Yamana Gold Announces Second Quarter Results

Wed Aug 8, 2012 5:09pm EDT

* Reuters is not responsible for the content in this press release.

  TORONTO, ONTARIO, Aug 08 (MARKET WIRE) --
YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY)(LSE:YAU) ("Yamana" or "the Company")
today announced its financial and operating results for the second
quarter 2012.

    HIGHLIGHTS FOR THE SECOND QUARTER 2012


--  Production of 288,700 gold equivalent ounces (GEO)(1)  
    --  Gold production of 242,692 ounces 
    --  Silver production of 2.3 million ounces 
--  Cash costs of $244 per GEO(2)(3)
    
--  Significant financial results 
    --  Revenue of $536 million  
    --  Adjusted earnings(2) of $135 million, $0.18 per share 
    --  Cash flow generated from operations(5) of $241 million, $0.32 per
        share 
    --  Generated cash margin(4) of $1,361 per ounce  
    --  Cash and cash equivalents were $699 million 
    --  Declared a quarterly dividend of $0.065 per share, representing an
        18% increase over the second quarter dividend rate
        
        
--  Advanced development projects Ernesto/Pau-a-Pique & C1 Santa Luz are on
    schedule and expected to be completed by the end of 2012; Pilar is also
    on schedule to be completed by mid 2013
    
    
--  At Jeronimo, results from the feasibility study indicate production of
    approximately 175,000 ounces per year for the first four years and a
    mine life of 11 years. Discussions have begun with our joint venture
    partner on the feasibility study, possible optimizations and advancing
    the project toward a construction decision
    
    
--  Acquisition of Extorre Gold - the transaction is expected to close on
    August 21, 2012 after which the Company will be evaluating a production
    plan and will provide an update on exploration and development plans by
    year end
    
    
--  At Suyai, the recent developments in the province of Chubut on the
    creation of a mining law framework provide the potential to advance a
    feasibility study on the project 

                                                                            
1.  Gold equivalent ounces (GEO) includes silver production at a ratio of   
    50:1.                                                                   
2.  Refers to a non-GAAP measure. Reconciliation of non-GAAP measures are   
    available at www.yamana.com/q22012                                      
3.  Cash costs are shown on a by-product basis including Alumbrera unless   
    otherwise noted.                                                        
4.  Cash margin is the difference between the average realized gold price   
    received less by-product cash costs per GEO.                            
5.  Cash flow from operations before changes in non-cash working capital.   


    "We continue to focus on delivering financial performance to complement
our operating results. We are focused on value delivered through
improvements in financial metrics, cash flow and margin maintenance and
expansion being among the top measures of delivering financial
performance," commented Peter Marrone, Chairman and Chief Executive
Officer. "We are very pleased with the increasing and steady production
results in the quarter and for the half year generally, and in
particular, at our newest mine, Mercedes. We continue to establish a
track record of advancement and development of new mines and other
projects also, although always with an attention to returns and value
creation complementing planned production growth."


KEY STATISTICS                                                              
                                                                            
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                                  Three months ended     Six months ended   
                                       June 30               June 30        
----------------------------------------------------------------------------
(In thousands of US dollars                                                 
 except where noted)                  2012      2011        2012        2011
                                --------------------------------------------
Revenues                         $ 535,705 $ 573,283 $ 1,095,450 $ 1,049,360
                                                                            
Cost of sales excluding                                                     
 depletion,depreciation &                                                   
 amortization                      201,024   191,777     392,866     348,879
Depletion, depreciation and                                                 
 amortization                       94,785    89,018     182,554     169,529
General and administrative                                                  
 expenses                           36,555    34,132      69,618      61,568
Exploration expenses                14,406     9,099      27,573      15,577
Operating Earnings                 142,822   254,672     378,660     467,340
Equity earnings from Alumbrera         908    16,592      11,852      28,324
Net earnings                        42,913   194,681     212,938     342,929
Net earnings per share                0.06      0.26        0.29        0.46
Adjusted earnings                  134,887   186,181     319,192     338,388
Adjusted earnings per share           0.18      0.25        0.43        0.46
Cash flow generated from                                                    
 operations after changes in                                                
 working capital                   139,213   315,766     427,114     544,664
Per share                             0.19      0.42        0.57        0.73
Cash flow generated from                                                    
 operations before changes in                                               
 working capital                   240,767   331,038     461,183     615,417
                                                                            
Per share                             0.32      0.44        0.62        0.83
Average realized gold price per                                             
 ounce                               1,605     1,509       1,651       1,450
Average realized silver price                                               
 per ounce                           26.93     37.76       29.85       35.78
Average realized copper price                                               
 per pound                            3.60      4.22        3.66        4.25
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PRODUCTION SUMMARY - FINANCIAL AND OPERATING       
SUMMARY                                            
                                                   
----------------------------------------------------------------------------
                                    Three months ended    Six months ended  
                                         June 30              June 30       
----------------------------------------------------------------------------
                                        2012      2011       2012      2011 
                                  ------------------------------------------
Total gold equivalent ounces -                                              
 produced                            288,700   278,737    567,530   546,105 
  Gold produced                      242,692   232,138    477,223   453,627 
  Silver produced (millions of                                              
   ounces)                               2.3       2.3        4.5       4.6 
Total gold equivalent ounces -                                              
 sold                                268,441   261,926    541,935   516,014 
Total copper produced - Chapada                                             
 (millions of pounds)                   40.4      40.8       70.7      79.2 
Total payable copper sold -                                                 
 Chapada (millions of pounds)           37.4      41.6       64.7      71.3 
----------------------------------------------------------------------------
                                    Three months ended    Six months ended  
                                         June 30              June 30       
----------------------------------------------------------------------------
                                        2012      2011       2012      2011 
                                  ------------------------------------------
Co-product cash costs per gold                                              
 equivalent ounce(2)               $     536 $     451  $     528 $     450 
  Cash cost per pound of copper -                                           
   Chapada(2)                      $    1.34 $    1.32  $    1.41 $    1.26 
By-product cash costs per gold                                              
 equivalent ounce(2)               $     244 $     (80) $     265 $     (34)
----------------------------------------------------------------------------


    Financial Results for the three months ended June 30, 2012

    Revenues were $536 million in the second quarter compared with $573
million in the same quarter of 2011. Mine operating earnings were $240
million in the quarter, compared with $293 million in the second quarter
of 2011. Lower revenues and mine operating earnings were mainly due to
lower metal prices and lower volume of copper concentrate sales, modestly
offset by increased sales of gold ounces contributed by the Mercedes
mine, which was under construction during the comparative period.
Revenues for the quarter were generated from the sale of 268,441 GEO and
37.4 million pounds of copper, excluding Alumbrera which is accounted for
as an equity investment. This compares to production excluding Alumbrera
of 276,341 GEO ounces and 40.4 million pounds of copper representing a
variance of almost 8,000 GEO and three million pounds of copper
production for the quarter relative to sales. The variance can be
attributed to 6,000 ounces of unsold gold that is accounted for in
inventory and the remainder is non-payable gold produced in copper
concentrate. Revenues during the quarter are highly impacted by the
timing of shipments. As at June 30, 2012, the Company had a build-up of
finished goods inventory of approximately 32,000 GEO and 3.9 million
pounds of copper.

    Adjusted earnings were $135 million or $0.18 basic and diluted earnings
per share in the second quarter of 2012, compared with $186 million or
$0.25 per share in the same quarter of 2011. Lower adjusted earnings is
attributed to lower metal prices, lower volumes of copper and concentrate
sold and lower equity earnings from the Company's investment in Alumbrera
which although having produced 10.5 million pounds of copper attributable
to Yamana during the second quarter, suspended export sales due to a new
resolution in respect of repatriation of net proceeds from export sales
in Argentina resulting in only 2.3 million pounds of copper sold
attributable to Yamana. Subsequent to the quarter end, export sales
resumed and the backlog of shipments and sales are expected to be
realized during the second half of 2012.

    Market fundamentals remain firm for gold albeit the effect of a stronger
US dollar negatively affected gold prices during the quarter. Average
realized price of gold increased modestly, by 6%, from the second quarter
of 2011, consistent with market prices. Average realized copper price was
$3.60 per pound compared to the average of $4.22 per pound in the second
quarter of 2011. Average realized prices for silver were $26.93 per ounce
compared to $37.76 per ounce in the second quarter of 2011. Lower average
realized prices for silver and copper reflect the weakening demand for
these metals due to the global economic condition.

    Net earnings for the quarter were $43 million or $0.06 per share on a
basic and diluted basis, compared with net earnings of $195 million or
basic and diluted earnings per share of $0.26 for the second quarter of
2011. In addition to the items impacting adjusted earnings discussed
above, net earnings were impacted by non cash impairment losses on
available for sale investments and net unrealized foreign exchange losses
recorded in the quarter. 

    Cash flows generated from operations before changes in non cash working
capital items for the quarter ended June 30, 2012 were $241 million
compared to $331 million for the same period ended June 30, 2011. The
decrease was due to lower earnings in the second quarter of 2012. Cash
flows from operations after taking into effect changes in working capital
items for the period ended June 30, 2012 were $139 million, compared to
inflows of $316 million for the same period ended June 30, 2011. The
decrease was mainly attributed to the increase of trade receivables
related to Chapada concentrate sales and decrease of payables due to
timing of payments.

    Equity earnings from associate were $1 million for the quarter compared
with $17 million in the second quarter of 2011. Cash distributions from
the Company's equity investment in Alumbrera during the quarter were nil
compared to $7 million in the second quarter of 2011. Export sales were
suspended by Alumbrera during the quarter due to a new resolution in
respect to export revenue repatriation in Argentina. Export sales resumed
in July under standard sales terms with the backlog expected to be sold
in the second half of 2012 following an amendment to the original
resolution extending the period for the repatriation of net export sales
proceeds.

    Cash and cash equivalents as at June 30, 2012 were $699 million compared
to $550 million as at December 31, 2011. 

    The Company has over $1.4 billion in available funds to continue to
invest in future growth.

    Financial Results for the six months ended June 30, 2012

    Revenues were $1.1 billion in the first six months compared with $1.0
billion in the same period of 2011 mainly due to an increase of realized
prices for gold and increased sales of gold and silver ounces partly
offset by lower sales volume of copper concentrate and lower prices for
copper and silver. Mine operating earnings were $520 million, compared
with $531 million in the first half of 2011.

    Adjusted earnings were $319 million or $0.43 basic and diluted earnings
per share in the first six months of 2012, compared with $338 million or
$0.46 per share in the same period of 2011. Lower adjusted earnings is
mainly attributed to lower prices for copper and silver, lower volumes of
copper and concentrate sold, partly offset by higher average realized
gold prices and gold ounces sold during the period. Lower equity earnings
from the Company's investment in Alumbrera also affected net earnings for
the period.

    Net earnings for the first six months were $213 million or $0.29 basic
and $0.28 diluted earnings per share, compared with net earnings of $343
million or basic and diluted earnings per share of $0.46 for the same
period of 2011. In addition to the items impacting adjusted earnings
discussed above, net earnings were impacted by non cash impairment losses
on available for sale investments and net unrealized foreign exchange
losses. 

    Cash flows generated from operations before changes in non cash working
capital items for the six-month period ended June 30, 2012 were $461
million compared to $615 million for the same period ended June 30, 2011.
Cash flows from operations after taking into effect changes in working
capital items for the period ended June 30, 2012 were $427 million,
compared to inflows of $545 million for the same period ended June 30,
2011.

    Average realized price of gold was $1,651 per ounce, consistent with
market prices, compared with $1,450 per ounce for the same period in
2011. Average realized copper price was $3.66 per pound versus the
average of $4.25 per pound, and average realized price for silver was
$29.85 per ounce compared to $35.78 per ounce in the first half of 2011.

    Equity earnings from associate were $12 million for the first six months
compared with $28 million in the same period in 2011. Cash distributions
from the Company's equity investment in Alumbrera during the period were
nil compared to $27 million in the first half of 2011. Export sales were
suspended by Alumbrera during the second quarter of 2012 due to the new
resolution in respect to revenue repatriation in Argentina, however in
July the resolution was refined, resulting in the resumption of export
sales in July with the backlog expected to be sold in the second half of
2012.

    Operating Results for the three months ended June 30, 2012

    Total production from operations was 288,700 GEO for the second quarter,
including the Company's attributable production from the Alumbrera Mine,
compared with production of 278,737 GEO for the quarter ended June 30,
2011, representing a 4% quarter to quarter increase. The production
increase was mainly due to the contribution from the Company's new mine,
Mercedes in Mexico. Production from all mines was in line with plan
except for Minera Florida, where the ramp up of the tailings
re-processing plant was delayed in part due to the installation of a zinc
recovery plant which is expected to further improve the cost structure
through additional zinc by-product credits. Build up of stockpiles at
some of the mines continued to provide greater flexibility in respect to
future production.

    By-product cash costs were $244 per GEO, compared with negative $80 per
GEO in the second quarter of 2011. Cash costs were impacted by lower
copper sale credits as a result of lower market prices and lower sales
volume of copper pounds. The temporary suspension of export shipments at
Alumbrera further compounded the issue of low copper sale credits of 39.6
million pounds of copper compared to production of 50.9 million pounds of
copper that led to higher by-product cash costs in the second quarter.
The average market price for copper was 14% lower than that for the
second quarter of 2011. Lower grades and higher input costs during the
period, primarily due to higher prices for consumables and mining
inflation, have also impacted by-product and co-product cash costs.

    Co-product cash costs were $536 per GEO compared with $451 per GEO for
the second quarter of 2011. 

    Copper production for the second quarter was 40.4 million pounds from the
Chapada Mine, compared with 40.8 million pounds for the second quarter
2011. Chapada copper production was slightly lower primarily as a result
of lower copper grade and recovery rate offset by higher throughput
compared with the second quarter of 2011. Additionally, 10.5 million
pounds of copper were produced from Alumbrera attributable to the
Company, compared with 9.3 million pounds for the quarter ended June 30,
2011. Total copper production for the second quarter was 50.9 million
pounds, compared with 50.1 million pounds in the same quarter of 2011. 

    Co-product cash costs per pound of copper were $1.34 for the quarter from
the Chapada Mine, compared with $1.32 per pound for the second quarter in
2011. Co-product cash costs per pound of copper for the quarter including
the Company's interest in the Alumbrera Mine were $1.35 per pound versus
$1.36 per pound for the quarter ended June 30, 2011.

    The Company anticipates average by-product cash costs for the year to be
lower than $250 per GEO, in line with previous guidance. By-product cash
costs are highly dependent on copper price assumptions. A downward trend
in co-product cash costs is expected to result from the ramp up of
production at Mercedes, additional lower cost production from the
tailings at Minera Florida and the expected grade improvement during the
year at El Penon and at Jacobina beginning in the fourth quarter.

    By-product cash costs are also expected to improve upon the resumption of
export sales and copper sale credits from Alumbrera during the second
half of the year.

    OPERATING MINES

    A summary of mine-by-mine operating results can be found on the final
page of this press release.

    Chapada, Brazil

    Chapada produced a total of 35,697 GEO contained in concentrate in the
second quarter of 2012 compared with 31,566 GEO contained in concentrate
in the same quarter of 2011, representing an increase of 13%. Chapada
copper production was 40.4 million pounds in the quarter compared with
production of 40.8 million pounds of copper in the second quarter of
2011. Gold production is expected to increase in 2013 and in the years to
follow, mostly as a result of the start up of the oxide gold operation at
Suruca and the expected gold and copper production from Corpo Sul
beginning in 2014.

    By-product cash costs for the quarter were negative $2,207 per GEO
compared with negative $3,555 per GEO for the same quarter in 2011. Lower
by-product cash cost credits were due to lower copper sale credits as a
result of lower market prices and lower sales volume of copper pounds.
The favourable effects of higher tonnage mined and tonnage processed on
by-product and co-product cash costs per GEO were partly offset by lower
feed grades and lower recovery rates during the quarter compared to that
of the second quarter of 2011. 

    Co-product cash costs were $302 per GEO in the second quarter compared
with $342 per gold ounce in the same quarter of 2011. Co-product cash
costs for copper were $1.34 per pound in the second quarter versus $1.32
per pound in the same quarter of 2011.

    During the second quarter, production of gold, copper and concentrate
increased from the first quarter of 2011, and has led to improvement in
cash costs, both on a by-product and co-product basis.

    Chapada revenues for the quarter net of sales taxes and treatment and
refining costs were $178 million (2011 - $219 million). Revenues included
mark to market adjustments and final and provisional pricing settlements
in the quarter of negative $2.2 million (2011 - positive $2.6 million).

    In December 2011, the Company completed the feasibility study and basic
engineering on the oxides at Suruca. The deposit will support an
additional average production of 49,000 gold ounces per year to Chapada's
operations over an initial five years beginning in 2013. Corpo Sul, a
recently discovered gold and copper deposit at the southwest end of the
orebody of Chapada with mineral resource of higher average grade cores
especially near the current Chapada pit, is expected to enhance
throughput through the blending of these higher grade ores and increase
in production levels for both gold and copper in the near term, and
possibly allow further development in size and scale to potentially
result in an entirely new mine, drilling results continue to support
this. The mineral grades of Corpo Sul are similar to the grades of the
Chapada orebody.

    Production for the quarter was consistent with the mine plan, which
indicated lower grades for 2012 relative to 2011. Planned production from
Chapada will decline in 2012 over the 2011 levels, however, gold
production is expected to increase in 2013 and in the years to follow.

    The Company's strategic plan is to ensure sustainable production from
Chapada of 150,000 gold ounces and 135.0 million pounds of copper from
2013 and onwards for at least five years.

    Jacobina, Brazil

    Gold production at Jacobina was 28,005 ounces in the second quarter, in
line with 27,806 ounces produced in the second quarter of 2011. The
increase in production in the second quarter compared to that of 2011,
resulted from a 2% increase in recoveries despite a decline in tonnage
processed. The average ore grade for the third quarter is expected to be
similar to the second quarter. However, continued development of access
to higher grade areas is expected to improve average ore grade beginning
in the fourth quarter.

    Cash costs were $735 per ounce for the second quarter compared with $663
per ounce in the second quarter of 2011. Cash costs were impacted by
higher labour inflation and maintenance costs in addition to roof support
improvements made during the second quarter. Roof support improvement is
a standard practice in underground mining and the intensity of such
activity is dependent on the depth and rock stress condition of the area
being mined. Maintenance expenses are expected to decrease with the
arrival of new equipment expected in August. The long term cost structure
is expected to be in line with the first quarter of 2012.

    The Company continues to focus on upgrading the current mineral resources
at Canavieiras and Morro do Vento and improving overall mineral reserve
grade for the mine. Development of these high grade areas is expected to
lead to production increasing to above 140,000 gold ounces per year
beginning in 2014. 

    Fazenda Brasileiro, Brazil

    Production at Fazenda Brasileiro was 16,219 ounces of gold in the second
quarter compared to 14,007 ounces of gold in the second quarter of 2011,
representing a 16% quarter-over-quarter increase. The increased
production was mainly due to higher gold grade and increased tonnage
mined and tonnage processed.

    Cash costs for the second quarter were $827 per ounce, 11% lower than
$934 per ounce for the same period in 2011. Increases in tonnage mined
and tonnage processed positively impacted cash costs and more than offset
the effect of mining inflation.

    The Fazenda Brasileiro mine was acquired in 2003 with two and a half
years of mine life remaining based on known mineral reserves. The Company
has since been mining at Fazenda Brasileiro for nearly nine years. The
mine continues to further outline exploration potential and mineral
resource additions are expected in 2012.

    Two new mineralization zones, CLX2 and Lagoa do Gato were discovered in
2009. The CLX2 zone is identified as having significant potential for
high grade sources of ore for the mill. Both infill and extension
drilling confirm the continuity of mineralization in both areas. The
Company continues to develop the high grade mineral reserves at CLX2 with
a focus on increasing mineral reserves and mineral resources. The Company
is evaluating the possible extension of mine life. 

    El Penon, Chile

    El Penon produced 105,245 GEO during the second quarter of 2012 compared
to 124,118 GEO in the same quarter of 2011. Production for the quarter
consisted of 68,275 ounces of gold and 1.8 million ounces of silver,
compared with 80,861 ounces of gold and 2.2 million ounces of silver
produced in the second quarter of 2011. 

    Production of both gold and silver were impacted by lower feed grades,
lower tonnage processed and lower silver recovery rates. The lower
tonnage processed was planned in order to optimize the metallurgical
recovery. Current production in the lower grade areas will allow access
to higher grade areas which is expected to increase production and lower
cash costs over the remainder of the year. 

    Cash costs were $491 per GEO in the second quarter, compared with $382
per GEO in the second quarter in 2011. Higher maintenance costs,
increases in power costs, diesel and other consumables in addition to
other mining inflation compared to that of the second quarter of 2011,
contributed to higher per unit cash costs, which are expected to decrease
as improved feed grades are planned for the balance of 2012.

    Exploration has been ongoing for 20 years at El Penon, which has a long
track record of replacement of ounces mined. Exploration at Pampa Augusta
Victoria is being fast tracked as part of the Company's continuous
exploration effort on high grade areas at El Penon. This is expected to
return significant near surface gold and silver values, improve
production and provide mining flexibility for a sustainable production
level of about 440,000 GEO per year and ultimately increase mine life.

    Minera Florida, Chile

    Minera Florida produced a total of 23,978 GEO in the quarter, compared
with 25,376 GEO in the second quarter of 2011. The expected lower
production was mainly a result of lower gold feed grade and recovery, and
lower tonnage mined and processed. 

    In addition, the mine produced 1,125 tonnes of zinc in the second
quarter, compared with 1,863 tonnes of zinc produced in the second
quarter of 2011. Zinc is accounted for as a by-product credit to cash
costs.

    Cash costs for the second quarter were $811 per GEO compared with $614
per GEO in the same quarter in 2011 primarily as a result of higher cost
for power, increased cost in temporary mine services and labour
inflation, and lower credit from sales of zinc as a result of lower
production and lower prices for zinc.

    The Company's expansion project at Minera Florida is expected to increase
annual production by approximately 40,000 GEO per year for five years
through the re-treatment of tailings. The tailings re-treatment plant was
completed in May and ramp up to design capacity was delayed in part due
to the installation of a zinc recovery plant that was not initially
contemplated. The zinc recovery plant is expected to further improve
costs through the application of additional zinc by-product credits.
Production from tailings re-treatment for 2012 is expected to be in the
range of 12,000 to 16,000 GEO and ramp up to 40,000 GEO per year in 2013.
Overall costs are expected to improve with the addition of tailings
production given the lack of mining costs associated. In 2012 and years
to follow, mine grade is expected to be consistent with mineral reserve
grade and process efficiency will be augmented by low cost historical
tailings material.

    The Company has strengthened the leadership team at the senior management
level in Chile by appointing a Vice President, Operations, in addition to
a Vice President, Country Manager, to focus on the operations in Chile
and Mexico with the expansion at Minera Florida as their first priority.

    Near mine exploration at Minera Florida continues to focus on the
Portezuelo, El Roble and Tribuna sectors to delineate the extension of
the orebodies. Mine development has advanced as planned in areas such as
Tribuna, Maqui Clavo I, which is expected to maintain and ensure future
production levels. 

    Gualcamayo, Argentina

    Gualcamayo produced 38,297 ounces of gold in the second quarter compared
with 43,194 ounces produced in the second quarter of 2011. Lower
production was mainly due to lower feed grade and recovery rates despite
increased tonnage mined and processed, hampered by the higher cells at
the southern leach pad that impacted the recovery time of the materials
stacked. 

    Cash costs were $547 per ounce in the quarter ended June 30, 2012
compared with $399 per ounce in the second quarter of 2011. Inflationary
pressures on labour and consumable costs, lower grade and recovery along
with increased maintenance to improve availability of equipment resulted
in higher cash costs.

    Subsequent to the quarter end, Gualcamayo started to place materials on
the heap leach pad in Valle Norte as part of the planned expansion which
is expected to improve recoveries and production in the fourth quarter.
Production from Valle Norte is scheduled to start in August. Underground
development of QDD Lower West continues to advance and project completion
remains on schedule. Full ramp-up of Gualcamayo's expansions to be
completed by mid-2013 are expected to increase sustainable production to
over 200,000 gold ounces per year beginning in 2014.

    A scoping study on the evaluation of milling higher grade ore at
Gualcamayo, subject to mineral resource increases into 2012 and 2013, has
commenced and is expected to be completed in the first half of 2013.

    Mercedes, Mexico

    Mercedes produced 28,900 GEO in the second quarter, consisting of 26,646
ounces of gold and 0.1 million ounces of silver, representing increases
over the first quarter production of gold by 21% and silver by 16%. 

    Cash costs per GEO were $499 for the second quarter, 16% lower than the
cash costs in the first quarter. Cash costs are expected to trend down as
production continues to ramp up, averaging approximately $475 - $500 per
GEO for the year. 

    Development continues at the Barrancas zone with the higher grade Lagunas
Norte vein, one of the newest discoveries at the mine. Development of the
vein structure in the Barrancas zone was not included in the original
mine plan and represents a significant opportunity to increase
production. Infill drilling at Lupita is confirming the width and grades
of mineralization and is expected to continue growth of the measured and
indicated mineral resources that will extend mine life, maintain higher
throughput and sustainable production levels.

    Production is initially planned at 120,000 GEO per year although
increased throughput along with the additional ore from Barrancas, and as
accelerated underground development work advances during 2012, the
Company expects production to increase to 125,000 - 135,000 GEO in 2013
and to a sustainable level of 140,000 GEO beginning in 2014.

    Alumbrera, Argentina 

    The Company's interest in the Alumbrera Mine is accounted for as an
equity investment. The Company recorded earnings from its 12.5% interest
in Alumbrera Mine of $1 million for the second quarter, compared with $17
million reported for the same quarter of 2011. Lower earnings were due to
the suspension of export sales by Alumbrera during the quarter to comply
with a new resolution in respect of repatriation of net proceeds from
export sales set forth by the Argentine Government. Subsequent to the
quarter end, the Argentine Government amended its resolution enabling
Alumbrera to resume exports. Export sales of concentrate have resumed in
July and the backlog of sales is expected to be realized during the
second half of 2012. The Company did not receive a cash distribution
during the six months ended June 30, 2012, compared with cash
distributions of $7 million during the three months and $27 million for
the six month period ended June 30, 2011.

    Attributable production from Alumbrera was 12,359 ounces of gold and 10.5
million pounds of copper for the quarter. This compares with attributable
production of 12,670 ounces of gold and 9.3 million pounds of copper for
the second quarter of 2011. Gold production was slightly lower mainly due
to lower feed grades from the ore mined and stockpiled ore. Copper
production increased by 13% primarily due to higher recovery rates. 

    By-product cash costs per ounce of gold were impacted by significantly
lower copper sale credits.

    CONSTRUCTION AND DEVELOPMENT PROJECTS 

    Ernesto/Pau-a-Pique, Brazil

    Construction progress is on schedule with commissioning and start up of
production expected by the end of 2012 and commercial production by
mid-2013. As of June 30, 2012, physical advancement continued and was
approximately 92% complete. Mine development and electromechanical works
continued as expected. Underground development at Pau-a-Pique continued
to progress and reached a total length of more than 3,400 metres. Annual
production is expected to be approximately 100,000 gold ounces with
average annual production during the first two full years expected to be
approximately 120,000 gold ounces.

    C1 Santa Luz, Brazil

    Construction progress is on schedule with commissioning and start up of
production expected by the end of 2012 and commercial production by
mid-2013. As of June 30, 2012, physical advancement of the project was
approximately 89% complete. Civil works, power line construction and
electromechanical assembly continued as planned. Annual production is
expected to be approximately 100,000 gold ounces with average annual
production during the first two full years to exceed 130,000 gold ounces.

    Pilar, Brazil

    Construction progress is on schedule with commissioning and start up of
production expected by mid-2013 with commercial production expected by
the end of 2013. As of June 30, 2012, physical progress advanced to
approximately 53%. Civil works and electromechanical assembly continued
as planned. Underground development at Pilar continued to progress and
reached a total length of more than 6,400 metres and underground
development at Caiamar has been initiated.

    Annual production from the mine was originally estimated to be 120,000
ounces of gold. The project is being built with 30% additional capacity
to that contemplated in the feasibility study in anticipation of
significant mineral resource growth. Development of Caiamar, a high grade
satellite deposit located 38 kilometres west of Pilar, is expected to
contribute to production and utilization of this excess capacity at Pilar
thereby increasing production to a minimum of 140,000 gold ounces per
year expected to begin as early as 2014. Mineral resource development and
work on a feasibility study continued at Caiamar during the quarter and
earth works were initiated. The ore from this deposit can be processed at
Pilar with the higher grades offsetting the additional transportation
costs. 

    Jeronimo, Chile

    At Jeronimo, the various components of the feasibility study have been
completed. Results of the studies indicate:


--  Initial capital: $425 million, (including a contingency of approximately
    $50 million) 
--  Operating costs: $650/oz 
--  Average annual production: 150,000 ounces per year with production of
    approximately 175,000 ounces in the first four years 
--  Mining method: Combination of Room and Pillar, Long hole Stoping and Sub
    Level Stoping 
--  Processing method: Flotation and pressure oxidation, followed by CIL 
--  Throughput: 1.5 million tonnes of ore per year 
--  Gold recovery: 86%  
--  Expected Mine Life: 11 years based on current mineral reserves of 1.9
    million gold ounces contained in 15.2 million tonnes at a grade of 3.88
    g/t 


    The Company has begun discussions with its joint venture partner (43%
owner of the project) on the components of the feasibility study. As
these discussions advance, the Company will be pursuing several
optimization studies and undertake advanced engineering that would
normally follow a positive construction decision, to further enhance the
project economics and to create greater certainty with costs and
specifics of processing. One study on the use of reverse osmosis to
reduce sulfuric acid consumption is ongoing and the Company is now
evaluating the impact of the related recovery of manganese as a secondary
metal that would decrease operating costs. Other optimizations being
studied include a tailings dam cost savings related to thickening
improvements, the decrease of flotation concentrate mass and the use of
existing infrastructure, power lines and roads, all of which could reduce
capital and operating costs. 

    The Company will continue discussions with its joint venture partner to
continue to pursue optimizations of the current feasibility study and
complete the advanced engineering studies toward an objective of
evaluating a construction decision on Jeronimo.

    Cerro Moro, Argentina

    On June 18, 2012, the Company announced that it had entered into a
definitive agreement with Extorre Gold Mines Limited to acquire all of
its issued and outstanding common shares. Extorre is a mining company
with exploration and development stage precious metals projects, the most
advanced of which is the Cerro Moro project, a high grade gold and 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
Argentina. Pending the close of the transaction, the Company will be
evaluating a plan for production beginning in 2015 that targets 200,000
GEO and by year end will provide an update on exploration and development
plans. The closing of the transaction is expected in August 2012.

    Suyai, Argentina

    Recently the Governor of Chubut introduced the framework for a new mining
law which is expected to be passed by the provinces' legislature in due
course. This law allows for mining throughout the province of Chubut,
which is a very positive development for the jurisdiction. Given the
depth of historic work completed on the project and the ongoing desktop
work, the Company expects to fast track a feasibility study in
anticipation of an acceptable resolution to all the details and the
passing of the new mining law. Further information on the project is
expected before year end.

    EXPLORATION

    The Company is committed to developing its future based on its
exploration successes and organic growth with programs targeting mineral
reserve growth and mineral resource discovery in addition to development
projects and discoveries at existing operations.

    The 2012 exploration program of $125 million will continue to focus on
increasing the Company's mineral reserves and mineral resources,
accelerating the development of new discoveries such as Jordino and Maria
Lazarus at Pilar, the extension of Pampa Augusta Victoria and definition
of a new discovery at El Penon, the expansion of high grade mineral
resources at Jacobina and the development of several greenfield projects
with the potential to be brought into the Company's project pipeline,
enhancing present and future asset values.

    The following summary highlights key updates from the exploration and
development program at the Company since the end of the first quarter of
2012. 

    Gualcamayo, Argentina

    During the second quarter, drilling totaled 7,300 metres in 39 holes. The
drilling is focused on extending the Rodado breccias to the north. In
addition, the development of a new underground access was commenced to
the southwest extension of both the Rodado and QDDLW breccias, which
remains open down dip with 450,000 ounces of new inferred resources
identified.

    Pilar, Brazil

    The drilling is focused on the expansion of the Jordino resource both
down dip, which has been shown to be open for more than two kilometres of
dip length, and along strike to the south under younger cover rocks. In
addition, exploration drilling will be completed at Maria Lazarus located
approximately 10 kilometres west of Jordino and is similar in geology and
style of mineralization to Jordino. Year-to-date, 35 drill holes have
been completed totaling 13,956 metres and drill results confirm that
growth in mineral reserves and mineral resources will continue in 2012.
The success of this early stage drilling effort at Maria Lazarus
continues to confirm that the area surrounding Pilar is a cluster of
mineralized zones which will contribute to Pilar's ore feed or
potentially could be developed as a multiple mine complex. The Company
has already increased the capacity of the mill by 30 percent from the
feasibility study level and continues to assess potential increases to
production and mine life with a strategic plan to fully utilize the
increased capacity beginning in 2014.

    Chapada, Brazil

    The $7 million 2012 exploration program includes 27,000 metres of diamond
drilling that will principally target the southern extension of the Corpo
Sul deposit as well as infill parts of the Corpo Sul mineral resource
identified in 2011. Early results from current diamond drilling completed
south of the Corpo Sul extension have returned very encouraging gold and
copper values from sulphide mineralization. Hole CS-70 is the
southernmost hole completed to date and intersected wide zones of
alteration and mineralization. The intersection extends Corpo Sul for
more than 2.5 kilometres along strike to the southwest. Additional
drilling on sections spaced between 200 to 400 metres apart confirmed
similar grades to that in CS-70.

    The results from Corpo Sul confirm similar metallurgy to the Chapada main
pit ores. Based on this and the associated low strip ratio of the
existing resource the Company is provided with the flexibility to at
least blend ore between the main pit and Corpo Sul to increase
production, particularly copper production because of the higher copper
grade.

    The drilling at Corpo Sul has identified gold and copper mineralization
along a minimum strike length of 4.5 kilometres, to a depth of almost 300
metres and mineralization remains open along strike and down dip. With
the discovery of Suruca in late 2009, Corpo Sul in 2011 and the continued
positive results at Corpo Sul this year, economic copper and gold
mineralization has now been identified along a strike length of almost 16
kilometres including the main Chapada deposit. Corpo Sul will provide the
opportunity to further evaluate whether it will be more than just a
higher grade ore contribution to an ore blend, or as it begins to show
sufficient size and continuity to either represent a larger portion of
ore contribution or an entirely new mine adjacent to Chapada.

    During the remainder of 2012, diamond drilling will continue to focus on
the expansion and delineation of mineralization at the Corpo Sul
extension and on confirming grade continuity of the Corpo Sul mineral
resource through infill drilling.

    El Penon, Chile

    The $29 million 2012 exploration program includes 140,000 metres of
surface and underground drilling. The objective of the exploration
program is to replace mineral reserves and mineral resources and, in
particular, outline new high grade ounces that will provide
sustainability for long term production goals. During the first five
months of 2012 a total of 34,383 metres of drilling have been completed.
The drilling has resulted in the discovery of a new mineralized vein
structure, Fortuna Este, and the advancement of two new targets, Dorada
South and the Elizabeth vein at Pampa Augusta Victoria, that will provide
mineral reserve and mineral resource growth for 2012.

    Fortuna Este - Exploration drilling completed in the second half of 2011
discovered a massive quartz vein structure 300 metres east of the Fortuna
deposit. Since the discovery, seven widely spaced surface reverse
circulation and diamond drill holes and three underground diamond drill
holes have been completed along a strike length of 800 metres. The best
grades and widths of mineralization have been intersected in the northern
part of Fortuna Este. Various drill holes at the southern end of east of
Fortuna also indicate the presence of high grades, multiple structures
and the continuity of a mineralized structure, which bode well for the
upside of Fortuna Este. During the remainder of 2012, drilling will focus
on expanding the high grade areas in both the north and south as well as
delineating the new structure identified.

    Dorada South - Two new mineralized structures, Dorada West 1 and Dorada
West 2 have been identified along the southern projection of Dorada. The
structures, which are separated by 20 to 30 metres of barren wall rock
have been traced along 700 metres of strike length and remain open along
strike to the south. Mineralization consists of oxidized hydrothermal
breccias and quartz veins with abundant hematite and manganese oxides and
is best developed near a sub horizontal contact between rhyolite tuffs
and underlying rhyolite flows and intrusive rocks. The mineralization has
been traced along a dip length of approximately 150 metres and remains
open down dip.

    Elizabeth Vein, Pampa Augusta Victoria - Past drilling at Pampa Augusta
Victoria had identified several discontinuous vein zones in the hanging
wall of the main Victoria vein. These structures, approximately 400
metres east of Victoria, were not included in 2011 in any mineral reserve
or mineral resource estimate due to the lack of drill information.
Drilling in 2012 is specifically focused on establishing the continuity
of these sub parallel structures and a narrow but high grade deposit in
the Elizabeth vein has been identified. A total of 32 holes have been
completed to date at Elizabeth and have outlined mineralization along a
strike length of 300 metres and a dip length of 150 metres and the
mineralization remains open along strike and locally down dip. As with
Victoria, the mineralization is characterized by extremely high silver
values.

    Additional drilling in 2012 will focus on extending the mineralization at
Elizabeth as well as the other sub parallel structures east of Victoria
and establishing a mineral reserve and mineral resource for these areas.
Exploration drilling will continue throughout 2012 to further extend
mineralization at Victoria, both along strike and down dip, and will also
expand and confirm the mineral resource potential of the Victoria Este
and Elizabeth veins. Pampa Augusta Victoria is being fast tracked which
will contribute to production and, along with the new discoveries, will
give the Company the flexibility to consider an increase in annual
production above the newly established sustainable level of 440,000 GEO
at El Penon.

    Mercedes, Mexico

    The $7 million 2012 exploration program includes approximately 33,000
metres of diamond drilling focused on the expansion of mineral reserves
and mineral resources, particularly at the Lagunas Norte extensions
within the Barrancas zone and at the Lupita vein zone. Three core rigs
are currently on site and a total of 26,604 metres have been drilled in
96 holes year-to-date. Mercedes is a gold-silver vein/stockwork system
with mineralization contained in four areas: Mercedes, Barrancas,
Klondike and Lupita. 

    Barrancas Vein, Marianas Zone extension - A total of 14 holes have been
completed as part of a widely spaced drilling program that has tested
nearly 1,000 metres of strike length to the northwest of the Lagunas
Norte ore body on the Barrancas structural trend. Almost all holes have
intersected broad zones of fractured, iron stained and argillized
andesite. However, associated quartz-carbonate-adularia
stockwork/brecciated vein zones are highly variable in distribution and
width. Additional drilling to be completed in 2012 will be focused on
establishing the continuity and extensions of this newly discovered
"Marianas" zone. This new discovery at Marianas is currently not
reflected in Mercedes' mineral reserves and mineral resources and it is
expected that continued exploration success will contribute to mineral
resources growth in 2012.

    Lupita - Thirty metre infill drilling at Lupita continues to demonstrate
that the quartz-carbonate vein/stockwork zone at the lower andesite/upper
tuff contact is very continuous. Vein width varies from 0.5 to nearly
15.0 metres although the amount of greenish ore stage quartz varies
greatly from hole to hole. Forty-five holes have been completed to date
and assays returned indicate that most holes within the 2011 inferred
grade shell contain at least narrow intervals with grades over 2.0 g/t
gold equivalent. The drill program currently being completed at Lupita
will increase the confidence in mineral resources from inferred to
indicated and enable a mineral reserve analysis to be completed.

    The continued exploration success and growing mineral resources at
Mercedes will contribute to sustainability of higher throughput levels of
1,800 tonnes per day, higher production level of 140,000 ounces of annual
production expected beginning in 2014 and the potential increase
extension of mine life.

    Picacho, Mexico

    On April 4, 2012, the Company reached an agreement with Adit Resources
Corp., a wholly owned subsidiary of Tara Minerals Corp., to acquire 100%
of American Copper Mining S.A. de C.V., holder of the Picacho group of
concessions. The Picacho group of concessions consists of 7,060 hectares
and is located 65 kilometres northeast of the Company's Mercedes Mine in
Sonora, Mexico. The Company commenced its first drilling campaign at
Picacho in July with drilling results expected before the end of 2012.

    OUTLOOK AND STRATEGY 

    The Company is focused on operational predictability and reliability with
a concentrated effort in increasing cash flows, containing costs and
expanding margins to maximize shareholder value. The Company continues on
a steady path of organic growth through expanding current, near term and
in development production plans, developing new projects and advancing
its exploration properties. The Company sometimes complements its growth
strategy by adding properties and projects with high development
potential and economic upside through strategic acquisitions.

    Production in 2012 is expected to be in the range of 1.2 to 1.3 million
GEO. This will represent an increase from 2011 production of
approximately 13%, most of which will come from Mercedes as production
ramps up having completed commissioning. C1 Santa Luz and
Ernesto/Pau-a-Pique are also expected to start production by the end of
2012.

    Production in 2013 is expected to be in the range of 1.5 to 1.7 million
GEO, most of which will come from a full year of production from C1 Santa
Luz and Ernesto/Pau-a-Pique, the start up of Pilar, the processing of
tailings at Minera Florida and the expansion of Gualcamayo.

    By 2014, production is targeted to be at a sustainable level of
approximately 1.75 million GEO. This includes production from the
existing mines and development projects for which construction decisions
have been made. 

    Current exploration and early development projects will potentially add
to this production level and will be included once construction decisions
have been made. These projects include Jeronimo, Agua Rica and Suyai. 

    Adding to the pipeline of exploration and development projects, the
Company has announced the proposed acquisition of Extorre Gold Mines
Limited ("Extorre"), owner of the Cerro Moro project located in the
Deseado Department, Santa Cruz Province, Argentina. The acquisition of
Extorre is expected to close in August 2012. 

    In the second quarter of 2012, the Company also acquired the Picacho
property, located 65 kilometres northeast of the Company's Mercedes Mine
in Sonora, Mexico, and additional mining rights near the Chapada Mine in
Brazil.

    The Company is contemplating certain initiatives that will result in
improved recoveries, reduced costs and/or mine life extension at various
operations. These projects are currently being evaluated with final
decisions pending. The most significant impact projects are at El Penon,
Chapada and Pilar.

    Cash costs are expected to remain below $250 per GEO for 2012. Cash costs
are calculated after only base metal by-product credits. 

    Development capital expected to be spent in 2012 remains to be $665
million as planned. This will decline in 2013 and the following years as
the Company's development projects are completed. Sustainment capital
expenditures are expected to be $340 million in 2012 and decline on a per
GEO basis after the current sustaining development projects are completed
in 2014. The Company expects to spend approximately $125 million on
exploration in 2012 with a continued focus on increasing mineral reserves
and mineral resources with its near-mine and regional exploration
programs, and exploration of greenfield targets.

    In addition to over $1.4 billion of available cash and undrawn credit
available at June 30, 2012, the Company expects robust cash flows from
operations under the current and intermediate term pricing conditions for
gold will enable the Company to fully fund its growth, reward
shareholders through dividends and accelerate capital spending to enhance
the Company's production growth profile.


SECOND QUARTER CONFERENCE CALL                                              
Q2, 2012 Conference Call Information for Thursday, August 9, 2012 at 11:00  
a.m. ET                                                                     
                                                                            
Toll Free (North America):                1-800-355-4959                    
Toronto Local and International           416-695-6616                      
International: Participant Audio Webcast: www.yamana.com                    
                                                                            
Q2, 2012 Conference Call REPLAY:                                            
                                                                            
Toll Free Replay Call (North America):    1-800-408-3053  Passcode 9088417  
Toronto Local and International:          905-694-9451    Passcode 9088417  
                                                                            
The conference call replay will be available from 2:00 p.m. ET on August 9, 
2012 until 11:59 p.m. ET on August 23, 2012.                                
                                                                            
Via Webcast                                                                 
Live Audio & Webcast: www.yamana.com                                        
                                                                            
For further information on the conference call or audio webcast, please     
contact the Investor Relations Department or visit our website,             
www.yamana.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.


----------------------------------------------------------------------------
Chile                                                                       
                                    Gold     Silver        Gold       Silver
                          Ore      Grade      Grade    Recovery     Recovery
                    Processed        g/t        g/t         (%)          (%)
----------------------------------------------------------------------------
El Penon                                                                    
Q2 2012               355,132       6.32     194.34        94.1         82.5
----------------------------------------------------------------------------
Q1 2012               335,741       7.19      212.0        93.5         82.9
Total 2011          1,452,090       7.05      215.9        93.0         84.0
Q4 2011               363,796       6.91      200.1        93.1         83.9
Q3 2011               367,503       6.77      215.4        93.6         86.8
Q2 2011               362,778       7.64      220.2        93.4         85.1
Q1 2011               358,013       6.91      227.8        92.0         79.9
----------------------------------------------------------------------------
Minera Florida                                                              
Q2 2012               224,107       3.15      43.31        80.8         69.6
----------------------------------------------------------------------------
Q1 2012               228,994       3.70       25.2        81.4         62.4
Total 2011            920,388       3.50       38.5        84.0         68.3
Q4 2011               207,147       3.37       50.2        83.5         68.9
Q3 2011               242,670       3.45       38.0        84.0         67.6
Q2 2011               238,287       3.43       31.8        83.9         68.0
Q1 2011               232,284       3.78       35.2        84.6         68.7
----------------------------------------------------------------------------
                                                                            

----------------------------------------------------------------------------
Chile                                                                       
                                                Gold         Gold           
                        Gold     Silver   Equivalent   Equivalent  Cash Cost
                      Ounces     Ounces       Ounces       Ounces    per GEO
                    Produced   Produced     Produced         Sold        (1)
----------------------------------------------------------------------------
El Penon                                                                    
Q2 2012               68,275  1,848,501      105,245      104,873   $    491
----------------------------------------------------------------------------
Q1 2012               72,742  1,896,604      110,675      108,011   $    442
Total 2011           306,184  8,470,112      475,586      473,607   $    400
Q4 2011               75,407  1,981,806      115,043      116,174   $    413
Q3 2011               76,347  2,213,974      120,627      125,600   $    407
Q2 2011               80,861  2,162,850      124,118      117,030   $    382
Q1 2011               73,568  2,111,482      115,798      114,803   $    397
----------------------------------------------------------------------------
Minera Florida                                                              
Q2 2012               19,179    239,931       23,978       23,229   $    811
----------------------------------------------------------------------------
Q1 2012               22,101    130,191       24,705       26,354   $    748
Total 2011            86,914    791,173      102,738      101,565   $    591
Q4 2011               18,326    241,208       23,151       23,219   $    706
Q3 2011               22,569    200,399       26,577       28,717   $    588
Q2 2011               22,034    167,114       25,376       22,831   $    614
Q1 2011               23,986    182,453       27,635       26,798   $    476
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Brazil                                                                      
                                                             By-        Co- 
                                                         Product    Product 
                        Gold     Gold     Gold    Gold Cash Cost  Cash Cost 
                   Ore Grade Recovery   Ounces  Ounces   per GEO    per GEO 
             Processed   g/t      (%) Produced    Sold       (1)        (1) 
----------------------------------------------------------------------------
Chapada                                                                     
Q2 2012      5,802,649  0.30     59.8   35,697  34,352 $  (2,207) $     302 
----------------------------------------------------------------------------
Q1 2012      4,487,496  0.29     59.6   24,541  25,970 $  (1,473) $     348 
Total 2011  20,581,385  0.32     63.8  135,347 129,419 $  (2,454) $     319 
Q4 2011      5,559,778  0.32     60.5   34,313  33,146 $  (1,715) $     320 
Q3 2011      5,075,556  0.33     66.0   36,075  28,618 $  (2,045) $     329 
Q2 2011      4,857,313  0.32     64.3   31,566  34,260 $  (3,555) $     342 
Q1 2011      5,088,739  0.32     64.7   33,392  33,395 $  (2,615) $     286 
                                                                            
----------------------------------------------------------------------------
                                                             By-        Co- 
                                                         Product    Product 
                        Gold     Gold     Gold    Gold Cash Cost  Cash Cost 
                   Ore Grade Recovery   Ounces  Ounces   per GEO    per GEO 
             Processed   g/t      (%) Produced    Sold       (1)        (1) 
----------------------------------------------------------------------------
Jacobina                                                                    
Q2 2012        523,603  1.75     95.1   28,005  27,852            $     735 
----------------------------------------------------------------------------
Q1 2012        526,765  1.94     93.0   30,493  29,706            $     666 
Total 2011   2,148,275  1.89     93.3  121,675 123,323            $     643 
Q4 2011        527,537  2.03     93.4   31,983  32,904            $     646 
Q3 2011        559,207  1.89     92.9   31,567  30,528            $     654 
Q2 2011        532,496  1.74     93.4   27,806  28,354            $     663 
Q1 2011        529,035  1.91     93.5   30,319  31,537            $     611 
----------------------------------------------------------------------------
Fazenda                                                                     
 Brasileiro                                                                 
Q2 2012        251,430  2.27     88.4   16,219  14,048            $     827 
----------------------------------------------------------------------------
Q1 2012        270,292  1.84     88.1   14,059  14,536            $   1,037 
Total 2011     936,459  2.07     88.4   55,163  56,907            $     937 
Q4 2011        234,767  2.33     88.1   15,568  16,430            $     915 
Q3 2011        249,752  1.99     89.9   14,335  14,534            $     940 
Q2 2011        246,551  2.02     87.5   14,007  13,052            $     934 
Q1 2011        205,389  1.93     88.2   11,252  12,891            $     968 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Argentina                                                                   
                               Gold      Gold      Gold     Gold  Cash Cost 
                        Ore   Grade  Recovery    Ounces   Ounces    per GEO 
                  Processed     g/t       (%)  Produced     Sold        (1) 
----------------------------------------------------------------------------
Gualcamayo                                                                  
Q2 2012           1,977,398    0.90      71.6    38,297   33,832   $    547 
----------------------------------------------------------------------------
Q1 2012           2,098,004    0.85      68.1    39,263   39,877   $    436 
Total 2011        7,578,156    0.97      68.4   158,847  160,326   $    441 
Q4 2011           1,955,094    0.99      65.4    40,676   40,908   $    424 
Q3 2011           1,844,293    0.94      67.7    37,381   38,354   $    442 
Q2 2011           1,882,237    1.02      74.4    43,194   46,399   $    399 
Q1 2011           1,896,533    0.95      66.4    37,597   34,665   $    507 
----------------------------------------------------------------------------
Alumbrera                                                                   
Q2 2012           1,218,825    0.44      71.2    12,359    3,242   $    711 
----------------------------------------------------------------------------
Q1 2012           1,166,630    0.36      67.5     9,317    8,227   $ (1,270)
Total 2011        4,775,130    0.42      69.4    44,502   44,664   $ (1,448)
Q4 2011           1,176,148    0.30      68.3     7,746    9,709   $ (1,351)
Q3 2011           1,239,638    0.44      71.8    12,712   11,177   $ (1,216)
Q2 2011           1,227,348    0.47      68.2    12,670   12,367   $ (1,736)
Q1 2011           1,131,995    0.45      69.3    11,374   11,412   $ (1,452)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Mexico                                                                      
                                   Gold      Silver        Gold       Silver
                        Ore       Grade       Grade    Recovery     Recovery
                  Processed         g/t         g/t         (%)          (%)
----------------------------------------------------------------------------
Mercedes                                                                    
Q2 2012             151,425        5.53       70.63        94.9         30.8
----------------------------------------------------------------------------
Q1 2012             136,063         5.9        83.6        93.7         28.4
----------------------------------------------------------------------------
                                                                            

----------------------------------------------------------------------------
Mexico                                                                      
                                               Gold        Gold             
                       Gold      Silver  Equivalent  Equivalent    Cash Cost
                     Ounces      Ounces      Ounces      Ounces      per GEO
                   Produced    Produced    Produced        Sold          (1)
----------------------------------------------------------------------------
Mercedes                                                                    
Q2 2012              26,646     112,729      28,900      28,760    $     499
----------------------------------------------------------------------------
Q1 2012              22,016      96,887      23,953      29,041    $     534
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Copper Production                                                           
                                                                  Cash costs
                           Copper     Copper     Copper   Copper   per pound
                     Ore      Ore   Recovery   Produced     Sold   of copper
               Processed    Grade        (%)   (M lbs.) (M lbs.)         (1)
----------------------------------------------------------------------------
Chapada                                                                     
Q2 2012        5,802,649     0.38       83.3       40.4     37.4      $ 1.34
----------------------------------------------------------------------------
Q1 2012        4,487,496     0.36       84.0       30.3     27.3      $ 1.51
Total 2011    20,581,385     0.42       87.4      166.1    153.6      $ 1.29
Q4 2011        5,559,778     0.43       86.7       45.4     43.6      $ 1.20
Q3 2011        5,075,556     0.42       87.5       41.4     38.7      $ 1.45
Q2 2011        4,857,313     0.43       88.4       40.8     41.6      $ 1.32
Q1 2011        5,088,739     0.39       87.1       38.5     29.7      $ 1.21
----------------------------------------------------------------------------
Alumbrera                                                                   
Q2 2012        1,218,825     0.45       85.9       10.5      2.3      $ 1.41
----------------------------------------------------------------------------
Q1 2012        1,166,630     0.40       79.4        8.0      7.2      $ 1.85
Total 2011     4,775,130     0.40       77.2       32.2     31.5      $ 1.82
Q4 2011        1,176,148     0.30       78.9        6.2      7.7      $ 2.59
Q3 2011        1,239,638     0.44       79.5        9.5      7.9      $ 1.58
Q2 2011        1,227,348     0.45       77.2        9.3      8.8      $ 1.54
Q1 2011        1,131,995     0.39       73.1        7.1      7.1      $ 1.85
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    CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release
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 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, risks
related to acquisitions, changes in project parameters 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.

    NON-GAAP MEASURES

    The Company has included certain non-GAAP measures including "Co-product
cash costs per gold equivalent ounce", "Co-product cash costs per pound
of copper", "By-product cash costs per gold equivalent ounce", "Adjusted
Earnings or Loss and Adjusted Earnings or Loss per share" to supplement
its financial statements, which are presented in accordance with
International Financial Reporting Standards ("IFRS"). The term IFRS and
generally accepted accounting principles ("GAAP") are used
interchangeably throughout this MD&A, except that 2010 financial data is
presented in accordance with previous Canadian GAAP. 

    The Company believes that these measures, together with measures
determined in accordance with IFRS, provide investors with an improved
ability to evaluate the underlying performance of the Company. Non-GAAP
measures do not have any standardized meaning prescribed under IFRS, and
therefore they may not be comparable to similar measures employed by
other companies. The data is intended to provide additional information
and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS.

    AVERAGE CASH COSTS

    The Company discloses "average cash costs" because it understands that
certain investors use this information to determine the Company's ability
to generate earnings and cash flows for use in investing and other
activities. The Company believes that conventional measures of
performance prepared in accordance with International Financial Reporting
Standards ("IFRS") do not fully illustrate the ability of its operating
mines to generate cash flows. The measures, as determined under IFRS, are
not necessarily indicative of operating profit or cash flows from
operations. Average cash costs figures are calculated in accordance with
a standard developed by The Gold Institute, which was a worldwide
association of suppliers of gold and gold products and included leading
North American gold producers. The Gold Institute ceased operations in
2002, but the standard remains the generally accepted standard of
reporting cash costs of production in North America. Adoption of the
standard is voluntary and the cost measures presented herein may not be
comparable to other similarly titled measures of other companies. Cash
costs include mine site operating costs such as mining, processing,
administration, royalties and production taxes, but are exclusive of
amortization, reclamation, capital, development and exploration costs.
Average cash costs are computed both on a co-product and by-product
basis. 

    Cash costs per gold equivalent ounce on a by-product basis is calculated
by applying zinc and copper net revenue as a credit to the cost of gold
production and as such the by-product gold equivalent ounce cash costs
are impacted by realized zinc and copper prices. These costs are then
divided by gold equivalent ounces produced. Gold equivalent ounces are
determined by converting silver production to its gold equivalent using
relative gold/silver metal prices at an assumed ratio and adding the
converted silver production expressed in gold ounces to the ounces of
gold production.

    Cash costs on a co-product basis are computed by allocating operating
cash costs to metals, mainly gold and copper, based on an estimated or
assumed ratio. These costs are then divided by gold equivalent ounces
produced and pounds of copper produced to arrive at the average cash
costs of production per gold equivalent ounce and per pound of copper,
respectively. Production of zinc is not considered a core business of the
Company; therefore, the net revenue of zinc is always treated as a credit
to the costs of gold production.

    Cash costs per gold equivalent ounce and per pound of copper are
calculated on a weighted average basis.

    The measure of average cash costs, along with revenue from sales, is
considered to be a key indicator of a company's ability to generate
operating earnings and cash flow from its mining operations. This data is
furnished to provide additional information and is a non-GAAP measure. It
should not be considered in isolation as a substitute for measures of
performance prepared in accordance with IFRS and is not necessarily
indicative of operating costs, operating profit or cash flows presented
under IFRS.

    ADJUSTED EARNINGS OR LOSS AND ADJUSTED EARNINGS OR LOSS PER SHARE

    The Company uses the financial measures "Adjusted Earnings or Loss" and
"Adjusted Earnings or Loss per share" to supplement information in its
consolidated financial statements. The Company believes that in addition
to conventional measures prepared in accordance with IFRS, the Company
and certain investors and analysts use this information to evaluate the
Company's performance. The presentation of adjusted measures are not
meant to be a substitute for net earnings or loss or net earnings or loss
per share presented in accordance with IFRS, but rather should be
evaluated in conjunction with such IFRS measures. Adjusted Earnings or
Loss and Adjusted Earnings or Loss per share are calculated as net
earnings excluding (a) share-based payments and other compensation, (b)
unrealized foreign exchange (gains) losses related to revaluation of
deferred income tax asset and liability on non-monetary items, (c)
unrealized foreign exchange (gains) losses related to other items, (d)
unrealized (gains) losses on commodity derivatives, (e) impairment losses
and reversals, (f) deferred income tax expense (recovery) on the
translation of foreign currency inter-corporate debt, (g) mark-to-market
(gains) losses on share-purchase warrants, (h) write-down of investments
and other assets and any other non-recurring adjustments. Non-recurring
adjustments from unusual events or circumstances are reviewed from time
to time based on materiality and the nature of the event or circumstance.
Earnings adjustments for the comparative period reflect both continuing
and discontinued operations.

    The terms "Adjusted Earnings (Loss)" and "Adjusted Earnings (Loss) per
share" do not have a standardized meaning prescribed by IFRS, and
therefore the Company's definitions are unlikely to be comparable to
similar measures presented by other companies. Management believes that
the presentation of Adjusted Earnings or Loss and Adjusted Earnings or
Loss per share provide useful information to investors because they
exclude non-cash and other charges and are a better indication of the
Company's profitability from operations. The items excluded from the
computation of Adjusted Earnings or Loss and Adjusted Earnings or Loss
per share, which are otherwise included in the determination of net
earnings or loss and net earnings or loss per share prepared in
accordance with IFRS, are items that the Company does not consider to be
meaningful in evaluating the Company's past financial performance or the
future prospects and may hinder a comparison of its period-to-period
profitability. Reconciliations of Adjusted Earnings to net earnings are
provided in the Company's MD&A Section 5 "Overview of Annual Results" and
Section 6 "Overview of Quarterly Results" for both the yearly and
quarterly reconciliations, respectively, found on the Company's website
at www.yamana.com.

    ADDITIONAL MEASURES

    The Company uses other financial measures the presentation of which is
not meant to be a substitute for other subtotals or totals presented in
accordance with IFRS, but rather should be evaluated in conjunction with
such IFRS measures. The following other financial measures are used:


--  Gross margin - represents the amount of revenues in excess of cost of
    sales excluding depletion, depreciation and amortization.  
--  Mine operating earnings - represents the amount of revenues in excess of
    cost of sales excluding depletion, depreciation and amortization and
    depletion, depreciation and amortization.  
--  Operating earnings - represents the amount of earnings before net
    finance income/expense and income tax expense.  
--  Cash flows generated from operations before changes in non-cash working
    capital - excludes the non-cash movement from period-to-period in
    working capital items including accounts receivable, advances and
    deposits, inventory, accounts payable and accrued liabilities. 


    The terms described above do not have a standardized meaning prescribed
by IFRS, and therefore the Company's definitions are unlikely to be
comparable to similar measures presented by other companies. The
Company's management believes that their presentation provides useful
information to investors because gross margin excludes the non-cash
operating cost item (i.e. depreciation, depletion and amortization), Cash
flows generated from operations before changes in non-cash working
capital excludes the non-cash movement in working capital items, mine
operating earnings excludes expenses not directly associate with
commercial production and operating earnings excludes finance and tax
related expenses and income/recoveries. These, in management's view,
provide useful information of the Company's cash flows from operations
and are considered to be meaningful in evaluating the Company's past
financial performance or the future prospects. 

Contacts:
Yamana Gold Inc.
Lisa Doddridge, Vice President,
Corporate Communications and Investor Relations
416-945-7362 or 1-888-809-0925
lisa.doddridge@yamana.com
www.yamana.com

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