Yamana Gold Provides 2009 and 2010 Operating Outlook

    2009 Production expected to increase by approximately 40 per cent; cash
    costs expected to decline

    TSX: YRI
    NYSE:   AUY
    LSE: YAU

    TORONTO, Jan. 12 /CNW/ - Yamana Gold Inc. (TSX:YRI)(NYSE:  AUY)(LSE:YAU)
today announced its operating outlook including production, cost and capital
expenditure guidance for 2009 and 2010, as well as its fourth quarter
operational highlights and update. All amounts are expressed in United States
Dollars unless otherwise indicated.


    Gold production is expected to be in the range of 1.3 million to 1.4
million gold equivalent ounces (GEO) in 2009. Yamana had previously guided in
October 2008 a specific production expectation with a +/-7% variance and this
range is consistent with this past guidance. Production is projected to
increase to approximately 1.4 million to 1.5 million GEO in 2010 from mines
currently in production. Estimated gold and copper production on a mine by
mine basis for 2009 and 2010 is detailed below.

    Gold Production Estimates (oz)                2009E                2010E
    Chapada                                 140-155,000          135-145,000
    El Penon (GEO)                          435-465,000          460-480,000
    Sao Francisco                             75-85,000           90-115,000
    Gualcamayo                              195-210,000          220-235,000
    Jacobina                                115-125,000          120-140,000
    San Andres                                70-75,000            70-80,000
    Fazenda Brasileiro                        90-95,000            85-95,000
    Minera Florida (GEO)                    105-110,000          110-120,000
    Sao Vicente                               55-60,000            50-55,000
    Alumbrera                                 55-60,000               50,000

    Total GEO(i)                        1,335-1,440,000      1,390-1,515,000


    Copper (lbs) (Chapada)              145-150,000,000      150-160,000,000

    (i) GEO calculations are based on an assumed gold to silver ratio of
        55:1 which is a three-year historical average. Silver production
        of approximately 12 million ounces for 2009 and 2010 is treated as
        a gold equivalent on this basis.

    Co-Product GEO Cash Cost Estimates                 2009E           2010E
    Chapada                                         $275-305        $290-310
    El Penon                                        $280-310        $280-310
    Gualcamayo                                      $380-400        $380-410
    Jacobina                                        $380-410        $350-380
    Minera Florida                                  $340-350        $310-330
    Other mines                                    $450-$480       $455-$480

    Co-product cash cost per GEO (US$)             $345-$375       $350-$375
    Co-product cash cost per lb (US$)            $0.90-$1.00     $0.92-$1.05
    By-product cash cost per GEO (US$)             $270-$295       $265-$310
    Excluding cash cost estimates for Alumbrera.

    Capital expenditures for 2009 and 2010 are expected to be approximately
$350 million and $400 million, respectively, including sustaining capital of
approximately $130 million each year. The majority of capital costs in 2009 is
allocated for the expansion at Chapada, for development work at El Penon, for
development of the satellite deposits Amelia Ines and Magdalena and initial
work on QDD Lower West at Gualcamayo, for the purchase of certain additional
mining concessions and for further development at Jacobina. The decision to
develop each of C1 Santa Luz and Mercedes is expected to be made mid-year
pending a cost review for improved economics at C1 Santa Luz and an initial
feasibility study and further exploration at Mercedes. Capital expenditures
shown above assume a modest amount for these projects and would increase
mostly in 2010 once a construction decision is made. The decision to advance
Ernesto/Pau-a-Pique and/or Pilar will depend on further evaluation of
economics into 2009. Results at Pilar are very promising and indicate that the
resource has grown substantially with more tonnes and comparatively high
grade. Additional capital would be required to advance these development stage
projects to production.
    Exploration expenses in 2009 are expected to total a minimum $56 million
($37 million capitalized and the remainder expensed). Yamana's exploration
program in 2009 will focus on mine and near-mine exploration primarily in
Chile, Brazil, Mexico and Argentina as the Company concentrates in 2009 on
expansions and advanced projects for near development.

    Assumptions for metal prices and exchange rates are as follows:

                                                             2009       2010
    Gold (US$/oz)                                             800        825
    Silver (US$/oz)                                         10.00      12.00
    Copper (US$/lb)                                          1.75       2.00
    Zinc (US$/lb)                                            0.50       0.50

    BRL Real/US$                                             2.20       2.20
    ARS Peso/US$                                             3.40       3.40
    CLP Peso/US$                                           650.00     625.00


    Yamana remains well financed to fund its strategic growth plan where
enhancements, expansions, improvements and development of existing assets are
expected to drive production towards the Company's objective to produce 2.0
million GEO in 2012. The Company will continue to evaluate the further
expansions at each of El Penon (for 600,000 GEO) and Minera Florida (for
150,000 GEO). With these expansions and the development of Mercedes, Pilar, C1
Santa Luz and Ernesto/Pau-a-Pique, the Company would achieve production levels
in excess of this target. The Company has approximately $160 million in cash
and cash equivalents as at December 31, 2008 and $500 million of available
credit under revolving credit lines of which approximately $250 million
remains undrawn. The Company has a modest net debt position of approximately
$407 million.
    For 2009, Yamana has approximately 50 million pounds of copper sold
forward at an average of approximately $3.00/lb. Yamana expects to derive more
than 80 percent of its revenue, cash flow and profit from precious metals
production this year and estimates this number will increase into 2010 and
    "Yamana is very well positioned for 2009," said Peter Marrone, Yamana
chairman and chief executive officer. "We expect to increase production to 1.3
to 1.4 million GEO at declining cash costs and most of our 2009 and 2010
production is based on mines already in production. Gualcamayo is a big driver
of the production growth into 2009 and it commenced production late last year.
We took time to better understand our assets and gather further information in
2008 and it positions us well beginning with 2009 both in terms of production
and costs."
    "We will remain focused on demonstrating growth on all measures,"
continued Mr. Marrone. "We will continue with cost control and containment,
with our precious metals and our Americas focus. We would look at add-on
acquisitions that show better returns than our current development and
exploration portfolio if they also meet the other criteria of stable mining
jurisdictions and good infrastructure."


    Yamana provided the following operational update for the fourth quarter
of 2008. Total production during the fourth quarter from all mines owned by
Yamana was approximately 255,000 GEO at cash costs on a co-product basis is
estimated to be approximately $385 per GEO which compares very favourably to
costs in the third quarter of 2008. For the month of December 2008, production
increased from November to approximately 89,000 GEO (including Alumbrera
although not including any production from either Gualcamayo or Sao Vicente)
and cash costs decreased to approximately $356 per GEO on a co-product basis,
further confirming a downward trend in costs. Copper production at Chapada for
the fourth quarter of 2008 was approximately 37 million pounds at a cash cost
of approximately $0.90 per pound of copper.
    For the year-ended December 31, 2008, production totaled approximately
1,000,000 GEO (including Alumbrera) at cash costs of approximately $385 per
GEO on a co-product basis plus approximately 140 million pounds of copper at
Chapada at a cash cost estimated to be approximately $1.00 per pound on a
co-product basis.
    Yamana expects production to increase from the first quarter in 2009 with
costs trending lower as production increases and input costs continue to
decline. Aggregate production for the first quarter is expected to be
approximately 290,000 GEO. Cash costs per GEO on a co-product basis are
expected to be approximately $345-$375 per GEO for 2009.

    Chapada, Brazil

    During the quarter, Yamana completed an updated feasibility level study
for the phased expansion to 20 million tonnes per year and then to 24 million
tonnes per year. The results of the study show that the throughput expansion
can be achieved with very high returns. Yamana has commenced the first phase
of the expansion to 20 million tonnes per year and plans to complete this
phase by mid-2009. The expansion to 24 million tonnes per year is expected to
begin by early 2010 and is expected to be completed in approximately 18
months. The decision to further expand to 32 million tonnes per year depends
on prevailing metal prices and an increase in proven and probable reserves to
extend the mine life. Capital expenditure estimates for 2009 and 2010 include
the first two phases of expansion. Efforts to accommodate the rainy season in
early 2009 have been completed by the end of 2008. Total production at Chapada
in 2009 is expected to be between 140,000 to 155,000 ounces of gold and 145 to
150 million pounds of copper at a cash cost of between $275-305 per ounce of
gold and between $0.90 -1.00 per pound of copper, respectively.

    El Penon, Chile

    During the fourth quarter of 2008, the Company received the license to
increase throughput at El Penon to 3,600 tonnes per day. The Company expects
to be mining at an effective rate of 500,000 GEO per year in 2009, targeting
production of approximately 435,000 to 460,000 GEO and the creation of a
stockpile. For the month of December 2008, average tonnage increased to
approximately 110,000 tonnes and production totaled approximately 36,000 GEOs.
The decision to increase plant capacity to 5,000 tonnes per day for a run rate
of 600,000 GEO per year will depend on further work in the North Block area
and additional development at Bonanza and Al Este in particular. The Company
intends to mine at a rate of 3,600 tonnes per day for the next two years
before further increasing plant capacity although it will evaluate the further
expansion as the proven and probable reserves increase. Production at El Penon
is expected to ramp up quarter over quarter as ore grade and throughput
increases. Cash costs at El Penon are expected to be between $280-310 per GEO
in 2009. The Company believes that significant potential exists at El Penon
and has substantially increased budgeted capital expenditures based on very
strong results.

    Jacobina, Brazil

    Significant development work was completed at Jacobina in 2008. In the
fourth quarter of 2008, Jacobina reached production levels at the mine of
5,000 to 6,000 tpd. Development work for the second phase of expansion to
increase plant capacity to 7,500 tonnes per day advanced during the fourth
quarter of 2008 and will continue in 2009. The Company expects to be mining
from 9 to 12 stopes at three mines in 2009 (Joao Belo, Canavieiras and Morro
do Vento) with further development work at the fourth mine (Basal) progressing
during the year. Production and costs may be improved over current guidance
based on work done at Basal. A significant improvement in proven and probable
reserves and measured and indicated resources is expected at Jacobina and,
while inferred resources will decrease, the Company now has a much higher
confidence level in the tonnage and grade for reserves and measured and
indicated resources. The Company remains on track to increase the mining rate
from developed stopes and expects to produce approximately 115,000 to 125,000
ounces of gold in 2009 at a cash cost of between $380-$410 per ounce.

    Gualcamayo, Argentina

    Start-up and commissioning commenced at Gualcamayo in December 2008 with
the first gold pour at the end of 2008. Completion of the primary crusher is
expected by the end of February as planned. The Company is commissioning the
ADR plant and commercial production remains on track for the end of the second
quarter of 2009. Gold inventory of mined material exceeded 45,000 ounces at
the end of December 2008 and continues to increase. The Company has committed
to the construction of the Amelia Ines and Magdalena open pit satellite
deposits which is expected to contribute to overall production by second half
of 2009. An update to the initial feasibility study relating to the QDD Lower
West deposit is expected by the end of January 2009. Total production for the
year at Gualcamayo is expected to be approximately 195,000 to 210,000 ounces
of gold at a cash cost of between $380-400 per ounce.

    Minera Florida, Chile

    Commissioning for the expansion at Minera Florida began during the fourth
quarter, resulting in a throughput increase to 2,000 tonnes per day. The
Company expects to produce approximately 105,000 to 110,000 GEO at Minera
Florida in 2009 at a cash cost of approximately $340-$350 per GEO. Minera
Florida has the potential to increase annual production to 150,000 GEO with a
change in the mining method to accommodate the recently completed expansion
and mining in narrow veins. The Company will assess the potential increase to
this higher throughput rate after two years of mining at the current rate.

    Sao Vicente, Brazil

    Operations began at Sao Vicente with the first gold pour at the end of
2008, and the mine remains on track for commercial production in the second
quarter of 2009. Total production from Sao Vicente is expected to be between
55,000 to 60,000 ounces of gold in 2009.


    At Gualcamayo, Yamana expects to release a feasibility study update at
QDD Lower West by the end of January 2009 with a construction decision
expected by the end of the year. The Company's Pilar project in Brazil was
virtually unexplored when acquired but has since advanced to be an important
development project for Yamana. In less than a year, the first resource
estimate of approximately 970,000 ounces was delivered and strong exploration
success is expected to continue. An initial feasibility study is expected to
be released for Mercedes in mid-February.


    The Board of Directors has elected to reduce Yamana's dividend payments
from the current $0.01 per share on a monthly basis to $0.01 per share on a
quarterly basis. Yamana's divided yield has been comparatively high and the
reduction will bring the dividend yield in line with its peer group. This
reduction will save the Company approximately $58 million in 2009 which will
be reallocated to development and exploration programs.


    Yamana will release its full fourth quarter financial results including
mineral reserve and mineral resource data after the close of business on March
24, 2009. A conference call will follow on March 25, 2009 at 11:00 a.m. ET.

    Conference Call Information:

    Toll Free (North America):                                1-877-874-1570
    International:                                              719-325-4765
    Participant Audio Webcast:                                www.yamana.com

    Conference Call REPLAY:

    Toll Free Replay Call (North America):   888-203-1112, Passcode: 9627346
    Replay Call:                             719-457-0820, Passcode: 9627346

    The conference call replay will be available from 1:00 p.m. EST on March
25, 2009 until 11:59 p.m. E.T. on April 1, 2009.
    For further information on the conference call or audio webcast, please
contact the Investor Relations Department or visit our website,

    Qualified Person

    Evandro Cintra, P. Geo., Senior Vice President, Technical Services of
Yamana Gold Inc., has reviewed and approved the contents of this press release
and serves as the "Qualified Person" as defined by National Instrument 43-101.

    About Yamana

    Yamana is a Canadian gold producer with significant gold production, gold
development stage properties, exploration properties, and land positions in
Brazil, Argentina, Chile, Mexico and Central America. Yamana is producing gold
and other precious metals at intermediate company production levels in
addition to significant copper production. Company management plans to
continue to build on this base through existing operating mine expansions and
throughput increases, the advancement of its exploration properties and by
targeting other gold consolidation opportunities in Brazil, Argentina and
elsewhere in the Americas.

contains certain "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995 and "forward-looking
information" under 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, but are not limited to, 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, possible variations in ore grade or recovery
rates, fluctuating metal prices (such as gold, copper, silver and zinc),
currency exchange rates (such as the Brazilian Real and the Chilean Peso
versus the United States 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, costs and timing of the development of new deposits, success of
exploration activities, permitting time lines, government regulation 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 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 the Company's plans and objectives and may not be appropriate
for other purposes.

For further information:

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

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