Yamana Gold Reports Second Quarter Results-Double Digit Growth in Revenue, Adjusted Earnings and Cash Flow



    
    TSX: YRI
    NYSE:   AUY
    LSE: YAU
    

    TORONTO, Aug. 6 /CNW/ - YAMANA GOLD INC. (TSX:YRI)(NYSE:  AUY)(LSE:YAU)
today announced its financial and operating results for the second quarter
ended June 30, 2008. All dollar amounts are expressed in US dollars unless
otherwise specified.

    2008 SECOND QUARTER HIGHLIGHTS

    Highlights from the period of April 1, 2008 to June 30, 2008 include the
following:

    
    -   Total revenue of $336.9 million.

    -   Mine operating earnings of $174.9 million.

    -   Adjusted earnings of $102.7 million or $0.15 per share.

    -   Cash flow from operations of $176.5 million before changes in non-
        cash working capital representing $0.26 per share.

    -   Total production of 257,498 gold equivalent ounces (GEO) at average
        cash costs after by-product credits of $(140) per GEO.
    

    Financial and Operating Summary

    Revenue for the second quarter 2008 was $336.9 million, representing an
83% increase from the second quarter last year. Revenue for the six months
ended was $693 million, representing a 111% increase from the comparative
period last year.
    Mine operating earnings for the second quarter 2008 were $174.9 million,
representing a 64% increase from the second quarter last year. Mine operating
earnings for the six months ended were $370.2 million, representing a 102%
increase from the comparative period last year.
    Adjusted earnings for the second quarter 2008 were $102.7 million,
representing a 34% increase from the second quarter last year. On a per share
basis, adjusted earnings for the quarter were $0.15 per share. Adjusted
earnings for the six months ended were $237.4 million, representing an 89%
increase from the comparative period last year. Adjusted earnings per share
were $0.35 for the six months ended in 2008.
    Net earnings of $42.1 million are adjusted to reflect the economic impact
of copper hedges. Adjusted earnings best compares to analyst consensus
estimates for earnings as the non-cash loss or gain impact of mark-to-market
for future delivery of copper sold forward do not impact the particular
quarter for which financial results are given. Adjusted earnings take into
account only the gain or loss actually realized in the period. Certain
non-recurring items for the quarter are not included in adjusted earnings such
as unrealized exchange gains and losses and similar changes.
    Cash flow from operations for the second quarter 2008 was $176.5 million
before changes in non-cash working capital items, representing a 94% increase
from the second quarter last year. On a per share basis, cash flow from
operations was $0.26 before changes in non-cash working capital items,
unchanged from the second quarter last year. Cash flow from operations for the
six months ended was $333.7 million before changes in non-cash working capital
items, representing a 109% increase from the comparative period last year. On
a per share basis, cash flow from operations for the six months ended was
$0.49 before changes in non-cash working capital items, representing a 9%
increase from the comparative period last year.
    Total production for the second quarter 2008 was 257,498 gold equivalent
ounces (GEO), representing a 122% increase from the second quarter last year.
Total production for the first six months ended was 492,718, representing a
108% increase from the comparative period last year. In addition, in the
second quarter 2008 Yamana produced 44.8 million pounds of copper,
representing a 42% increase from the second quarter last year. Copper
production for the six months ended was 85.7 million pounds, representing a
46% increase from the comparative period last year.
    By-product cash costs for the second quarter of 2008 were $(140) per GEO,
compared to $(125) per GEO in the first quarter of 2008, and $(434) per GEO in
the second quarter last year. By-product cash costs for the six months ended
were $(133) per GEO, compared to $(267) per GEO for the comparative period
last year.

    Overview of Financial Results

    The following table presents a summary of financial information for the
three and six months ended June 30, 2008:

    
                                                Three months      Six months
                                                       ended           ended
    (in thousands of dollars)                  June 30, 2008   June 30, 2008
    -------------------------------------------------------------------------
    Revenues                                       $ 336,938       $ 692,998
    Cost of sales                                   (109,921)       (219,886)
    Depreciation, amortization and depletion         (50,721)       (100,351)
    Accretion of asset retirement obligations         (1,354)         (2,571)
    -------------------------------------------------------------------------


    Mine operating earnings                          174,942         370,190


    Expenses
    General and administrative and other expenses    (23,287)        (39,630)
    Other losses                                      (3,042)        (11,086)
    -------------------------------------------------------------------------


    Operating earnings                               148,613         319,474


    Other expenses                                   (77,838)       (106,733)
    Unrealized loss on derivatives                       869        (102,479)
    -------------------------------------------------------------------------


    Earnings before income taxes and equity
     earnings                                         71,644         110,262


    Income tax provision                             (38,828)        (35,573)
    Equity earnings from Minera Alumbrera              9,273          30,519
    -------------------------------------------------------------------------


    Net earnings                                   $  42,089       $ 105,208


    Earnings Adjustments:
    Stock-based compensation                           2,648           2,648
    Foreign exchange loss                             40,522          42,372
    Unrealized (gain) or loss on derivatives            (869)        102,479
    Future income tax expense on foreign currency
     translation of inter corporate debt              18,918          20,424
    -------------------------------------------------------------------------


    Adjusted Earnings before income tax effects      103,308         273,131


    Income tax effect of earnings adjustments           (606)        (35,764)
    -------------------------------------------------------------------------


    Adjusted Earnings                              $ 102,702       $ 237,367
    -------------------------------------------------------------------------


    Adjusted earnings per share                    $    0.15       $    0.35
    -------------------------------------------------------------------------


    Cash flow from operating activities (before
     changes in non-cash working capital items)      176,457         337,728


    Cash flow from operating activities per share  $    0.26       $    0.49
    -------------------------------------------------------------------------


    Capital expenditures                             158,708         275,441
    -------------------------------------------------------------------------


    Cash and cash equivalents (end of period)      $ 238,377       $ 238,377
    -------------------------------------------------------------------------


    Average realized gold price per ounce          $     893       $     911
    Average realized silver price per ounce        $   17.20       $   17.49
    Chapada average realized copper price per lb   $    3.81       $    3.73
    -------------------------------------------------------------------------


    Gold sales (ounces)                              193,150         380,350
    Silver sales (millions of ounces)                    2.9             5.3
    Chapada payable copper contained in
     concentrate sales (millions of lbs)                35.2            68.4
    -------------------------------------------------------------------------
    

    The Company previously provided information on production and costs on an
aggregate basis and by mine for Q2 2008 in its press release dated July 9,
2008. Further detail is available in Yamana's Q2 2008 Financial Statements and
Management's Discussion & Analysis. For complete financial disclosure and
further detail about the financial results and operations please see Yamana's
Q2 2008 Financial Statements and Management's Discussion & Analysis at
www.yamana.com or www.sedar.com.

    SECOND HALF 2008 GUIDANCE

    Production for the second half of 2008 is expected to be 610,000 to
685,000 GEO. Production guidance for 2008 has been impacted by reduced
expectations for Sao Francisco and Jacobina and increased expectations at El
Penon, Chapada and Gualcamayo which will be contributing more ounces and
comparatively lower costs. At El Penon, planned production remains on track to
be at an annualized level of 500,000 GEO by the end of 2008. At Chapada,
production in the second half of the year is expected to exceed production in
the first half. Gualcamayo is expected to commence production by year end.
Production for the balance of 2008 will in part also depend on Alumbrera and
Rossi, in which the Company has minority interests, establishing levels of
production that are not less than those reported for Q1. Both mines are
expected to contribute a total of 22,000 GEO per quarter. Copper production
for 2008 is expected to be 190 to 200 million pounds, of which 155 to 160
million pounds is expected to be from Chapada.

    STRATEGIC OUTLOOK

    Yamana has previously guided that its production range is expected to be
1.95 to 2.5 million GEO in 2012. Based on existing reserves and resources,
sustainable production of 1.95 million GEO is supported for and from 2012.
Assuming all projects are developed as planned and on schedule, the maximum
production is expected to increase to the higher end of the range. Based on
existing reserves and resources and proposed increases at projects now being
evaluated, the Company has formed a strategic objective of 2.2 million GEO in
2012. As the Company matures its projects, increases its reserves and
resources and continues with feasibility work, the Company will upgrade its
strategic plan into a more formalized mine plan for each project under
evaluation.

    LOOKING AHEAD

    Upcoming Events

    
    -------------------------------------------------------------------------
    Event                                                      Expected Date
    -------------------------------------------------------------------------
    Ongoing drill programs at Mercedes and El Penon          Throughout 2008
    Production commences at Gualcamayo                             Late 2008
    Begin operations at Sao Vicente                                Late 2008
    Completion of Phase Two expansion at Jacobina                  Late 2008
    Complete Minera Florida expansion                              Late 2008
    Complete throughput increases at El Penon                      Late 2008
    Gualcamayo feasibility level study update (QDD Lower West)     Late 2008
    Feasibility level study for Mercedes                           Late 2008
    Complete internal study on Chapada pyrite and oxide
     project                                                    By late 2008
    Complete feasibility level study for Chapada expansion      By late 2008
    Complete scoping study for El Penon mine and plant
     expansion                                                  By late 2008
    -------------------------------------------------------------------------

    CONFERENCE CALL

    A conference call and audio webcast is scheduled for August 7, 2008 at
    11:00 a.m. E.T. to discuss the 2008 second quarter results.

    Conference Call Information:
    ----------------------------

    Local and Toll Free (North America):                        866-696-5896
    International:                                           +1 416-641-6108
    Participant Audio Webcast:                                www.yamana.com

    Conference Call REPLAY:
    -----------------------

    Toll Free Replay Call:                     800-408-3053 Passcode 3266333
                                                 followed by the number sign
    Replay Call:                            +1 416-695-5800 Passcode 3266333
                                                 followed by the number sign
    

    The conference call replay will be available from 1:00 p.m. EST on August
7, 2008 until 11:59 p.m. E.T. on August 21, 2008.

    Presentation Slides

    Presentation slides will be available 30 minutes prior to the call and
can be found on Yamana's website at 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, Central America and the
United States. Yamana is producing gold and other precious metals at
intermediate company production levels in addition to significant copper
production. The company continues to build on this base through existing
operating mine expansions and throughput increases, the advancement of its
exploration properties and by targeting other gold consolidation opportunities
in Brazil, Argentina, Chile and elsewhere in the Americas.

    CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: This news release
contains certain "forward-looking statements" within the meaning of Section
21E of the United States Securities Exchange Act of 1934, as amended and
"forward-looking information" under applicable Canadian securities laws.
Except for statements of historical fact relating to the company, information
contained herein constitutes forward-looking statements, including any
information as to the Company's strategy, plant 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 possible variations
in ore grade or recovery rates, fluctuating metal prices (such as gold,
copper, silver and zinc), currency exchange rates (such as Brazilian Real
versus the US Dollar), changes in the Company's hedging program, changes in
accounting policies, changes in the Company's corporate resources, changes in
project parameters as plans continue to be refined, changes in project
development and production 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, as well as those risk factors discussed or referred to in the
Company's annual Management's Discussion and Analysis and Annual Information
Form filed with the securities regulatory authorities in all provinces of
Canada and available at www.sedar.com, and the Company's Annual Report on Form
40-F filed with the United States Securities and Exchange Commission. Although
the Company has attempted to identify important factors that could cause
actual actions, events or results to differ materially from those described in
forward-looking statements, there may be other factors that cause actions,
events or results not to be anticipated, estimated or intended. There can be
no assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. The Company undertakes no obligation to update
forward-looking statements if circumstances or management's estimates,
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 presently 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 cash cost
per gold equivalent ounce ("GEO") data, adjusted net earnings (loss) and
adjusted net earnings (loss) per share to supplement its financial statements,
which are presented in accordance with Canadian GAAP. Non-GAAP measures do not
have any standardized meaning prescribed under Canadian GAAP, 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 Canadian GAAP.
    The Company has included cash cost per ounce information data because it
understands that certain investors use this information to determine the
Company's ability to generate earnings and cash flow for use in investing and
other activities. The Company believes that conventional measures of
performance prepared in accordance with Canadian GAAP do not fully illustrate
the ability of its operating mines to generate cash flow. The measures are not
necessarily indicative of operating profit or cash flow from operations as
determined under Canadian GAAP. Cash costs are calculated on a by-product and
co-product basis. Cash costs are determined in accordance with the Gold
Institute's Production Cost Standard. By-product cash costs are computed by
deducting by-product copper and zinc revenues from operating cash costs. Cash
costs on a co-product basis are computed by allocating operating cash costs
separately to metals based on an estimated or assumed ratio. Where cost per
ounce data is computed by dividing GAAP operating cost components by ounces
sold, the Company has provided a formal reconciliation of these statistics in
the Company's Management's Discussion and Analysis for the quarter ended June
30, 2008 available at www.sedar.com or on the Company's website at
www.yamana.com.
    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 presentation of adjusted measures are
not meant to be a substitute for net earnings (loss) or net earnings (loss)
per share presented in accordance with GAAP, but rather should be evaluated in
conjunction with such GAAP measures. Adjusted Earnings or Loss and Adjusted
Earnings or Loss per share are calculated as net earnings excluding (a)
stock-based compensation, (b) foreign exchange (gains) losses, (c) unrealized
(gains) losses on commodity derivatives, (d) impairment losses, (e) future
income tax expense (recovery) on the translation of foreign currency inter
corporate debt, (f) debt repayment expense, (g) non-controlling interest and
(h) internal transaction costs. The terms "Adjusted Earnings (Loss)" and
"Adjusted Earnings (Loss) per share" do not have a standardized meaning
prescribed by Canadian GAAP, 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 Canadian
GAAP, 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.
    The Company uses the financial measure "cash flow from operations before
changes in non-cash working capital" or "cash flow from operating activities
before changes in non-cash working capital" to supplement its consolidated
financial statements. The presentation of cash flow from operations before
changes in non-cash working capital is not meant to be a substitute for cash
flow from operations or cash flow from operating activities presented in
accordance with GAAP, but rather should be evaluated in conjunction with such
GAAP measures. Cash flow 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 "cash flow from operations
before changes in non-cash working capital" do not have a standardized meaning
prescribed by Canadian GAAP, and therefore the Company's definitions are
unlikely to be comparable to similar measures presented by other companies.
The Company's management believes that the presentation of cash flow from
operations before changes in non-cash working capital provides useful
information to investors because it excludes the non-cash movement in working
capital items is a better indication of the Company's cash flow from
operations and considered to be meaningful in evaluating the Company's past
financial performance or the future prospects. The Company believes that
conventional measure of performance prepared in accordance with Canadian GAAP
does not fully illustrate the ability of its operating mines to generate cash
flow.




For further information:

For further information: Yamana Gold Inc., Letitia Wong, Director,
Investor Relations, (416) 815-0220, Email: investor@yamana.com, Website:
www.yamana.com; or MEDIA INQUIRIES: Mansfield Communications Inc., Hugh
Mansfield, (416) 599-0024

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YAMANA GOLD INC.

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