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Gold/Mining/Energy : Yamana Resources INC. T- YRI -- Ignore unavailable to you. Want to Upgrade?

To: Greg W. Taylor who wrote (1490)	8/18/1998 10:04:00 PM
From: Neil Irwin	Read Replies (1) \| Respond to of 2346

All, I wrote this short report for a friend of mine about Yamana, its current doldrums, and the probability that it will perform well as drilling starts. I feel that we should see some appreciation in share price as the drill plans are announced (any comment, Greg?) and then commenced. Hopefully. Neil. ======================= One stock that I would recommend you keep your eye on (and of course buy) is Yamana (YRI) on the Toronto Stock Exchange. They have three exciting silver prospects in Argentina, having released spectacular results from drilling in March/April, with silver values in the kilograms per tonne. High grade silver is considered to be assays grading about 150 grams per tonne or better. These results drove the stock up to a high of $1.80. (See Yamana graph on Yahoo! at quote.yahoo.com ). You will also notice that the stock has fallen since that time. This is not due to poor subsequent results. I'll discuss later why this has happened. At any rate, this presents a fine buying opportunity. Properties Yamana is working on three properties in the Santa Cruz province of Argentina. This is the southern-most province of Argentina, and thus is currently in the middle of winter. All three properties have given high grade silver results. The initial results included: Lejano Thirty five shallow holes were drilled on two targets at Lejano. Thirty three of these holes contained significant mineralization. The zone of mineralization has been identified to be at least 1 kilometre long. The more significant drill results were: Hole 11: 12 metres of 642 g/t silver, 1.78 g/t gold and 6.1% lead Hole 8: 22 metres of 290 g/t silver, 1.00 g/t gold and 4.4% lead (converting silver to a gold-equivalent basis, this is 14.6 g/t and 6.8 g/t respectively) North Bacon (150 km southeast of Lejano) Eighteen shallow drill holes tested an anomaly that had previously yielded rock samples grading 6918 g/t silver and 5.17 g/t gold over 2 metres and another sample grading 5213 g/t silver and 6.87 g/t gold over 4.7 metres. Two holes, 18 metres apart, yielded exceptional results: Hole 1: 14 metres of 737 g/t silver, 1.30 g/t gold Hole 16: 24 metres of 664 g/t silver, 0.68 g/t gold (converting silver to a gold-equivalent basis, this is 16.0 g/t and 14.0 g/t respectively) South Bacon (8.5 km south of North Bacon) Fifteen shallow holes tested a 150 x 250 area within a structural zone more than 3 kilometres in length. Although the initial results did not yield the bonanza grades of the other properties, Yamana's geologists deems it worthy of deeper drilling. Hole 23: 8 metres of 42 g/t silver, 0.13 g/t gold Hole 28: 12 metres of 50 g/t silver, 0.26 g/t gold (converting silver to a gold-equivalent basis, this is 1.0 g/t and 1.3 g/t respectively) Several other companies have made discoveries in the same area. The Cerro Vanguardia property is the most significant. Located about 80 kilometres east of Bacon, it is a multi-million ounce gold-silver mine that will be going into production shortly. Other junior exploration companies have made discoveries nearby, notably Abacus Minerals and Mineras Andes. Both of these are worthwhile to keep an eye on as well, besides Yamana. However, the excitement quickly faded as these results came at the end of the Argentine summer. It is now winter there and Yamana cannot drill or conduct any other exploration activity. Due to this inactivity, the share price has slid down to its current level of about $0.70. There was a small increase recently in the share price, which was due to a small run-up in the price of silver. Drilling will restart in September, and the share price will start to climb then. This type of situation happens about twice a year on the stock market, with many examples. Companies exploring in the deep south (or in the Andes) of South America will swoon in July and August. A case in point last year was Argentina Gold which was at $2.80 after releasing some excellent results in March 97 (something like 168 metres grading 2 g/t gold), then fell to $0.80 in July 97 before climbing to $1.60 in Sept 97 (see graph at quote.yahoo.com ). They have followed up those results this year, but the stock has fallen somewhat due to overall market conditions (ie lower gold price, Central Banks selling gold, etc). Similarly, companies exploring in Canada's north will swoon in December and January. An example of this was Donner, which is exploring for nickel in the Voisey's Bay area of Labrador - it surged to about $4.30 after releasing its initial drill results in Oct 97, then fell to $0.80 during the winter before rebounding to $3.00 in April 98 (see graph at quote.yahoo.com ). A joint venture company, Northern Abitibi, showed the same response (see graph at quote.yahoo.com. Yamana has excellent properties, which will generate some interest as the drills start to turn. This by itself would warrant holding the stock. The extra bonus of its current inactivity makes it attractive now. It should be close to its low, so buy now! It is quite possible (barring a stock market melt-down, or a collapse in silver prices) that you will get a 50% return between now and October. Judging from the past performance of Argentina Gold, Donner and Northern Abitibi, you should be able to attain a higher return than that. In addition, the general consensus is bullish for the price of silver, as many analysts see a possible supply shortage pushing the price higher. If this happens to coincide with Yamana's start of drilling, this should help their share price. If you are interested, Yamana's press releases can be found at: www2.cdn-news.com@dockeywords+"stock=yri" Please keep in mind that Yamana is a junior exploration company. As such, any investment in it contains high risk. You may in fact lose all of your investment. Only risk what you can afford to lose, and don't invest in it if you are going to lose any sleep worrying about it. Beware of the risks before you dream of the gains!