Yamana Gold Receives Gualcamayo Environmental Approval; Provides Results for Gualcamayo QDD Feasibility Study and Amelia Ines/Magdalena Scoping Study and Makes a Positive Construction Decision



    
    TSX: YRI
    NYSE:   AUY
    LSE:   YAU
    

    TORONTO, Aug. 22 /CNW/ - YAMANA GOLD INC. (TSX:YRI)(NYSE:  AUY)(LSE:  YAU)
today announced a positive construction decision for the main Quebrada Del
Diablo (QDD) deposit which is the first of three mining opportunities
encompassed within the Company's Gualcamayo project in San Juan, Argentina.
The construction decision is based on the results of a positive feasibility
study for the QDD deposit and on the formal approval for its Gualcamayo
Environmental Assessment report. The Company also received a scoping study for
the Amelia Ines and Magdalena (AIM) deposits. The QDD and AIM deposits
together with the QDD Lower West Zone comprise the Gualcamayo project. A more
formal and updated feasibility study relating to the AIM deposits as well as
an update for the QDD Lower West Zone resource are expected to be completed by
year end based on ongoing positive exploration results (see "Gualcamayo
Exploration Update" below). The planned development and the Company's
understanding of the AIM deposits have been significantly advanced as a result
of the completion of the scoping study. Work to date indicates that the
deposits are higher grade, larger than initially projected, remain open for
expansion and are expected to provide a larger and more significant
contribution to the project than was originally contemplated.
    The first phase of the Gualcamayo feasibility study addresses the mining
and heap leach processing of ore from the QDD deposit. It is the Company's
plan to be in a position to begin mining and processing of this ore in
mid-2008, followed by the mining and processing of AIM ore in 2009 and QDD
Lower West Zone ore in 2010. With the inclusion of these deposits, the Company
plans to produce at an annualized level of more than 200,000 ounces of gold
per year from Gualcamayo for at least a 10-year period.
    "Our construction decision now takes the Gualcamayo project into the
development phase. Positive results from the QDD feasibility and AIM scoping
studies, combined with drilling results to date for the QDD Lower West Zone,
support our production expectations at Gualcamayo," commented Peter Marrone,
Yamana's chairman and chief executive officer. "We are encouraged that the AIM
resource base is larger than originally considered, has higher grades, and
that ongoing extension drilling continues to show the potential for further
resource increases. And, the potential to add more ore from the QDD Lower West
Zone provides further upside to that."

    Combined QDD and AIM Open Pit Project

    A scoping study level analysis has been completed for the mining and
processing of ore from the AIM deposits in combination with the ore from QDD.
The scoping study is based on resources prepared by Ronald Simpson, P. Geo. of
GeoSim Services Inc. and a mine plan designed and prepared by Renato Petter of
the Company. Both are Qualified Persons as defined by National Instrument
43-101. The study is based on preliminary metallurgical test work for AIM and
on the assumption that the AIM ore would be processed via heap leaching along
with the QDD ore. Further drilling and metallurgical test work is ongoing and,
given the higher grades at AIM, it is becoming apparent that milling may be
the optimal approach for processing some or all of the ore from the AIM
deposits. In this regard, the Company is studying the possibility of improving
the economics of incorporating AIM into the Gualcamayo feasibility i) by
increasing the size of the AIM resource through further drilling; and ii)
through the milling of the AIM ore versus processing via heap leaching. With
this additional work ongoing, the AIM feasibility update is now expected by
year end. The target start date for production from the AIM deposits remains
in 2009 as is currently contemplated in the scoping study. The scoping study
is based on measured and indicated resources. Mineral resources that are not
mineral reserves do not have demonstrated economic viability.
    Based on a feasibility level review for QDD and a scoping study level
review for AIM, combined production from the QDD and AIM open pits is
currently projected to total an approximate 1.6 million recoverable ounces
over a 10-year mine life. Cash operating costs including transport and
insurance but excluding production taxes and royalties are projected to
average US$245 per ounce. Total cash costs including production royalties and
taxes, but excluding export sales tax, are projected to average US$270 per
ounce.

    The projected annual production from QDD and AIM is outlined as follows
(000s Ounces):

    
    -------------------------------------------------------------------------
           2008
         (6 mos) 2009  2010  2011  2012  2013  2014  2015  2016 2017   Total
    -------------------------------------------------------------------------
    QDD    99.4 190.8 167.7 133.6 155.4 135.1 150.4 174.4 157.8 56.8 1,421.4
    -------------------------------------------------------------------------
    AIM       0  46.5  44.1  44.7  38.1  39.7     0     0     0    0   213.1
    -------------------------------------------------------------------------
    TOTAL  99.4 237.3 211.8 178.3 193.5 174.8 150.4 174.4 157.8 56.8 1,634.5
    -------------------------------------------------------------------------

    Production estimates above are based only on proven and probable ore from
QDD and measured and indicated resources from AIM. The measured and indicated
resource estimate from which this production estimate is derived includes a
total of approximately 2.5 million ounces of gold. Additional inferred
resources from QDD and AIM that do not factor into current production
estimates total 15.5 million tonnes of potential ore grading on average 1.33
g/t and containing approximately 650,000 ounces. The resource breakdown for
the QDD and AIM deposits is as follows:

    -------------------------------------------------------------------------
    Mineral      Resource Category      Tonnes      Grade          Contained
    Deposit                              (000s)   Au (g/t)   Ounces Au (000s)
    -------------------------------------------------------------------------
    QDD          Measured                6,720       1.09                236
                 Indicated              67,251       0.86              1,857
                 Measured + Indicated   73,971       0.88              2,093
                 Inferred               13,856       1.17                523
    -------------------------------------------------------------------------
    Amelia Ines  Measured                  249       3.96                 32
                 Indicated               1,785       2.72                156
                 Measured + Indicated    2,035       2.87                188
                 Inferred                  754       1.58                 38
    -------------------------------------------------------------------------
    Magdalena    Measured                   95       2.32                  7
                 Indicated               2,475       2.97                236
                 Measured + Indicated    2,570       2.95                243
                 Inferred                  812       3.73                 97
    -------------------------------------------------------------------------
    

    Notes: The Amelia Ines and Magdalena resources are based on sample data
received prior to June 2007 and are based on a cut-off grade 0.5 g/t Au.
Mineable ore resources for the scoping study are based on a cutoff grade of
0.27 g/t Au and a gold price of US$315 per ounce.
    QDD resources are unchanged from those reported in 2006 and are based on
a cut-off grade of 0.3 g/t Au. Mineable reserves for the feasibility study are
based on a cut-off grade of 0.18 g/t Au and a gold price of US$480 per ounce.
    It is important to note that drilling at AIM has continued with
considerable success and that by the time the feasibility study is completed
later in the year the expectation is that the resource base from which
reserves will be delineated at AIM will be larger than currently contemplated
in the AIM scoping study.
    Other key operating and economic parameters for the combined
feasibility/scoping study project are outlined as follows:

    
    -------------------------------------------------------------------------
    Initial Capital Expenditures - QDD                      US$140.1 million
    -------------------------------------------------------------------------
    Initial Capital Expenditures - AIM                        US$9.1 million
    -------------------------------------------------------------------------
    Production Period Strip Ratio                                      3.1:1
    -------------------------------------------------------------------------
    Assumed Recovery Rate - QDD                                          80%
    -------------------------------------------------------------------------
    Assumed Recovery Rate - AIM                                          70%
    -------------------------------------------------------------------------
    Internal Rate of Return (pre-tax)                                  29.3%
    -------------------------------------------------------------------------
    Net Present Value (pre-tax) @ 7.5%                   US$125.6 million
    -------------------------------------------------------------------------
    Net Present Value (pre-tax) @ 5%                     US$155.6 million
    -------------------------------------------------------------------------
    Gold Pricing Assumptions                            US$600/oz (2008/2009)
                                                        US$550/oz (2010-2017)
    -------------------------------------------------------------------------
    NPV Sensitivity (pre-tax) @ 5%        +/- US$113 for each +/- $100/oz
                                                           gold price change
    -------------------------------------------------------------------------
    

    QDD Feasibility Study

    The QDD feasibility study and the AIM scoping study were prepared by
Wardrop Engineering Inc. under the direction of Jacqueline McAra, P.Eng.,who
is a Qualified Person as defined by National Instrument 43-101, and who has
reviewed and approved the contents of this press release as applicable. The
feasibility study is based on open pit mining of the QDD ore deposit at a rate
of 1,100 t/h. However, the process and leach pad facilities have a design
capacity to accommodate tonnage of 1,250 t/h in anticipation of ore expected
to be added in the future from the AIM deposits and from the QDD Lower West
Zone.
    The QDD deposit has been considered as a stand alone project for the
purpose of making a construction decision. However, additional ore from AIM
and/or QDD Lower West Zone will further improve the economic parameters and
value of the overall project. Production from the QDD deposit alone is
projected to total approximately 1.4 million recovered ounces over a 10-year
mine life, broken down as provided for in the production table above. Cash
operating costs including transport and insurance but excluding production
taxes and royalties are projected to average US$259 per ounce. Total cash
costs including production royalties and taxes, but excluding export sales
tax, are projected to average US$280 per ounce. An export tax of 5% is also
applied to unrefined gold which is shipped and sold outside of Argentina and
is assumed for the purpose of the feasibility study economic analysis.
    The ore reserve estimate for the QDD stand-alone feasibility study is
derived from measured and indicated resources totaling 2.1 million ounces as
outlined in a table above. Proven and probable reserves are summarized as
follows:

    
    -------------------------------------------------------------------------
    Category     Tonnes                    Au g/t            Ounces Au (000s)
                  (000s)
    -------------------------------------------------------------------------
    Proven        7,523                      0.98                        237
    -------------------------------------------------------------------------
    Probable     59,332                      0.80                      1,534
    -------------------------------------------------------------------------
    Total        66,855                      0.82                      1,771
    -------------------------------------------------------------------------

    Other key operating and economic parameters for the QDD project are
provided below. As indicated above, although the feasibility study applies to
mining ore from only the QDD deposit, capital expenditures are based on an
expanded throughput capacity to accommodate the processing of ore from AIM and
potentially from the QDD Lower West Zone. The project capital cost of US$140.1
million also includes US$12.4 million of contingency.

    -------------------------------------------------------------------------
    Initial Capital Expenditures - QDD                      US$140.1 million
    -------------------------------------------------------------------------
    Production Period Strip Ratio                                     2.97:1
    -------------------------------------------------------------------------
    Assumed Recovery Rate - QDD                                        80.2%
    -------------------------------------------------------------------------
    Internal Rate of Return (pre-tax)                                  21.9%
    -------------------------------------------------------------------------
    Net Present Value (pre-tax) @ 7.5%                    US$78.3 million
    -------------------------------------------------------------------------
    Net Present Value (pre-tax) @ 5%                     US$102.5 million
    -------------------------------------------------------------------------
    Gold Pricing Assumptions                            US$600/oz (2008/2009)
                                                        US$550/oz (2010-2017)
    -------------------------------------------------------------------------
    NPV Sensitivity (pre-tax) @ 5%    +/- US$97 for each +/- $100/oz gold
                                                                price change
    -------------------------------------------------------------------------
    

    The Company is targeting initial start up of operations at QDD in
mid-2008. As shown in the production schedule as provided above, it is
expected that ore from AIM will begin to be mined and processed in 2009. The
capital cost estimate for QDD includes a US$3.3 million allowance for project
acceleration activities in order to achieve start-up by mid-2008. Long-lead
equipment has been purchased including mining equipment, crushers, conveyors
and electrical power supply components. Contracts have been awarded for
critical construction activities including power line installation,
earthworks, tunneling and ore pass construction. Several activities were
undertaken during the exploration phase that will enable more rapid ramp-up of
construction. Expansion of the camp site is well advanced, site and mining
access roads are in place, tunnels constructed for exploration will serve for
permanent operations conveyor galleries, and excavations in the mining area
will permit more rapid advance of pre-stripping.

    Gualcamayo Exploration Update

    The Company also provides the following update with respect to its
ongoing exploration efforts at Gualcamayo. The QDD and AIM deposits remain
open down dip to the southwest. Recent drilling at the QDD Lower West Zone has
defined a largely oxidized breccia body immediately west and 150 to 200 metres
below the QDD pit design. Zone dimensions averaging more than 2 g/t Au are
currently 300 metres along strike and 150 metres down dip with an average
thickness of 100 metres. Core length intercepts not yet included in the
current inferred resource estimates include 3 g/t Au over 100 metres and     
5 g/t Au over 40 metres and are common. The QDD Lower West Zone deposit
remains open along strike to the west and down dip. Construction of a 550
metre decline is 75% complete and when finished will provide access to the
deposit and facilitate deeper drilling to define the ultimate strike and down
dip potential.
    An aggressive regional exploration program is also underway to assess the
numerous gold anomalies that extend a further 12 km west and 8 km north of
Gualcamayo. Anomolies are associated with similar trans-tensional wrench
structures, Tertiary age intrusives and Lower Paleozoic carbonates as are
recognized at Gualcamayo.
    Exploration on the Gualcamayo project is being conducted under the
supervision of Mr. Evandro Cintra, Ph.D., P.Geo., vice president, exploration
of the Company, a Qualified Person as defined under NI 43-101, and who has
reviewed and approved the contents of this press release as applicable.

    About Yamana

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

    IMPORTANT NOTICE: This press release does not constitute an offer to buy
or an invitation to sell, any of the securities of Yamana, Northern Orion or
Meridian. Such an offer may only be made pursuant to a registration statement
and prospectus filed with the U.S. Securities and Exchange Commission and an
offer to purchase and circular filed with Canadian securities regulatory
authorities. Yamana has filed with the U.S. Securities and Exchange Commission
a Registration Statement on Form F-10 as well as a Schedule TO tender offer
statement both of which include the offer and take-over bid circular relating
to the Meridian offer and is mailing the offer and take-over circular to
Meridian shareholders. Investors and security holders are urged to read the
Registration Statement, the offer and take-over bid circular and any other
relevant documents filed wit the SEC and Canadian securities regulators,
regarding the proposed business combination transaction because they contain
important information. Investors may obtain a free copy of the offer and
take-over bid circular and other documents filed by Yamana with the SEC at the
SEC's website at www.sec.gov. The offer and take-over bid circular and other
documents may also be obtained for free on Yamana's website at www.yamana.com
or by directing a request to Yamana's investor relations department.

    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, certain information contained
herein constitutes forward-looking statements. Forward-looking statements are
frequently characterized by words such as "plan," "expect," "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 and estimates of
management at the date the statements are made, and are subject to a variety
of risks and uncertainties and other 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, prices for sulphiric acid and currency
exchange rates, changes in project parameters, the possibility of project cost
overruns or unanticipated costs and expenses and general risks of the mining
industry, failure of plant, equipment or processes to operate as anticipated,
unexpected changes in mine life of Chapada, availability of a local market for
the sale of sulphiric acid, 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 or opinions should change. The reader is cautioned
not to place undue reliance on forward-looking statements.

    
    CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED,
    INDICATED AND INFERRED RE

SOURCES This news release uses the terms "Measured", "Indicated" and "Inferred" Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.

For further information:

For further information: Yamana Gold Inc., Peter Marrone, Chairman &
Chief Executive Officer, (416) 815-0220; or Yamana Gold Inc., Jodi Peake,
Director, Investor Relations, (416) 815-0220, Email: investor@yamana.com,
Website: www.yamana.com

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YAMANA GOLD INC.

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