an increase from historical production levels of 320,000 to
340,000 gold equivalent ounces) to over 500,000 gold equivalent ounces
in 2010.
Mr. Greg Walker, P. Geo., General Manager, Resource of Yamana
Gold Inc., has supervised the preparation of the El Penon technical
data contained within this press release and serves as the Qualified
Person as defined by National Instrument 43-101.
LOOKING AHEAD
Yamana expects to release a resource estimate for QDD Lower West
at Gualcamayo in Argentina (which is the third area of mineralization)
by end of March 2008 and a corresponding full feasibility study by the
end of 2008. Yamana has also updated information previously provided in
its scoping study for the satellite deposits Amelia Ines and Magdalena
(AIM) at Gualcamayo and has made a positive construction decision to
begin mine development work at the AIM mine in the second half of 2008.
Production from AIM is expected to begin in mid-2009. Based on further
metallurgical test work and ore type, Yamana has concluded that the AIM
material contains higher sulphide content than originally contemplated
in the scoping study. The scoping study assumed a 70 percent recovery
rate through heap leaching and present information suggests that it
would be approximately 50 percent. However, based on metallurgical test
work managed by Hatch Ingenieros y Consultores Limitada (Hatch),
recovery through milling of the high-grade material at AIM would have a
potential recovery of 80 percent or better. Based on Hatch's current
work to update the scoping study and testwork to date indicating a 50%
gold recovery rate for AIM ore, Yamana has concluded it is feasible to
develop the project and accordingly intends to begin mine development
activities in the second half of 2008 to begin operations in 2009.
Hatch has recommended that in the meantime, an optimization study
should be conducted to combine ore from QDD Lower West and AIM which
would be processed through milling. Yamana is in the process of
purchasing a mill with a capacity of 4,000 tpd for this purpose.
Yamana estimates the mining costs for AIM to be $28.2 million
including pre-stripping and equipment, and processing costs previously
estimated in the scoping study to be approximately $9 million are now
expected to be approximately $13 million. With a recovery rate of 50
percent for AIM from heap leaching, Yamana expects cash costs excluding
the five percent export tax would be approximately US$330 per ounce.
With the expected recovery rate of more than 80 percent at AIM from
milling, based on metallurgical testwork done to date, the combination
of QDD and AIM is expected to result in cash costs of approximately
$290 to $310 per ounce over the life of mine, not including the five
percent export tax. The initial estimate of cash costs in the scoping
study was $270 per ounce and the difference is mainly due to increases
in consumable costs, fuel, energy costs and mine site costs. Recovery
of gold from QDD Lower West is expected to be more than 90 percent
given its grade and high level of free gold which should maintain these
cash costs. Metallurgical testwork at QDD Lower West is continuing.
Yamana is currently updating its capital cost estimates and has
assumed construction costs of approximately $133 million in its 2008
guidance capex provided in the January 14, 2008 outlook press release.
This is in addition to the approximately $33 million that was spent in
2007.
Planned production for QDD and AIM combined is expected to be
approximately 200,000 ounces of gold per year, increasing to
approximately 300,000 ounces of gold per year beginning in late 2010
when production from QDD Lower West begins for the balance of the
initial ten-year mine life at Gualcamayo.
Mr. Dale Tweed, P. Eng., Engineering Manager of Yamana Gold
Inc., has reviewed and approved the Gualcamayo section of this press
release as applicable and serves as the Qualified Person as defined by
National Instrument 43-101.
Yamana also expects to release a new resource estimate at the Mercedes project in Mexico before the end of March 2008.
About Yamana
Yamana is a Canadian gold producer with significant gold
production, gold development stage properties, exploration properties,
and land positions in Brazil, Argentina, Chile, Mexico, Central America
and the United States. Yamana is producing gold and other precious
metals at intermediate company production levels in addition to
significant copper production. Company management 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 Brazil,
Argentina and elsewhere in the Americas.
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 and
"forward-looking information" under applicable Canadian securities
laws. 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", "estimate" 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 possible variations
in ore grade or recovery rates, fluctuating metal prices, prices for
sulphiric acid and currency exchange rates, changes in project
parameters, the possibility of project cost overruns or unanticipated
costs and expenses and general risks of the mining industry, failure of
plant, equipment or processes to operate as anticipated, unexpected
changes in mine life of Chapada, availability of a local market for the
sale of sulphiric acid, unanticipated results of future studies, as
well as those risk factors discussed or referred to in the Company's
annual Management's Discussion and Analysis and Annual Information Form
filed with the securities regulatory authorities in all provinces of
Canada and available at 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
or opinions should change. The reader is cautioned not to place undue
reliance on forward-looking statements.
CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES
This news release uses the terms "Measured", "Indicated" and
"Inferred" Resources. United States investors are advised that while
such terms are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does not recognize
them. "Inferred Mineral Resources" have a great amount of uncertainty
as to their existence, and as to their economic and legal feasibility.
It cannot be assumed that all or any part of an Inferred Mineral
Resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of Inferred Mineral Resources may not form the basis
of feasibility or other economic studies. United States investors are
cautioned not to assume that all or any part of Measured or Indicated
Mineral Resources will ever be converted into Mineral Reserves. United
States investors are also cautioned not to assume that all or any part
of an Inferred Mineral Resource exists, or is economically or legally
mineable.
FOR FURTHER INFORMATION PLEASE CONTACT:
MEDIA INQUIRIES:
Mansfield Communications Inc.
Hugh Mansfield
(416) 599-0024
Yamana Gold Inc.
Jodi Peake
Vice President, Public & Investor Relations
(416) 815-0220
Email: investor@yamana.com
Yamana Gold Inc.
Letitia Wong
Director, Investor Relations
(416) 815-0220
