Yamana Second Quarter Update

    TSX: YRI
    NYSE:   AUY
    LSE: YAU

today announced an update on the Company's operational and preliminary
financial results for the second quarter of 2008.
    Total production for Q2 2008 was 260,000 gold equivalent ounces (GEO)
comprised of 205,000 ounces of gold and 2.8 million ounces of silver,
representing a 9.5% increase quarter over quarter. Copper production from
Chapada was 36.6 million pounds compared to first quarter production of 31.0
million pounds, representing an 18% increase. Total copper production
including the Company's 12.5% interest in Alumbrera for the quarter totalled
approximately 44.8 million pounds, compared to first quarter production of
40.9 million pounds, representing a 9.5% increase. Production in Q2 was
positively impacted by increases at Chapada and El Penon which account for
most of the production from Yamana's mines.
    Gold sales not including Alumbrera for the second quarter were 248,000
GEO, compared to 232,002 GEO in the first quarter, a 6.9% increase. Chapada
copper sales were 35.2 million payable pounds for the quarter, compared to
33.2 million pounds in the first quarter representing a 6.0% increase, and
Chapada concentrate sales for the quarter were 62,000 tonnes compared to
58,786 tonnes in the first quarter, a 5.5% increase. The realized gold price
was approximately US$895 per GEO. The realized copper price for Chapada for Q2
was approximately US$3.81 per pound.
    As shown in the table below, cash costs after by-product credits for the
second quarter of 2008 were approximately negative US$81 per GEO. Costs in the
quarter were affected by currency fluctuations, in particular the appreciation
of the Brazilian Real against the US dollar, as well as higher costs for
steel, fuel, power, labour and consumables which have generally increased
across the industry.
    The following table summarizes the Company's preliminary Q2 2008
production and by-product cash costs by mine:

                                                       Q2 2008
                                       Total Gold
                                       Equivalent                 Cash Costs
                                       Production(1) (oz)    Per GEO(1) (US$)
    Chapada                                       42,000             $(2,219)
    El Penon (GEO)                               113,000                $284
    Sao Francisco(2)                              17,000                $667
    Jacobina(2)                                   19,000                $614
    San Andres                                    13,000                $642
    Fazenda Brasileiro                            25,000                $376
    Minera Florida (GEO)                          14,000                $419
    Rossi (40% interest) (GEO)                     3,000                $350
    Alumbrera (12.5% interest)                    14,000               $(514)
    Total                                        260,000                $(81)

    (1) GEO and by-product cash costs per GEO are calculated based on a gold
        to silver ratio of 52.2 to 1. By-product cash costs at Chapada and
        Minera Florida are net of base metal credits (copper and zinc).
    (2) Cash costs for Sao Francisco and Jacobina include the impact of
        currency hedges.

    For the remainder of the year, the Company expects production of 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. 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.
    Yamana's operational and financial performance is significantly impacted
by the Chapada and El Penon mines which are the two flagship mines of the
Company. The following is a summary of the operational and financial
performance of several of the Company's mines, highlighting Chapada and El
Penon in particular.
    Production at Chapada in the second quarter of 2008 was 42,000 ounces of
gold, compared to 36,939 ounces of gold in the first quarter, a 14% increase.
Copper production at Chapada was 36.6 million pounds, compared to 31.0 million
pounds in the first quarter, an 18% increase. Production is expected to
increase quarter over quarter, with the strongest quarter expected to be Q3.
Chapada is impacted by seasonality largely in Q1. As a comparison, production
in June was approximately 14,000 ounces of gold and 12.3 million pounds of
copper, a significant improvement when compared with February production of
10,900 ounces of gold and 9.6 million pounds of copper. The month of February
is normally the month most heavily impacted by rain. The Company confirms
previous annual production guidance of 170,000 to 175,000 ounces of gold and
155 to 160 million pounds of copper for 2008. Cash costs for Q2 at Chapada on
a co-product basis were approximately US$0.98 per pound of copper and US$345
per ounce of gold, which compares to Q1 co-product cash costs of US$1.02 per
pound of copper and US$341 per ounce of gold given fuel, consumables, and
foreign exchange increases from Q1 to Q2. Co-product cash costs for the first
half of the year were US$1.00 per pound of copper and US$343 per ounce of
gold. For the remaining portion of the year, cash costs for Chapada are
expected to be approximately US$0.95 per pound of copper and approximately
US$320 per ounce of gold.
    Production at El Penon for the second quarter of 2008 was 113,000 GEO,
comprised of 61,000 ounces of gold and 2.7 million ounces of silver. This
compares to 97,873 GEO in the first quarter, which was comprised of 54,609
ounces of gold and 2.3 million ounces of silver, representing a 16% increase
in gold equivalent production. Production for the first half of 2008 compares
favourably to the expected production that Yamana initially anticipated for
this year. Current production for El Penon is now expected to be at
approximately 460,000 GEO this year with planned production to be at a run
rate of 500,000 GEO annually by the end of 2008. Cash costs for Q2 at El Penon
were approximately US$284 per GEO and for the first half of 2008 cash costs
were US$281 per GEO. Cash costs for El Penon for the remainder of the year are
expected to be approximately US$290 per GEO.
    Production at Jacobina for the second quarter of 2008 was 19,000 ounces
of gold, compared to 12,701 ounces of gold in the first quarter, representing
a 50% increase. The Company is continuing with its plan to increase throughput
to match the first phase of expansion and is advancing the phase two expansion
plan for the end of the year. Yamana has also undertaken improvements to the
tailings impoundment and tailings pipeline to accommodate increased
throughput. At the end of Q2, plant capacity had achieved the planned 6,500
tpd with ore processing at a consistent level exceeding 5,000 tpd. Sufficient
development work has been undertaken to support the current plant capacity
level and is planned to increase throughout the year.
    Sao Francisco is affected by heavy seasonal impacts normally in Q1 and is
also impacted by a significant mine call factor (variance to planned head
grade) which will vary periodically and in particular quarter-over-quarter. As
a result, Yamana had previously indicated that variability in production could
range from an average year-over-year of approximately 105,000 to 140,000
ounces of gold. In the absence of a positive mine call factor in the second
half of this year, production at Sao Francisco is expected to be 90,000 ounces
of gold, although this could increase significantly depending on the mine call
    In the second quarter of 2008, development continued at Gualcamayo and
the Company anticipates the start of production by end of year. Total
production of gold and gold in-inventory is expected to be approximately
75,000 ounces of gold by the end of 2008. Production in 2009 is expected to
exceed 220,000 ounces of gold.
    Production in Q2 from Yamana's other mines, San Andres, Fazenda
Brasileiro, and Minera Florida, totalled 52,000 GEO. In addition, the planned
expansion at Minera Florida continued to advance and is expected to contribute
more GEO of production in Q4 than previous quarters.
    Second quarter production for the two mines which Yamana holds a minority
interest, Rossi (40%) and Alumbrera (12.5%), was 3,000 GEO and 14,000 ounces
of gold, respectively. Production at Alumbrera in Q2 was impacted by mining
lower grade material. Production at Rossi was only for a partial quarter.
Yamana has been advised by its joint venture partners at these mines that
production in the second half of 2008 is expected to exceed production in the
first half of the year.
    The Company is impacted on a quarterly basis by provisional accounting as
final pricing for concentrate sales is calculated two or three months after
shipment. This causes a delay in the impact of price movements for copper and
gold sold in concentrate to the following quarter. This impact from the
provisional accounting from receivables may create variability quarter to
quarter, however is normalized over the course of a longer period. For the
second quarter, revenue will be adjusted by a net amount of approximately
US$12 million in mark-to-market and certain other pricing adjustments.
Additionally, the Company has recorded approximately US$7 million in treatment
and refining charges for the second quarter for Chapada.
    Depreciation for the second quarter was approximately US$55 million, and
is expected to be in the range of US$210 to US$220 million for the full year
(which includes the amounts in the first and second quarter).
    General & administrative expenses for the quarter were approximately
US$19 million.
    The Company expects a long term normalized tax rate on adjusted earnings
of approximately 27%. The effective tax rate will experience variability from
time to time due to impacts caused by such things as mark-to-market
adjustments, changes in exchange rates and changes in inter-corporate
    The company recorded an earnings pick up from its 12.5% interest in the
Alumbrera Mine of approximately US$9.0 million in the second quarter, compared
to US$21.2 million in the first quarter. It is expected that the equity pick
up from Alumbrera will return to first quarter levels in the third and fourth
quarters as the copper grade improves, which would further contribute to
Yamana's earnings.
    The Company may be impacted by unrealized foreign exchange gains or
losses and mark-to-market adjustments on derivative contracts which are
excluded from the determination of adjusted earnings.
    The cash and short term investments at the end of the second quarter were
approximately US$265 million.
    Total preliminary capital expenditures for the second quarter were
approximately US$150 million. Exploration expenditures were approximately
US$17 million, which includes approximately US$13 million which was
capitalized, and the remainder was expensed. The Company has accelerated plans
for the increase of production at El Penon and anticipates increasing the
capital expenditure budget to approximately US$595 million for 2008, as
compared to the previously budgeted amount of US$575 million.


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


    Yamana will release its full second quarter financial results after the
close of business on August 6, 2008. A conference call will follow on August
7, 2008.


    Upcoming Events

    Event                                                      Expected Date
    Resource updates for La Pepa, Jeronimo, Amancaya               July 2008
    Ongoing drill programs at Mercedes and El Penon          Throughout 2008
    Gualcamayo achieves commercial production                      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

    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. Company 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, Chile and elsewhere in the Americas.

    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 our
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 possible variations in ore grade or recovery rates,
fluctuating metal prices (such as gold, copper, silver and zinc), prices for
sulfuric acid and 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
parametres, changes in project development and production time frames, the
possibility of project cost overruns or unanticipated costs and expenses,
higher prices for fuel, steel, power, labour and other consumables
contributing to higher cash costs and general risks of the mining industry,
failure of plant, equipment or processes to operate as anticipated, unexpected
changes in levels of sustainability of production, successful completion and
operation of the ore pass at Gualcamayo, 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
referenced and may not be appropriate for other purposes.


    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 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 not provided formal reconciliations of these statistics. Cash
costs are reconciled by the following: non-cash movements in net working
capital items and provisions for losses on inventory.

For further information:

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

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