Yamana Gold Provides Mercedes Pre-Feasibility and Ernesto/Pau-a-Pique Scoping Study Results and Further Update

today announced the results of its studies relating to development of its
Mercedes and Ernesto/Pau-a-Pique projects. All amounts are expressed in United
States Dollars unless otherwise indicated.


    The Mercedes project is located in northern Sonora, Mexico approximately
200 kilometres south of Tucson, Arizona. The deposit consists of a complex
gold-silver hydrothermal low-sulphidation vein/stockwork system with several
mineralized structures discovered to date, two of which, the Mercedes and
Klondike veins, have been significantly advanced and support development of
Mercedes as a mine. In 2008, 74,000 metres of mostly infill drilling were
completed to delineate mineralization in the Mercedes and Klondike areas,
resulting in a significant conversion of inferred resources to indicated
resources. A total of 140,000 metres of exploration and infill drilling has
been completed to date.
    The Mercedes mineral reserves estimate as of December 2008 includes
probable reserves of 2.65 million tonnes grading 7.58 g/t gold equivalent
containing 645,000 gold equivalent ounces (GEO). The Mercedes mineral resource
estimate, inclusive of mineral reserves, based on a cut off grade of 2.0 g/t
gold equivalent and using only sample data received as of September 2008,
includes indicated resources of 2.39 million tonnes grading 9.19 g/t gold
equivalent containing 705,000 GEO, and inferred resources of 452,000 tonnes
grading 6.27 g/t gold equivalent containing 91,000 GEO. This compares well to
the previously announced (March 25, 2008 press release) inferred resources of
2.8 million tonnes grading 7.78 g/t gold equivalent containing 738,000 GEO.
Total resources, quality of resources and grade have been improved.
    The table below summarizes the mineral reserves for Mercedes as of
December 2008 and the mineral resources as of September 2008. The gold
equivalent was calculated using a conversion ratio of 150:1 for silver to gold
which reflects the recoveries of gold and silver and metal prices.

                                Probable Reserves
    Area        Tonnes    Au    Ag       Gold    Au oz      Ag oz       Gold
                         g/t   g/t equivalent                     equivalent
                                          g/t                             oz
    Mercedes 1,960,700  7.83  86.1       8.40  493,589  5,427,478    529,772
    Klondike   686,074  5.02  33.4       5.24  110,814    735,638    115,718
    Total    2,646,774  7.10  72.4       7.58  604,402  6,163,221    645,490

                  Indicated Resources (2.0 g/t gold equivalent)
                          (Inclusive of mineral reserves)
    Area        Tonnes    Au    Ag       Gold    Au oz      Ag oz       Gold
                         g/t   g/t equivalent                     equivalent
                                          g/t                             oz
    Mercedes 1,817,692  9.31  99.8       9.98  544,138  5,832,400    583,000
    Klondike   570,283  6.42  38.4       6.68  117,693    703,993    122,387
    Total    2,387,975  8.62  85.1       9.19  661,830  6,536,394    705,387

                    Inferred Resources (2.0 g/t gold equivalent)
    Area       Tonnes    Au    Ag       Gold    Au oz      Ag oz        Gold
                        g/t   g/t equivalent                      equivalent
                                         g/t                              oz
    Mercedes  376,112  5.86  73.1       6.34   70,862    884,491      76,716
    Klondike   76,084  5.63  42.7       5.91   13,765    104,344      14,459
    Total     452,206  5.82  68.0       6.27   84,627    988,835      91,175

    The proposed bench and fill mining method is consistent with the mining
method used at Yamana's El Penon mine where geologic conditions are similar to
Mercedes. Expected throughput at 1,500 tonnes per day would result in
production of approximately 118,000 GEO for approximately six years based on
known reserves. Cash costs are expected to be $264 per GEO which is
comparatively low and well below industry averages. Gold recovery is expected
to be approximately 95% based on metallurgical test work to date. Silver
recovery is expected to be approximately 30% which is consistent with similar
mineral deposits. Gold and silver production is expected to be approximately
112,000 ounces and 366,000 ounces, respectively, or approximately 118,000 GEO
as previously indicated. GEO calculations are based on an assumed gold to
silver ratio of 55:1 which is a longer-term historical average. Total capital
costs are expected to be approximately $152 million including a contingency of
$16.8 million and owner costs of $9.8 million. Costs for Mercedes were
determined for the purposes of this study based on inputs and quotations in
2008. Yamana believes improvements in these cost references may be possible.
    The financial analysis for the study, using a gold price of $814 per
ounce and a silver price of $13 per ounce, suggests an after tax NPV at a 5%
discount rate of $72.7 million, with an after tax IRR of 22.4%.
    Yamana intends to continue to advance the project in 2009. Mercedes shows
a high geological potential given the size of the property and the results of
geological and geophysical studies to date. Yamana is continuing to drill at
Mercedes targeting 30,000 metres of drilling in 2009, with a budget of
approximately $4.0 million. Yamana intends to provide updates to this study
and, depending on the results, expects to make a construction decision
thereafter. Construction of the mine is expected to take approximately two
years and, provided that a construction decision is made not later than Q1
2010, Yamana expects to be in production at Mercedes by 2012. Yamana will also
determine improvements in costs in addition to increased recoverable gold
equivalent ounces during this period. Yamana believes that in 2009 most of the
inferred resources and some narrow indicated resources may be upgraded to
reserves, further increasing reserves by approximately 80,000 GEO. Yamana's
objective is to increase total recoverable GEO to at least 1.0 million GEO
before a construction decision is made. With the upgrade of inferred resources
and the discovery of an additional 280,000 GEO with a successful drilling and
exploration effort, the estimated after-tax NPV and IRR would increase to $153
million and 27.4%, respectively, based on the same economic assumptions used
in the current study. In 2009, the current capital budget includes an amount
for the continued development of a production-ready exploration tunnel that is
currently 400 metres long and has reached the mineralized zone in Mercedes,
confirming grades and vein width. This tunnel will provide confirmation of the
grade distribution, and other geological and geotechnical aspects and will
also serve as a platform for underground drilling and preparation for future
mine development work.


    The Ernesto/Pau-a-Pique project is located in southwest Mato Grosso
state, near Pontes e Lacerda in Brazil. The Ernesto deposit is approximately
60 kilometres south of Yamana's Sao Francisco mine. The Pau-a-Pique deposit is
approximately 56 kilometres by road south of the Ernesto deposit. The
significant existing infrastructure including paved roadways supports the
development of Ernesto/Pau-a-Pique as two mines with a common plant.
    The deposits are hosted by meta-sedimentary rocks of Proterozoic age and
at the contact with underlying granitic basement rocks. The gold
mineralization is hosted by quartz veins in the metasedimentary rocks
(arenites and conglomerates) or associated with shear zones at the contact of
the metasediments with the underlying granite basement. At Ernesto, gold-rich
quartz veins and veinlets occur within a thick, low-angle structure at the
base of the meta-sedimentary sequence and within sulphidic horizons in
overlying altered meta-arenite units.
    The project has been evaluated based on more than 50,000 metres of
drilling to date, and the region hosts various targets of considerable
potential for increasing resources at the project. Yamana plans to continue
with additional exploration in 2009, focusing on infill drilling at Ernesto in
    The Ernesto/Pau-a-Pique mineral resources estimate, based on cut off
grades of 1.0 g/t gold for the open pit and 1.5 g/t gold for underground,
includes indicated resources of 3.95 million tonnes grading 4.67 g/t gold
containing 593,000 ounces of gold and inferred resources of 3.14 million
tonnes grading 3.02 g/t gold containing 305,000 ounces of gold. The table
below summarizes the total indicated mineral resources and total inferred
mineral resources for Ernesto/Pau-a-Pique deposits.

                           Indicated                         Inferred
    Area             Tonnes  Au g/t  Ounces           Tonnes  Au g/t  Ounces
    Ernesto       1,520,000    3.66 179,000        2,144,000    2.61 180,000
    Pau-a-Pique   2,427,000    5.31 414,000          998,000    3.90 125,000
    Total         3,947,000    4.67 593,000        3,142,000    3.02 305,000

    An infill program is planned for 2009 to support a feasibility study and
construction decision by the end of the year. Yamana believes that
Ernesto/Pau-a-Pique has significant merit. Given the robust return, high
grade, comparatively low capital cost and significant infrastructure
supporting the project, Yamana's capital cost budget includes the costs for
construction beginning in 2010, and anticipates Ernesto/Pau-a-Pique will be in
production in 2012.
    The financial analysis for this study using a gold price of $825 per
ounce suggests an after tax NPV at a 5% discount rate of $138 million, with an
after tax IRR of 38%. This includes certain incentives and tax benefits
related to operating in Mato Grosso state, which the Company is entitled to
rely on for all of its exploration, development and producing properties in
Mato Grosso. Ernesto/Pau-a-Pique would be supplementing production from
Yamana's mines already in production and in proximity to Ernesto/Pau-a-Pique.
    Total capital costs are expected to be approximately $86 million through
2010 and 2011. Total annual production is expected to be approximately 100,000
ounces of gold with an average cash cost of approximately $356 per ounce.
    Yamana intends to determine if further improvements in equipment and
contractor costs can be realized in 2009, as the capital cost references for
this project were made in 2008. Certain elements of the scoping study for
Ernesto/Pau-a-Pique, including capital and operating costs, are consistent
with higher level financial and operating review and support Yamana's
objective of completing a feasibility-level study by the end of 2009.


    Pilar, Brazil

    In 2008, Yamana invested approximately $6.1 million and drilled
approximately 23,000 metres at its Pilar project in Goias state, Brazil.
Exploration in 2009 contemplates a budget of approximately $4.0 million and
20,000 metres of drilling planned. In less than a year, an inferred mineral
resource estimate of 12.4 million tonnes grading 2.42 g/t gold and containing
approximately 970,000 ounces of gold was delivered, and more than 43,000
metres of drilling has been completed to date. An update to Pilar's resource
estimate is expected in Q2 2009 which will include the drilling information
completed in 2008. Pilar is advancing rapidly to the development stage and
Yamana anticipates that Pilar will be developed in part as an open pit and
also as an underground mine.

    El Penon, Chile

    In 2009, Yamana plans to spend approximately $12 million on drilling and
other exploration at its El Penon mine, principally focusing on the North
Block with the objective of discovering another 600,000 GEO this year. Yamana
continues to evaluate a conceptual plan to further increase production beyond
the expected production levels for 2009 and 2010 as more resources are


    Yamana continues with its plan to increase total annual production to 2.0
million GEO in 2012. The advancement of these development stage projects once
construction decisions are made would advance Yamana toward that target.


    -   Update to Pilar resource estimate: Q2 2009

    -   Pilar initial feasibility study: H2 2009

    -   Update to C1 Santa Luz economic analysis: Q2 2009

    -   C1 Santa Luz construction decision: H2 2009

    -   Ernesto/Pau-a-Pique feasibility study and construction decision:
        by end of 2009

    -   Mercedes feasibility study and construction decision: By Q1 2010

    -   Pilar construction decision: Q1 2010

    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.

    Quality Control/Quality Assurance

    While each of Mercedes and Ernesto/Pau-a-Pique as stand-alone projects
may not be considered material to the Company,the analyses and studies
conducted for these projects had quality control measures and quality
assurances consistent with technical and similar reports and information for
the Company's material properties.
    Gold and silver price assumptions used for the Mercedes pre-feasibility
study and the Ernesto/Pau-a-Pique scoping study reflect the metal prices
deemed appropriate by the respective engineering firms.

    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 advantages determined based
on findings of the current pre-feasibility studies conducted on the Company's
Mercedes and Ernesto/Pau-a-Pique projects proving to be accurate, the
Company's expectations in connection with the projects 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, 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 presented for
the purpose of assisting investors in understanding the Company's expected
operational performance and the Company's plans and objectives related to the
projects discussed herein 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)

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