<excerps> Yamana Announces Completion of Feasibility Study and
Construction Decisions
Monday November 22, 4:27 pm ET
TORONTO--(BUSINESS WIRE)--Nov. 22, 2004--YAMANA GOLD INC. (AMEX:AUY - News; TSX:YRI - News; LSE:YAU - News): YAU) is pleased to announce the following:
Completion of final feasibility study for its Sao Francisco Gold Project A 20% increase in reserves at Sao Francisco
Construction decision at Sao Francisco for start-up of operations in 2005 Construction decision at its Chapada Gold-Copper Project for start-up of operations in early 2007
Potential for further upside at Sao Francisco and Sao Vicente
SAO FRANCISCO FEASIBILITY STUDY AND RESERVE ESTIMATE
The following is a summary of the final feasibility study for Yamana's Sao Francisco gold project in Mato Grosso State, Brazil. The feasibility study and capital and operating cost estimates were prepared by Kappes Cassiday Associates (KCA) and incorporates specific data supplied by Independent Mining Consultants, Inc. (IMC), GeoSystems International (GSI), Francis Pitard Sampling Consultants (FPSC), SEI Consultoria & Projeto S/C (SEI) and Homero Delboni and Jock Y. Clark. The resources model was updated by GSI and the new reserve estimate and mine plan were prepared by IMC.
Reserves
Proven and probable reserves at Sao Francisco have increased by 20% to 1,038,000 ounces from the previous estimate of 865,000 ounces summarized as follows.>
<Total measured and indicated resources at Sao Francisco, including the above reserves, total 1,188,000 ounces (40.0 million tonnes at 0.923 g/t assuming a 0.3 g/t cutoff). Additional inferred resources amount to 25.2 million tonnes at an average grade of 0.66 g/t assuming a 0.3 g/t cutoff.
Economic Parameters
At a 5% discount and a US$375/oz gold price, the after-tax NPV is US$50.2 million increasing to US$69 million with a 10% increase in the assumed gold price to US$412.50 per ounce gold.
After-tax internal rate of return of approximately 29.8% increases to 37.6% at US$412.50 per ounce gold.
Capital payback occurs in year 3 (after-tax basis).>
<Life-of-mine (LOM) capital costs are projected at approximately US$67 per recovered ounce. This assumes no additional ounces that may be recovered from potentially higher actual grades.
Working capital requirements are expected to be US$1.9 million.
Yamana highlights that capital costs accommodate a much larger operation than originally contemplated in prior studies, mining as much as 25 million tonnes of material per year. The mining approach adopted in the feasibility study accommodates the high grade coarse gold nature of the deposit.
Capital costs now also include items that enhance overall project economics, the most notable of which are the power line to connect to the national grid, a high grade crushing circuit to accommodate the potential for higher grade ore than indicated in the reserve estimate, and a front end gravity processing circuit.
Operating Costs
Average LOM total operating costs, including refining and G&A, are projected to be US$3.58 per tonne of ore (main ore and ROM ore) and include the following:
mining costs of approximately US$0.53 per tonne of material or US$1.83 per tonne of ore based on an average stripping ratio of 2.44 to 1;
processing costs, including laboratory services and support, of US$1.42 per tonne of ore;
G&A and ongoing environmental costs of US$0.22 per tonne; and
transport, refining and freight costs of US$0.11 per tonne.
LOM cash operating costs including sales royalty tax are projected to be US$212 per ounce gold. For the first three years, cash operating costs are projected to average US$202 per ounce gold.
Net sustaining capital costs amount to US$8.5 million over a 7.5 year mine life.
Operating Parameters and Mining Plan
Up to 25 million tonnes of material will be mined per year to produce 4.0 million tonnes per year for the crushing and gravity concentration circuits, and up to 4.3 million tonnes of ROM ore.
Three processing streams: i) high grade ore - mine, four stage crush, jig and leach tails; ii) average grade ore - mine, three stage crush, jig and leach tails; and iii) marginal ore - mine, no crushing, leach on dedicated pads.
Grades as follows: average of 1.0 g/t for main ore (an increase from 0.81 g/t in past estimates); average (CM1)of 0.23 g/t for ROM ore.
Mine is expected to produce an average of 108,666 ounces per year for a total of 815,000 ounces over the 7.5 year mine life (up 17% from previous estimate of 697,000 ounces).
Projected recoveries average 80% for average and high grade ore and 71% for marginal ore.
The mine will be operated by Yamana on an owner-operator basis.
Existing Infrastructure
Access is available by state and internal roads and by air at an onsite air strip.
Buildings including shops, warehouses, offices and a sample preparation and process control laboratory.
Homes, dormitories, a school, a maintenance garage, laboratory and other basic facilities at neighbouring Sao Vicente project.
Pilot processing plant on site. Water is readily available from nearby sources.
General Overview
This positive feasibility study is an update to a prior preliminary study completed by Watts, Griffis and McOuat Limited in July, 2003 and to a feasibility study prepared by KCA in August, 1997.
Financial assumptions include a foreign exchange rate of 3.0 Reals per 1.0 United States dollar.
The feasibility economic analysis incorporates an effective tax rate of less than 10% for the life of the project. Tax incentives that are in place in the State of Mato Grosso and conventional tax and corporate structures commonly available to mining companies in Brazil reduce the overall tax rate to this level.
Capital and operating costs are based on contractor and supplier bids and quotations supplied directly to KCA or to third parties hired by KCA and on internal KCA data.
The feasibility study was prepared by KCA under the direction of Bob Rose and Michael Cassiday. The mining plan and capital and operating cost estimates for mining were provided by IMC.
The IMC report has been incorporated into the KCA feasibility study. The IMC report was prepared by Michael Hester. Michael Cassiday and Michael Hester are Independent Qualified Persons as defined by National Instrument 43-101.
CONSTRUCTION DECISIONS
Yamana is pleased to announce that formal construction decisions for Sao Francisco and Chapada have been made. The feasibility study for Chapada, Yamana's gold-copper project, was completed in July, 2004 as previously announced. With construction now underway, Yamana plans to be in production at Sao Francisco by the fourth quarter of 2005 and at Chapada in early 2007. Yamana has two mines in production at the present time with annual production of approximately 135,000 ounces per year.>
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