GOLD NEWS

Yamana Gold forecasts 13% increase in GEO production in 2012

Yamana Gold reported total gold equivalent ounce production of 1.1 million ounces in 2011, consisting of 915,513 ounces of gold and 9.3 million ounces of silver.

RENO - 

Toronto's Yamana Gold provided 2012 production guidance in the range of 1.2 million to 1.3 million gold equivalent ounces Wednesday, a 13% increase over the 1.1 million GEO produced last year.

Cash costs for the full year 2011 were $50 per GEO after by-product credits, significantly less than the previous guidance of less than $250 per GEO.

The company forecast a production range of 1.5 million to 1.7 million GEO in 2013, and 1.75 million GEO of production in 2014. "We are now looking beyond 2014 with an initial 1.75 million plus GEO sustainable production level," said Yamana CEO Peter Marrone in Wednesday's news release.

Silver production is expected to be consistent at between 8 million to 9 million ounces each in both 2012 and 2013.

Estimated cash costs for 2012 are expected to be below $250 per GEO.

For the full year ended Dec. 31, 2011, Yamana's total production was 1.10 million GEO, consisting of 915,513 ounces of gold and 9.3 million ounces of silver.

Chapada's 2011 copper production exceeded guidance and was reported at 166 million pounds, an 11% increase from 2010 levels. The Brazilian mine's copper production is expected to decrease to a range of 140 million to 155 million pounds in 2012, and decline further to a range of 120 million to 135 million pounds in 2013.

The El Peñon operation in Chile exceeded 2011 production guidance with 476,000 GEO, while Chapada gold production was in line with guidance. Argentina's Gualcamayo gold production and Brazil's Jacobina gold production were also in line with 2011 guidance.

Total Yamana GEO production during the fourth quarter of 2011 was 276,900 GEO, which was within guidance.

Total 2011 development capital, not including capitalized exploration, is $435 million, which is below the previous guidance of $500 million.

Development capital to be spent in 2012 is expected to be $665 million including initial development capital for the Jeronimo JV (57%Yamana, 43% Codelco) gold project in northern Chile in anticipation of a construction decision this year. Jeromino's average annual gold production is expected to be 150,000 ounces with production in the early years of 190,000 ounces.

Yamana expects to spend $125 million on exploration this year to continue to focus on near-mine and regional exploration programs, as well as continuing to explore greenfield targets. The company's 2011 mineral resource and reserve estimates are expected in late February 2012.