Yamana Builds on Its Development Pipeline With Acquisition of Extorre

Mon Jun 18, 2012 7:00am EDT

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YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY)(LSE:YAU) ("Yamana" or the "Company")
today announced that it has entered into a definitive agreement (the
"Agreement") with Extorre Gold Mines Limited (TSX:XG)(NYSE Amex:XG)(NYSE
MKT:XG)(FRANKFURT:E1R) ("Extorre") whereby Yamana will acquire all of the
issued and outstanding common shares of Extorre. Extorre is a mining
company with exploration and development stage precious metals projects,
the most advanced of which is its Cerro Moro project, a high grade, gold
silver deposit with approximately 1.36 million ounces of gold equivalent
indicated mineral resources and 1.05 million ounces of gold equivalent
inferred mineral resources, located in the province of Santa Cruz in

    Under the terms of the Agreement, each Extorre shareholder will receive
$4.26 per share comprised of $3.50 in cash and 0.0467 of a Yamana common
share for each Extorre common share held. The offer represents a 54%
premium to Extorre's 20-day volume weighted average price ("VWAP") and an
18% premium to the 60-day VWAP for the period ending June 15, 2012. The
transaction value, net of cash and on a basic shares outstanding basis,
is approximately $395 million, representing approximately 3% of Yamana's
pro-forma market capitalization.

    "For the past few years, Yamana has been focused on organic growth and we
plan to continue with this strategic direction moving forward. We have
recently indicated Yamana would consider tuck-in acquisitions in
mining-friendly and familiar jurisdictions that fit our other criteria
including opportunity for organic growth, accelerated path to development
and production and high return. Extorre represents one of these
opportunities. It is a relatively small transaction in that it represents
only 3% of Yamana's market capitalization yet it could ultimately deliver
more than 10% of our total gold equivalent production," commented Peter
Marrone, Chairman and Chief Executive Officer. "It is rare to find such a
small transaction that could contribute meaningfully to increases in net
asset value, production and cash flow. While this represents only 3% of
market capitalization, it could contribute to a multiple of that in cash
flow growth. In our view, it is one of the best undeveloped, high-grade
opportunities in the Americas. Further, Yamana has the operational,
jurisdictional, and financial strength to advance the project on a timely
basis which will be beneficial for all stakeholders involved. In
addition, this represents significant value to Extorre shareholders in
terms of both cash and continuing participation in Yamana shares."

    Completion of the transaction is subject to approval by Extorre
shareholders and other customary conditions, including court approvals
and the receipt of all necessary regulatory approvals. The transaction is
expected to close in August 2012.

    Yamana's financial advisors in relation to the transaction are Barclays
Capital and CIBC World Markets Inc. Its Canadian legal advisor is Cassels
Brock and Blackwell LLP and its US legal advisor is Paul, Weiss, Rifkind,
Wharton & Garrison LLP. For more details about the transaction please
refer to the investor presentation on Yamana's website at www.yamana.com.

    (All amounts are expressed in Canadian dollars, unless otherwise

    Cerro Moro

    Extorre's principal asset is the 95% owned Cerro Moro project, an
advanced stage, high grade vein system located in the Santa Cruz province
of Argentina. The project covers 177 square kilometres and is located
approximately 70 kilometres southwest of the coastal port city of Puerto
Deseado, and 130 kilometres east of the Cerro Vanguardia gold silver
mine. In April 2012, Extorre released a preliminary economic assessment
("PEA-3") for Cerro Moro that outlined a possible 1,150 tonnes per day
("tpd") or 1,300 tpd combined open pit and underground mining operation
that could potentially produce gold equivalent production of 248,000
ounces per year at cash costs of $303/ gold equivalent ounce (first five

    Current resources are summarized as follows:

              Tonnage        Grade (g/t)             Contained Material     
           ----------  ----------------------  -----------------------------
                   Mt      Au       Ag    GEO     koz, Au   Moz, Ag     kGEO
Indicated        2.43     7.4    498.8   17.4         578      38.9    1,356
Inferred         4.75     3.5      172    6.9         528      26.2    1,053
   (i)Gold equivalent ounces ("GEO") are calculated on the basis of a 50:1  
                       ratio between gold and silver.                       

    For additional details on the Cerro Moro project, please see the
technical report entitled "Preliminary Economic Assessment for The Cerro
Moro Gold-Silver Project, Santa Cruz Province, Argentina," dated March
30, 2012 and co-authored by Carlos Guzman, Mining Eng., Registered Member
of the Chilean Mining Commission, Bill Gosling, BSc Eng., MBA, FAusIMM,
David (Ted) Coupland, BSc, DipGeoSc CFSG ASIA, MAusIMM (CP), Anthony
Sanford, BSc, MBA, SACNASP Pr.Sci.Nat., Krishna Sinha, P. Eng., Utah and
Michael Gabora, P. Geo, Ontario. A copy of the technical report can be
obtained from SEDAR at www.sedar.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 Colombia.
Yamana plans to continue to build on this base through existing operating
mine expansions, throughput increases, development of new mines, the
advancement of its exploration properties and by targeting other gold
consolidation opportunities with a primary focus in the Americas.

contains "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 include, but are not limited to, statements relating to
completion of the acquisition of Extorre, and future silver and gold
production. 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 Company's expectations in connection with the
projects and exploration programs discussed herein being met, 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, the Chilean Peso, the Argentine Peso, and
the Mexican 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
mineral resources, risk related to non-core mine dispositions, changes in
project parametres 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 and the risk of government
expropriation or nationalization 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,
2011 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, 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.

terms "Measured", "Indicated" and "Inferred" Mineral 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.

Yamana Gold Inc.
Lisa Doddridge
Vice President, Corporate Communications
and Investor Relations
416-945-7362 or 1-888-809-0925

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