Yamana Gold Inc.

March 08, 2005 21:38 ET

Yamana Reports $2.8 Million Profit


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: YAMANA GOLD INC.

TSX SYMBOL: YRI
AMEX SYMBOL: AUY
LSE SYMBOL: YAU

MARCH 8, 2005 - 21:38 ET

Yamana Reports $2.8 Million Profit

TORONTO, ONTARIO--(CCNMatthews - March 8, 2005) - (all figures in US$
unless otherwise stated)

Yamana Gold Inc. (TSX:YRI)(AMEX:AUY)(LSE AIM:YAU) reports net earnings
for the ten month period ended December 31, 2004 of $2.8 million and for
the quarter ended December 31, 2004 of $0.8 million. These results
compare to net income for the previous twelve month fiscal year ended
February 29, 2004 of $1.0 million and net income for the fourth quarter
of the previous year of $0.6 million. Basic earnings per share were
$0.03 for the fiscal year and $0.01 for the quarter. This compares to
net earnings of $0.02 per share of for the previous year and net
earnings of $0.01 per share for the corresponding quarter of the
previous fiscal year. Sales for the ten month period were $32.3 million.
The per share calculations for fiscal year and quarter ended December
31, 2004 are based on weighted average shares outstanding for the
periods of 100 million shares and 112 million shares respectively.
Pro-forma basic earnings per share for the twelve month period ended
December 31, 2004 were $0.04 per share. Yamana changed its year end to
December 31 from February 28/29 and the current fiscal year ended
December 31, 2004 consists of operations for the ten month period then
ended.

Yamana produced 84,231 ounces of gold of which 78,168 ounces was
produced from the Fazenda Brasileiro Mine, 2,849 ounces from the Fazenda
Nova Mine and 3,214 ounces from the Sao Francisco pilot plant during the
fiscal year ended December 31, 2004 (ten months). A total of 101,295
ounces were produced for the twelve month period ended December 31, 2004
and a total of 24,445 ounces were produced during the quarter ended
December 31, 2004. Yamana sold 84,434 ounces of gold of which 79,822
ounces were sold from Fazenda Brasileiro and are reflected in operating
earnings for the December year end. The remaining 4,587 ounces were sold
from the Fazenda Nova Mine and the Sao Francisco pilot plant for which
proceeds have been capitalized as pre-operating and mine development
costs. Expenses for the year include a non-cash expense of $2.2 million
of stock-based compensation ($0.02 per share).

Cash flow from operations for the fiscal year was $8.5 million or $0.09
per share. Cash flow from the operations for the quarter was $3.6
million representing $0.03 per share and pro-forma cash flow from
operations for January and February 2004, excluding movements in working
capital is an additional $0.03 per share. During the fiscal year ended
December 31, 2004, Yamana completed a financing commitment for $100
million for the construction and development of the Chapada project. In
December 2004 Yamana closed an equity financing for gross proceeds of
Cdn $91.0 million. The cash balance as of December 31, 2004 was $87.1
million. The company had a working capital surplus of $89.2 million.

Pro-forma results and information are provided primarily for financial
market reference to show a full year of operations given the change in
year end this year. Pro-forma results assume the combination of earnings
and cash flow for the ten month period ending December 31, 2004 with the
normalized earnings and cash flow of January and February, 2004 that
exclude year-end adjustments made in February that did not relate to the
January and February period. The pro-forma results are a non-GAAP
(Generally Accepted Accounting Principles) measure and are unaudited.
Please see the note on non-GAAP Measures contained at the end of
Management's Discussion and Analysis for the quarter ended December 31,
2004 and contained in the December 2004 annual report.

The interim unaudited financial statements for the ten month period and
quarter ended December 31, 2004 follow this announcement.

Change in Year End

The year end of the Company was changed from February 28/29 to December
31.
Below is a summary of the quarterly periods for the current fiscal year
and comparative
periods:



For the Period Ending Comparative Period
---------------------------------------------------------------------
June Quarter June 30, 2004(i) May 31, 2003
September Quarter September 30, 2004 August 31, 2003
December Year End December 31, 2004 February 29, 2004
(i) The June quarter is for a four month period.


Yamana is a Canadian gold producer with significant gold production,
gold and copper-gold development stage properties, exploration
properties and land positions in all major mineral areas in Brazil.
Yamana expects to produce gold at intermediate company production levels
by 2006 in addition to significant copper production by 2007. Yamana
also holds gold exploration properties in Argentina. Company management
plans to build on this base by targeting other gold consolidation
opportunities in Brazil and elsewhere in Latin America.

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. All
statements, other than statements of historical fact, included in this
release, and Yamana's future plans are forward-looking statements that
involve various risks and uncertainties. There can be no assurance that
such statements will prove to be accurate, and actual results and future
events could differ materially from those anticipated in such
statements. Forward-looking statements are based on the estimates and
opinions of management on the date the statements are made, and Yamana
does not undertake any obligation to update forward-looking statements
should conditions or management's estimates or
opinions change.

DECEMBER 2004 QUARTERLY REPORT

(Based on Canadian GAAP and expressed in U.S. dollars, unless otherwise
noted)

Highlights

1. Production for the quarter ended December 31, 2004 from the Fazenda
Brasileiro Mine was 20,854 ounces of gold. Average cash costs per ounce
for the quarter ended December 31, 2004 at the Fazenda Brasileiro Mine
were $246 per ounce and $218 per ounce for the ten month period there
ended. Additionally, a total of 2,745 ounces of gold were produced from
the Fazenda Nova Mine and 846 ounces were produced from the Sao
Francisco pilot plant for total production of 24,445 ounces of gold for
the quarter ended December 31, 2004. Production for the quarter ended
February 29, 2004 from the Fazenda Brasileiro Mine consisted of 25,944
ounces of gold at an average cash cost of $216 per ounce and 283 ounces
from the Sao Francisco pilot plant. In addition, inventory as at
December 31, 2004, included 13,307 ounces of gold of which 7,050 ounces
of contained gold were on the heap leach pads at the Fazenda Nova Mine.

2. Revenue for the December quarter was $10.3 million from the sale of
23,982 ounces of gold from Fazenda Brasileiro. Revenue for the fiscal
year was $32.3 million from the sale of 79,822 ounces of gold.

3. Net earnings for the December quarter were $0.8 million consisting of
operating earnings from Fazenda Brasileiro. Net earnings for the fiscal
year were $2.8 million.

4. Cash flow from operations for the December quarter was $3.6 million
or $0.03 per share. Cash flow from operations for the fiscal year end
was $8.5 million or $0.09 per share.

5. The Company raised gross proceeds of $76.1 (Cdn$91.1) million from a
share equity offering of 26.4 million common shares at a price of
Cdn$3.45 per share on November 9, 2004.

6. The Company completed a debt financing commitment for $100 million
for the construction and development of the Chapada project on December
21, 2004. Funding had not occurred as at the year ended December 31,
2004.

7. Cash on hand as at December 31, 2004 was $87.1 million.

Production and Costs

Production from the Fazenda Brasileiro Mine for the December 2004
quarter consisted of 20,854 ounces of gold at a cash cost of $246 per
ounce. A total of 255,000 tonnes were milled through the CIP circuit
during the December quarter at an average recovery rate of 90.5% at the
Fazenda Brasileiro Mine. For the twelve month period ending December 31,
2004, Yamana produced 95,080 ounces of gold at an average cash cost of
$218 per ounce at the Fazenda Brasileiro Mine. A total of 825,000 tonnes
were milled from underground operations and 195,000 tonnes from the open
pit for the twelve month period ended December 31, 2004.

Cash costs per ounce of gold produced at Fazenda Brasileiro increased
from the September quarter ($225 per ounce) to $246 per ounce largely
due to lower head grades from processing lower grade ore from
underground operations. Mining of the lower grade material will continue
throughout 2005 and part of 2006. Throughout 2005 and 2006 the Company
will be gaining access to higher grade ore bodies beneath the existing
mine workings. In addition, tonnes sourced from the Canto open pit
during the quarter had the effect of lowering recovery rates due to
carbonaceous ore.

Net Earnings

Net earnings for the December quarter were $0.8 million. Sales for the
fourth quarter consisted of 23,982 ounces of gold and for the ten month
period ended December 31, 2004 consisted of 79,822 ounces of gold. Sales
for the December quarter were $10.3 million. Inventory as at December
31, 2004 was $5.9 million, an increase in inventory compared to
September 30, 2004 of $0.3 million. The average sale price realized
during the quarter was $434 per ounce for net revenue of $10.3 million
for the quarter. Operations from the Fazenda Nova Mine have been
credited against mineral properties as pre-operating activities.
Commercial production from Fazenda Nova is expected early fiscal 2005.



Reserves

Summary Reserve and Resource Table (1)

---------------------------------------------------------------------
Gold M&I Reserve Inferred
Ounces Ounces Ounces
(000s) (000s) (000s)
-------------------------------------

Fazenda Brasileiro (underground) 291 178 81
Fazenda Brasileiro (open pit) 119 55 -
-------------------------------------
410 233 81

Fazenda Nova 168 147 2

Sao Francisco (Main ore) 1,164 888 503
Sao Francisco (ROM ore) 223 151 304
-------------------------------------
1,387 1,039 807

Sao Vicente 161 161 297
Chapada 3,046 2,493 1,226

Santa Cruz / Argentina 90 - 48
-------------------------------------

Total Ounces 5,262 4,073 2,461
-------------------------------------
-------------------------------------

---------------------------------------------------------------------

Copper M&I Reserve Inferred
Pounds Pounds Pounds
(millions) (millions) (millions)
-------------------------------------

Chapada 2,809 2,273 1,394
-------------------------------------
-------------------------------------

---------------------------------------------------------------------
(1) Reserve ounces are a subset of M&I ounces. Inferred ounces are in
addition to M&I ounces.
A table providing a breakdown of reserves and resources is
attached.


As at December 31, 2004, Fazenda Brasileiro had proven and probable
reserves containing 233,000 ounces of gold of which 178,400 ounces are
underground reserves and 54,600 ounces are from open pit. The Company
replaced 69% of the 78,000 ounces of gold mined during the fiscal year
ended December 2004. Reserves and resources are currently expected to
support the operation for an additional four years, producing between
90,000 and 105,000 ounces annually. Through additional near mine
exploration efforts, management anticipates the mine life of Fazenda
Brasileiro will be increased. Total reserves and resources (excluding
inferred resources) at Fazenda Brasileiro as at December 31, 2004 were
410,200 ounces of gold.

Proven and probable reserves for Sao Francisco contain 1,038,400 ounces
of gold. Given the coarse gold effect at Sao Francisco, there is
potential for actual mined grade of ore to exceed the reserve grade in
the feasibility study.

Proven and probable reserves for Sao Vicente contain 161,000 ounces of
gold. Yamana is currently undergoing a new feasibility study for Sao
Vicente. A higher reserve estimate might indicate that Sao Vicente could
support a stand-alone mine. Under the original mine plan for Sao
Vicente, treating it on a combined basis with Sao Francisco, total
production is expected to exceed 300,000 ounces of gold in 2006.

Remaining proven and probable reserves for the Fazenda Nova Mine are
147,000 ounces of gold following mining activity since the start of
operations. The mine life of Fazenda Nova is currently over 4 years.

Proven and probable reserves for Chapada are 2,493,500 ounces of gold
and 2.27 billion pounds of contained copper as at December 31, 2004. The
current mine life for the Chapada project is expected to be 19 years.

Reserve and resource estimates are calculated in accordance with
National Instrument 43-101 issued by the Canadian Securities Regulatory
Authorities.

Future Outlook

The long-term plan of the Company includes reaching an annual production
level in excess of 400,000 ounces of gold per year by 2007 plus over 100
million pounds of annual copper production.

During fiscal 2005 it is estimated that the Company will produce between
145,000 - 160,000 ounces of gold at an average total cash cost between
$215- 230 per ounce. These estimates exclude any potential production
from Sao Vicente, which is currently subject to a feasibility study.
Forecast cash costs have assumed a Reais to U.S. Dollar exchange rate of
3.0 to 1.0 which is a more favorable U.S. Dollar exchange rate than the
current rate, but inline with Brazilian consensus estimates for the
year. If the Reais averages a rate that is stronger than 3:1, this could
increase our operating and capital costs expressed in U.S. dollars. In
addition, increasing costs of consumables would increase costs above
estimates and while this estimate is provided on an annual basis, on a
quarter by quarter basis costs may be higher than the annual average.

The Company plans to pursue further mining and exploration opportunities
in the mining industry. The Company intends to move swiftly to become a
major Brazilian gold producer and explorer and believes that its
existing Brazilian properties, together with further acquisitions in
Latin America, will give the Company the critical mass necessary to
become a mid-tier global gold producer with good exploration prospects.

Development Projects Update

Construction of the Fazenda Nova Mine was completed during the year at a
cost of $6.5 million before capitalization of pre-operating costs.
Construction was funded from the Company's existing cash resources.
Leaching and smelting of the first gold bar occurred in September 2004.
The Fazenda Nova Mine is expected to produce more than 140,000 ounces of
gold over the next four years.

The construction of Chapada and Sao Francisco is underway. The Company
is on schedule with contracts for the mine fleet, site preparation and
engineering for Chapada. The mills have been ordered and tenders for the
EPC contracts are underway. The Company closed a $100 million debt
financing commitment in December 2004 for the construction and
development of Chapada but this remains undrawn. The remaining capital
cost requirements of $78 million for the construction of Chapada will be
funded by the company's existing financial resources. The construction
of Sao Francisco will be funded by the Company's existing cash resources
and cash flow from operations. Capital costs for the construction of Sao
Francisco are estimated at $46.1 million. Production from Sao Francisco
is expected late 2005 and from Chapada in 2007.

Exploration

Rio Itapicuru Greenstone Belt (RIGB)

During 2004 Yamana spent approximately $1.5 million on exploration and
doubled the size of its land holdings to 150,000 hectares in the RIGB.
Exploration included 375 drill holes totaling more than 15,000 m and the
excavation of 70 trenches totaling more than 24,123 m. This work has led
to the discovery of eight high priority targets, the Mandacaru,
Sapateira, Serra Branca, Ambrosio, Rio de Peixe-Treado, Encantado, Mari
and Bonsucesso.

Santa Elina Gold Belt

The Santa Elina Gold Belt is a major crustal shear zone which extends
for approximately 600 km in western Brazil and eastern Bolivia. There
are some 38 known gold deposits along a 200 km section of the belt which
reportedly have historic production totalling more than 2.2 million
ounces. Yamana holds approximately 750,000 hectares in the belt and
efforts are currently focused in the area between its two operating
mines particularly at our Longa Vida, Buriti, Sao Vicente Deep South
conglomerate and Sao Francisco Deep targets. The Longa Vida target, just
800 m from the Sao Francisco mine, is a 2 km-long zone that includes a 1
km-long zone with coarse gold-bearing quartz veins. Initial chip samples
ranged up to 600 g/t gold and several veins with visible gold were
observed. A second chip sampling program included 182 samples over a
1.25 km-section of the zone and assayed up to 46 g/t gold. Plans for
Longa Vida include excavating 12 trenches to total approximately 2,000 m
and bulk sampling to better define the grade of the mineralization. A
2,400 m diamond drill program to fully define the extent of the zone is
also planned.



Key Statistics

(Based on Canadian GAAP and expressed in U.S. dollars, unless
otherwise noted)

(Unaudited) (Unaudited)
For the For the
three months fiscal year
ended ended
Dec. 31, Feb. 29, Dec. 31, Feb. 29,
2004 2004 2004 2004
(10 months)
------------------------------------

Gold production (ounces):

Fazenda Brasileiro 20,854 25,944 78,168 56,794

Fazenda Nova 2,745 - 2,849 -

Sao Francisco pilot plant 846 283 3,214 283
------------------------------------
24,445 26,227 84,231 57,077
------------------------------------

Fazenda Brasileiro gold sales
(ounces) 23,982 26,617 79,822 49,989

Fazenda Brasileiro per ounce data:

Average realized gold price $ 434 $ 407 $ 409 $ 396

Cash costs per ounce produced $ 246 $ 213 $ 218 $ 216


Fazenda Brasileiro average ore
grade (g/t) 2.82 3.50 3.13 3.42

Fazenda Brasileiro average
recovery rate (%) 90.5 95.3 91.9 95.5


Financial Results (thousands)

Gold sales $ 10,305 $ 10,453 $ 32,298 $ 19,811

Net earnings $ 804 $ 639 $ 2,783 $ 1,008

Operating cash flow $ 3,621 $ 3,205 $ 8,536 $ 5,491

Per share data:

Net earnings (basic) $ 0.01 $ 0.01 $ 0.03 $ 0.02

Net earnings (diluted) $ 0.01 $ 0.01 $ 0.02 $ 0.02

Operating cash flow $ 0.03 $ 0.04 $ 0.09 $ 0.13

Weighted average number of
common shares (thousands) 111,737 92,870 100,036 43,674


Financial Position (thousands) Dec. 31, 2004 Feb. 29, 2004
------------------------------

Cash and cash equivalents $ 87,054 $ 34,603

Working capital $ 88,936 $ 35,803

Shareholders' equity $ 160,309 $ 81,261


Non-GAAP Measures

The Company has included cost per ounce information data because it
understands that certain investors use this information to determine the
Company's ability to generate earnings as 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 mine to generate cash flow.
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 are 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 measures are not necessarily indicative of operating
profit or cash flow from operations as determined under Canadian GAAP.
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 determined in
accordance with the Gold Institute's Production Cost Standard.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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" 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 the inherent risks involved in the
exploration and development of mineral properties, the uncertainties
involved in interpreting drilling results and other ecological data,
fluctuating metal prices, the possibility of project cost overruns or
unanticipated costs and expenses, uncertainties relating to the
availability and costs of financing needed in the future and other
factors. 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.



Reserves and Resources
December 31, 2004

Mineral Reserves (Proven and Probable)

Proven Probable
Reserves Reserves


Gold
Tonnes Grade Contained Tonnes Grade Contained
(000's) (g/t) oz.(000's) (000's) (g/t)oz.(000's)
---------------------------------------------------------------------

Fazenda Brasileiro
(U/G) 990 2.970 94.5 946 2.758 83.9
Fazenda Brasileiro
(O/P) 695 2.440 54.6

---------------------------------------------------------------------

Total Fazenda
Brasileiro 1,685 2.751 149.1 946 2.758 83.9

Fazenda Nova 4,986 0.914 146.6

---------------------------------------------------------------------

Sao Francisco
(Main Ore) 8,928 0.999 286.8 18,728 0.998 600.9
Sao Francisco
(ROM Ore) 6,762 0.231 50.2 13,414 0.233 100.5

---------------------------------------------------------------------

Total Sao Francisco 15,690 0.668 337.0 32,142 0.679 701.4
Sao Vicente 5,220 0.960 161.1

---------------------------------------------------------------------

Chapada 17,341 0.324 180.6 279,807 0.257 2,312.9

---------------------------------------------------------------------

Total Gold
Reserves 34,716.3 0.597 666.7 323,101 0.328 3,405.8

---------------------------------------------------------------------

Copper
Tonnes Grade Contained Tonnes Grade Contained
(000's) (%) lbs (mm) (000's) (%) lbs (mm)
---------------------------------------------------------------------

Chapada 17,341 0.418% 160.0 279,807 0.343% 2,113.2

---------------------------------------------------------------------



Total - Proven
and Probable


Gold
Tonnes Grade Contained
(000's) (g/t) oz.(000's)

---------------------------------------------------------------------

Fazenda Brasileiro (U/G) 1,936 2.866 178.4
Fazenda Brasileiro (O/P) 695 2.440 54.6

---------------------------------------------------------------------

Total Fazenda Brasileiro 2,631 2.755 232.9
Fazenda Nova 4,986 0.914 146.6

---------------------------------------------------------------------

Sao Francisco (Main Ore) 27,656 0.998 887.7
Sao Francisco (ROM Ore) 20,176 0.232 150.7

---------------------------------------------------------------------

Total Sao Francisco 47,832 0.675 1,038.4
Sao Vicente 5,220 0.960 161.1

---------------------------------------------------------------------

Chapada 297,148 0.261 2,493.5

---------------------------------------------------------------------

Total Gold Reserves 357,817 0.354 4,072.5

---------------------------------------------------------------------

Copper
Tonnes Grade Contained
(000's) (%) lbs (mm)
---------------------------------------------------------------------

Chapada 297,148 0.347% 2,273.2

---------------------------------------------------------------------


Mineral Resources (Measured, Indicated and Inferred) (Measured and
Indicated include Reserves as outlined above)


Measured Indicated
Resources Resources

---------------------------------------------------------------------

Gold Tonnes Grade Contained Tonnes Grade Contained
(000's) (%) lbs (mm) (000's) (%) lbs (mm)

---------------------------------------------------------------------

Fazenda Brasileiro
(U/G) 990 2.969 94.5 1,901 3.218 196.7
Fazenda Brasileiro
(O/P) 2,019 1.833 119.0 - - -

---------------------------------------------------------------------

Total Fazenda
Brasileiro 3,009 2.207 213.5 1,901 3.218 196.7
Fazenda Nova - - - 6,053 0.866 168.5
Sao Francisco
(Main Ore) 11,522 0.978 362.3 26,062 0.957 801.9
Sao Francisco
(ROM Ore) 9,559 0.226 69.4 21,177 0.225 153.2

---------------------------------------------------------------------

Total Sao Francisco 21,081 0.637 431.7 47,239 0.629 955.1
Sao Vicente 5,220 0.960 161.1
Chapada 25,200 0.300 243.1 396,200 0.220 2,802.4
Santa Cruz/Argentina - - - 206 13.620 90.2

---------------------------------------------------------------------

Total Gold
Resources 49,290 0.561 888.3 456,819 0.298 4,374.0

---------------------------------------------------------------------

Copper
Tonnes Grade Contained Tonnes Grade Contained
(000's) (%) lbs (mm) (000's) (%) lbs (mm)
---------------------------------------------------------------------

Chapada 25,200 0.34% 188.9 396,200 0.30% 2,620.4

---------------------------------------------------------------------


Total - Measured Inferred
and Indicated Resources

---------------------------------------------------------------------

Gold Tonnes Grade Contained Tonnes Grade Contained
(000's) (%) lbs (mm) (000's) (%) lbs (mm)

---------------------------------------------------------------------

Fazenda Brasileiro
(U/G) 2,891 3.133 291.2 489 5.150 81.0
Fazenda Brasileiro
(O/P) 2,019 1.833 119.0 - - -

---------------------------------------------------------------------

Total Fazenda
Brasileiro 4,910 2.599 410.2 489 5.152 81.0
Fazenda Nova 6,053 0.866 168.5 95 0.500 1.5
Sao Francisco
(Main Ore) 37,584 0.963 1,164.2 22,529 0.695 503.4
Sao Francisco
(ROM Ore) 30,736 0.225 222.6 42,394 0.223 304.4

---------------------------------------------------------------------

Total Sao Francisco 68,320 0.631 1,386.8 64,923 0.387 807.8
Sao Vicente 5,220 0.960 161.1 11,400 0.810 296.9
Chapada 421,400 0.225 3,045.5 250,870 0.152 1,226.0
Santa Cruz/
Argentina 206 13.620 90.2 141 10.600 48.2

---------------------------------------------------------------------

Total Gold
Resources 506,109 0.323 5,262.3 327,918 0.233 2,461.4

---------------------------------------------------------------------

Copper
Tonnes Grade Contained Tonnes Grade Contained
(000's) (%) lbs (mm) (000's) (%) lbs (mm)
---------------------------------------------------------------------

---------------------------------------------------------------------

Chapada 421,400 0.302% 2,809.3 250,870 0.252% 1,393.7

---------------------------------------------------------------------


Mineral Reserves and Resources

Chapada's inferred resources were taken from a Micon International
Limited NI 43-101 compliant technical report July 2003. Independent
Mining Consultants estimated Chapada's inferred resources in their
report dated February 2004 at 68 million tonnes grading 0.14 g/t gold
and 0.2% copper. Mineral reserve and resource estimates presented were
prepared by or under the supervision of external consultants as
indicated in the table below in accordance with NI 43-101. In estimating
the mineral reserves and mineral resources, such persons made
assumptions, and used parameters and methods appropriate for each
property, and verified the data disclosed, including sampling,
analytical and test data underlying such estimates. These external
reserve reports have been reviewed by Mel Klohn, Exploration Consultant
as "qualified person", as that term is defined in NI 43-101.

These figures are estimates, however, and no assurance can be given that
the indicated amounts of quantities of gold will be produced. Gold price
fluctuations may render mineral reserves containing relatively lower
grades of gold mineralization uneconomic. Moreover, short-term operating
factors relating to the mineral reserves could affect the Company's
profitability in any particular accounting period. The corporation is
not aware of any environmental, permitting, legal, title, taxation,
socio-political, marketing or other relevant issues which may materially
affect the Corporation's mineral reserve and resource estimates, other
than factors discussed above and in "Risks and Uncertainties" in the
Management Discussion and Analysis section of the annual report. Mineral
resources which are not mineral reserves have not demonstrated economic
viability.



Mineral Reserves Mineral Resources Date Report
---------------------------------------------------------------------

Fazenda Porfirio Cabaleiro Porfirio Cabaleiro Jan-05 Estimate
Brasileiro Rodriguez, Rodriguez, of
Geostatistician Geostatistician Mineral
Geoexplore Geoexplore Reserves
Consultoria e Consultoria e
Servicos Ltd. Servicos Ltd.
Chapada Independent Mining Independent Mining Aug-04 Feasibi-
Consultants Inc. Consultants lity
Study
Sao
Francisco Independent Mining Independent Mining Dec-04 Feasibi-
Consultants Inc. Consultants Inc. lity
Study
Sao Vicente Watts, Griffis and Watts, Griffis and Jul-03 Prelimi-
McOuat Limited McOuat Limited nary
Feasibi-
lity
Study
Fazenda Moreno & Associados Kappes, Cassiday Jan-05/ Reserve
Nova & Associates Nov-03 Estimate
Update /
Feasibi-
lity
Study

Santa Cruz Cia Minas, Jun-04 Internal
/Argentina Buenaventura S.A.A. Resource
Study


Mine Mineral Reserve Gold Copper Mineral Resources
Cut-off Price Price Cut-off Grade
(g/t gold; % copper) (g/t gold; % copper)
---------------------------------------------------------------------

Fazenda 1.5 US$350 n/a 1.5
Brasileiro

Chapada $2.43 (1) US$325 US$0.85 0.15% (2)
Sao
Francisco 0.32 and 0.16 US$350 n/a 0.32 and 0.16
Sao
Vicente 0.30 US$325 n/a 0.30
Fazenda
Nova 0.30 US$345 n/a 0.30


(1) Breakeven NSR cutoff vs grade cutoff used. Internal NSR cutoff
of $1.93.
(2) copper equivalent equals (copper (%) + 0.56 x gold (g/t))



YAMANA GOLD INC.
CONSOLIDATED BALANCE SHEETS
Prepared by management
(In thousands of U.S. dollars)

December 31, 2004 February 29, 2004
(Unaudited) (Unaudited)
---------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 87,054 $ 34,603
Accounts receivable 1,177 1,488
Inventory (Note 3) 5,862 3,848
Advances and deposits 2,068 819
---------------------------------------------------------------------
96,161 40,758
Capital
Property, plant and equipment (Note 4) 18,315 18,237
Assets under construction (Note 5) 12,085 250
Mineral properties (Note 6) 43,292 34,628
---------------------------------------------------------------------
73,692 53,115
Other
Other assets (Note 7) 5,797 75
Further income tax assets (Note 12) 1,456 -
---------------------------------------------------------------------
$ 177,106 $ 93,948
---------------------------------------------------------------------
---------------------------------------------------------------------
LIABILITIES
Current
Accounts payable and accrued liabilities $ 7,225 $ 5,030
---------------------------------------------------------------------

Long Term

Asset retirement obligation (Note 8) 4,972 4,943
Future income tax liabilities (Note 12) 4,600 2,714
---------------------------------------------------------------------

16,797 12,687
---------------------------------------------------------------------
---------------------------------------------------------------------


SHAREHOLDERS' EQUITY
Capital stock
Authorized
Unlimited number of first preference
shares without par value issuable in series
Unlimited number of common shares without par value
Issued and outstanding
122,286,716 common shares (Note 9)
(February 29, 2004 - 95,060,749 shares) 147,407 74,427


Share purchase warrants and other (Note 10) 10,864 8,721
Continued surplus 1,775 633

Refined Earnings (deficit) 263 (2,520)
---------------------------------------------------------------------

160,309 81,261
---------------------------------------------------------------------
$ 177,106 $ 93,948
---------------------------------------------------------------------



(Unaudited) (Unaudited)
Three months ended Fiscal year ended
December February December February
31, 2004 29, 2004 31, 2004 29, 2004
(10 months)

SALES $ 10,305 $ 10,453 $ 32,298 $ 19,811

COST OF SALES (5,930) (6,336) (17,755) (10,916)

DEPRECIATION, AMORTIZATION
AND DEPLETION (1,506) (1,303) (4,541) (2,430)

ACCRETION OF ASSET RETIREMENT
OBLIGATION (Note 8) (174) (162) (364) (162)
---------------------------------------------------------------------

MINE OPERATING EARNINGS 2,695 2,652 9,638 6,303

EXPENSES

General and administrative (2,314) (1,311) (5,487) (3,432)
General exploration - (3) - (6)
Mineral property and other
asset write-offs - (2) - (76)
Stock-based compensation
(Note 11) - (227) (2,191) (612)
Foreign exchange gain (loss) 519 (663) 1,848 157
Severance costs - (6) - (716)
---------------------------------------------------------------------

OPERATING EARNINGS (LOSS) 900 440 3,808 1,618

Investment and other business
income 367 289 792 483
Interest and financing
(expense) recovery - 3 - (255)
---------------------------------------------------------------------

EARNINGS BEFORE TAX 1,267 732 4,600 1,846

INCOME TAX EXPENSE (Note 12) (463) (93) (1,817) (838)
---------------------------------------------------------------------

NET EARNINGS 804 639 2,783 1,008

DEFICIT, BEGINNING OF THE PERIOD (541) (3,159) (2,520) (3,491)

INTEREST ON CONVERTIBLE NOTES - - - (37)
---------------------------------------------------------------------

RETAINED EARNINGS (DEFICIT),
END OF THE PERIOD $ 263 $ (2,250) $ 263 $ (2,250)
---------------------------------------------------------------------
---------------------------------------------------------------------

BASIC EARNINGS PER SHARE $ 0.01 $ 0.01 $ 0.03 $ 0.02
DILUTED EARNINGS PER SHARE $ 0.01 $ 0.01 $ 0.02 $ 0.02
---------------------------------------------------------------------

Weighted average number of
Shares outstanding (in
thousands) 111,737 92,870 100,036 43,674
---------------------------------------------------------------------
---------------------------------------------------------------------


Note: In the opinion of management of Yamana, all adjustments of a
normal recurring nature have been included in these financial statements
to provide a fair statement of results for the periods presented. The
results of those periods are not necessarily indicative of the results
for the full year.



YAMANA GOLD INC.
CONSOLIDATED STATEMENTS
OF CASH FLOWS
Prepared by management
(In thousands of U.S. dollars)

(Unaudited) (Unaudited)
Three months ended Fiscal year ended
December February December February
31, 2004 29, 2004 31, 2004 29, 2004
(10 months)
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings for the period $ 804 $ 639 $ 2,783 $ 1,008
Asset retirement obligations
realized (82) - (237) -
Items not involving cash
Services paid in common
shares (adjustment) - (566) - 272
Depreciation, amortization
and depletion 1,506 1,303 4,541 2,430
Stock-based compensation - 227 2,191 612
Mineral property and other
asset write-offs - - - 74
Future income taxes 14 495 430 (324)
Accretion of asset retirement
obligation 174 162 364 162
Foreign exchange (692) 794 (1,792) (100)
Other 901 - 1,013 819
---------------------------------------------------------------------

2,625 3,054 9,293 4,953
Net change in non-cash
working capital 996 151 (757) 538
---------------------------------------------------------------------

3,621 3,205 8,536 5,491
---------------------------------------------------------------------
---------------------------------------------------------------------

FINANCING ACTIVITIES
Issue of common shares and
warrants for cash 76,167 21,630 76,167 61,105
Issue costs (4,236) (1,488) (4,236) (4,756)
Deferred financing charges
(Note 7) (2,007) - (3,049) -
Interest expense on
convertible notes - 37 - -
---------------------------------------------------------------------
69,924 20,179 68,882 56,349
---------------------------------------------------------------------

INVESTING ACTIVITIES
Business acquisition of
Fazenda Brasileiro - (933) - (22,098)
Expenditures on mineral
properties (4,749) (2,848) (11,512) (4,191)
Acquisition of property,
plant and equipment (627) (466) (3,079) (1,770)
Expenditures on assets under
construction (5,711) - (11,965) -
Other (354) - (531) -
---------------------------------------------------------------------
(11,441) (4,247) (27,087) (28,059)
---------------------------------------------------------------------

INCREASE IN CASH AND CASH
EQUIVALENTS 62,104 19,137 50,331 33,781

EFFECT OF FOREIGN EXCHANGE ON
NON-U.S DOLLAR DENOMINATED
CASH AND CASH EQUIVALENTS 984 (794) 2,120 100

CASH AND CASH EQUIVALENTS
BEGINNING OF THE PERIOD 23,966 16,260 34,603 722
---------------------------------------------------------------------

CASH AND CASH EQUIVALENTS END
OF THE PERIOD $ 87,054 $ 34,603 $ 87,054 $ 34,603
---------------------------------------------------------------------
---------------------------------------------------------------------


Notes to the Unaudited Interim Consolidated Financial Statements

As at December 31, 2004 and for the ten month period ended December 31,
2004 and for the twelve month period ended February 29, 2004 (Tabular
amounts in thousands of U.S. dollars)(Unaudited)

1. Basis of presentation

The accompanying interim consolidated financial statements have been
prepared in accordance with accounting principles generally accepted
("GAAP") in Canada. These interim financial statements do not contain
all the information required by generally accepted accounting principles
for annual financial statements and therefore should be read in
conjunction with the most recent annual financial statements of the
Company. These financial statements follow the same accounting policies
and methods of their application as the most recent annual financial
statements. On August 12, 2003, the outstanding common shares then
outstanding were consolidated on the basis of one new common share for
27.86 existing common shares. The share and per share information for
the comparative period ended February 29, 2004 is presented as if the
consolidation took place March 1, 2003.

Certain amounts for fiscal 2004 have been reclassified to conform with
the current year's presentation.

2. Change in year end

The Company changed its year end from February 28/29 to December 31. As
such year to date figures are for the ten month period ended December
31, 2004 with comparative figures for the twelve month period ended
February 29, 2004 and quarterly figures are for the three month period
ended December 31, 2004 with comparative figures for the three month
period ended February 29, 2004.



3. Inventory

December 31, February 29,
2004 2004
-----------------------------------------------------------

Metal in circuit and gold in
process $ 2,729 $ 155
Ore stockpiles - 364
Dore inventories 996 1,721
Materials and supplies 2,137 1,608
-----------------------------------------------------------

$ 5,862 $ 3,848
-----------------------


4. Property, plant and equipment

December 31, February 29,
2004 2004

---------------------------------------------------------------------
Accumulated Net Book Net Book
Cost Amortization Value Value
---------------------------------------------------------------------

Land $ 1,053 $ - $ 1,053 $ 875
Buildings 8,500 2,061 6,439 7,096
Machinery and equipment 9,196 1,890 7,306 6,616
Vehicles 2,677 543 2,134 2,344
Furniture and office
equipment 1,262 304 958 1,033
Computer equipment and
software 515 90 425 273
---------------------------------------------------------------------

$ 23,203 $ 4,888 $ 18,315 $ 18,237
-----------------------------------------------



5. Assets under construction

December 31, February 29,
2004 2004
-----------------------------------------------------------

Fazenda Nova $ 6,949 $ 250
Sao Francisco 1,915 -
Chapada 3,221 -
-----------------------------------------------------------

$ 12,085 $ 250
---------------------------


Construction costs and preproduction revenues and expenses will be
transferred to property, plant and equipment and mineral properties for
each project upon commencement of commercial production.



6. Mineral properties

December 31, February 29,
2004 2004
-----------------------------------------------------------

Fazenda Brasileiro (i) $ 13,158 $ 9,212
Santa Elina (ii) 13,319 11,237
Chapada properties 11,523 9,197
Argentine properties 5,036 4,975
Other 256 7
-----------------------------------------------------------

$ 43,292 $ 34,628
---------------------------


(i) Fazenda Brasileiro

Balance is net of accumulated amortization in the amount of $2.77
million (February 29, 2004 - $1 million).

(ii) Santa Elina Properties

Balance is net of accumulated amortization in the amount of $0.7 million
(February 29, 2004 - $NIL).



7. Other assets

December 31, February 29,
2004 2004
-----------------------------------------------------------

Deferred financing charges (i) $ 5,191 $ -
Other 606 75
-----------------------------------------------------------

$ 5,797 $ 75
---------------------------


(i) Deferred financing changes relate to a $100 million debt financing
commitment for the development of the Chapada Gold and Copper project
that closed in December 2004. The secured notes are for a term of 6
years and bear interest at an annual rate of 10.95%. Principal is
repayable upon maturity of the notes and covenants under the facility
have characteristics comparable to high yield debt. The Company may also
elect to defer interest payments for the first three years. Under this
scenario, the interest note is subject to an additional 150 basis points
during the first two years during which the interest is accrued. The
Company must drawdown the full $100 million within 180 days of closing.
As at March 7, 2005, the Company had not drawn down any monies from this
facility. During the year, total fees in the amount of $1.35 million
were paid and 2.5 million warrants were issued resulting in the
recognition of $2.1 million of deferred financing charges were
recognized. The fair value of the warrants was calculated using the
Black-Scholes pricing model with the following assumptions: (i) dividend
yield of 0%, (ii) expected volatility of 30%, (iii) risk free interest
rate of 3.0% and (iv) expected life of 5 years. Additional fees of
$850,000 and 2.5 million warrants are payable only on funding.
Additional expenditures of $1.7 million have also been deferred as
financing charges for total cash expenditures of $3.049 million incurred
in connection with the debt facility for the ten month period ended
December 31, 2004. Financing charges will be amortized over the life of
the loan upon funding.

8. Asset retirement obligation

The asset retirement obligation for reclamation and closure costs
relates to the costs on acquisition of Fazenda Brasileiro mine, Sao
Vicente project and the Fazenda Nova project calculated as the net
present value of estimated future cash flows at a discount rate of 7%.

The following is an analysis of the beginning and year end balance of
the asset retirement obligation as at December 31, 2004:



Balance as at February 29, 2004 $ 4,943
Accretion incurred in the current year 364
Liabilities accrued on Fazenda Nova 316
Liabilities accrued on Fazenda Brasileiro 175
Reduction of estimated liabilities of
Fazenda Brasileiro (920)
Foreign exchange 331
Expenditures in the current year (237)
-------

Balance as at December 31, 2004 $ 4,972
-------
-------



9. Capital stock

(i) Common share s issued and outstanding

Number of
Common Shares Amount
(000's)
---------------------------------------------------------------------

Balance as at February 29, 2004 95,061 $ 74,427
Exercise of options and share
appreciation rights (1) 41 101
Public offering, net of issue costs (2) 26,377 71,858
Issue of common shares (3) 808 1,021
--------------------------

Balance as at December 31, 2004 122,287 $ 147,407
--------------------------


1. The Company issued 41,000 shares to optionees on the exercise of
their share options and appreciation rights. Previously recognized
compensation expense in the amount of $25,200 on options exercised
during the year was charged to share capital with a corresponding
decrease to contributed surplus.

2. In November, 2004, the Company closed a public offering for
26,377,000 common shares at a price of C$3.45 per share for aggregate
gross proceeds of $76.1 million (C$91 million) net of $4.2 million of
issue costs.

3. In July, 2004, the Company issued 808,000 common shares to management
in connection with previous subscriptions that were approved by the
shareholders at the February 2004 annual general meeting.

10. Share purchase warrants

As at December 31, 2004 there were 43.4 million share purchase warrants
outstanding with an average exercise price of Cdn$1.78 and an average
outstanding life of 3.87 years.

11. Stock-based compensation

There were no stock options issued during the three month period ended
December 31, 2004.

Yamana accounts for all stock options granted using the fair value based
method of accounting, estimating at the time of grant using the
Black-Scholes option pricing model with the following assumptions for
the options issued during the current fiscal year: (i) dividend yield of
0%, (ii) expected volatility of 50.5%, (iii) risk free interest rate of
3.5% and (iv) expected life of 3 years. The Company has assumed no
forfeiture rate as adjustments for actual forfeitures are made in the
year they occur.

As at December 31, 2004, there were 6.66 million stock options
outstanding with an average exercise price of Cdn$2.04 and an average
outstanding life of 8.28 years. A total of 6.54 million stock options
were exercisable as at December 31, 2004.

12. Income taxes

The following table reconciles income taxes calculated at statutory
rates with the income tax expense in the fiscal year financial
statements:



December 31, February 29,
2004 2004
(10 months)
-----------------------------------------------------------

Earnings before income taxes $ 4,600 $ 1,846

Statutory rate 36.12 % 38.00 %
-----------------------------------------------------------

Expected income tax expense
(recovery) $ 1,662 $ 701
Effect of lower tax rates in
foreign jurisdictions (154) (503)
Unrecognized tax benefits in
Canada and United States 19 1,364
Non-taxable items 106 (724)
Change in valuation allowance 184 -

-----------------------------------------------------------

Income tax expense $ 1,817 $ 838

-----------------------------------------------------------

Less: current income tax expense 1,387 1,162

-----------------------------------------------------------

Future income tax expense
(recovery) $ 430 $ (324)
------------------------


(i) Future income taxes

The temporary differences that give rise to future income
tax assets are presented below:

December 31, February 29,
2004 2004
-----------------------------------------------------------

Amounts related to tax loss and
credit carry-forwards in
Canada and United States $ 7,175 $ 6,988
Financing costs 3,126 1,474
-----------------------------------------------------------

Net future tax asset 10,301 8,462
Valuation allowance (8,845) (8,462)

-----------------------------------------------------------

Future income tax assets $ 1,456 $ -
--------------------------


The temporary differences that give rise to future income tax
liabilities are presented below:


December 31, February 29,
2004 2004
-----------------------------------------------------------

Mineral properties and property,
plant and equipment $ (3,992) $ (3,512)
Asset retirement obligation 621 631
Unrealized foreign exchange gains
on inter-company loans (1,317) -
Other 88 167

-----------------------------------------------------------

Future income tax liabilities $ (4,600) $ (2,714)
--------------------------



13. Supplementary cash flow information

(i) Supplementary information regarding other non-cash transactions:

Three months ended Fiscal year ended
December 31, February 29, December 31, February 29,
2004 2004 2004 2004
(10 months)
---------------------------------------------------------------------

Financing Activities
Issue of common
shares on exercise
of options and
share appreciation
rights $ 25 $ - $ 28 $ -
Stock-based
compensation on the
exercise of options
and share
appreciation rights $ - $ - $ (3) $ -
Reversal of
contributed surplus
on previously
recognized stock-based
compensation on
exercise of options $ (25) $ - $ (25) $ -
Issue of warrants $ 2,142 $ - $ 2,142 $ -
Deferred financing
charges on the
issue of warrants $ (2,142) $ - $ (2,142) $ -
Issue of common
shares for interest
and principal due
on convertible
notes $ - $ - $ - $ 1,529
Issue of common
shares for Santa
Elina assets $ - $ 171 $ - $ 18,496
Equity component of
convertible notes:
Payment of interest
in common shares $ - - $ - $ (49)
Payment of principal
in common shares $ - - $ - $ (1,480)
Investing Activities
Expenditures on mineral
properties, net of tax $ - $ (171) $ - $ (18,496)


14. Segmented information

The Company considers its business to consist of three geographical
segments primarily in Brazil, Argentina and corporate head office in
Canada. Capital assets referred to below consist of land, buildings and
equipment, and mineral properties.



(i)

December 31, February 29,
2004 2004
-----------------------------------------------------------

Mineral properties and property,
plant and equipment

Brazil $ 68,163 $ 47,617
Argentina 5,413 5,376
Canada 116 122
-----------------------------------------------------------

$ 73,692 $ 53,115
-----------------------------------------------------------


(ii)

Three months ended Fiscal year ended
December 31, February 29, December 31, February 29,
2004 2004 2004 2004
(10 months)
Mine Revenues
Brazil $ 10,305 $ 10,453 $ 32,298 $ 19,811
Argentina - - - -
Canada - - - -
---------------------------------------------------------------------

$ 10,305 $ 10,453 $ 32,298 $ 19,811
---------------------------------------------------



15. Related party transactions

The Company had the following transactions with related parties:

December 31, February 29,
2004 2004
(10 months)
-----------------------------------------------------------

Pursuant to the reimbursement
of third party costs relating
to the Company's financing and
property acquisitions incurred
on behalf of the Company $ - $ 438
Legal fees paid to a law firm
that had partners who are either
a former director or a former
officer of the Company $ - $ 295
Directors fees and consulting
fees to associates thereof (i) $ 179 $ 117
Consulting fees paid to an
officer prior to becoming
an officer $ - $ 72
-----------------------------------------------------------

(i) Included in accounts payable and accrued liabilities is
39,133 (February 29, 2004 -$21,586) in this regard.


These transactions occurred in the normal course of business and are
measured at the exchange amount, which is the amount of consideration
established and agreed to by the related parties based on their estimate
of fair market value.



16. Commitments

Year 2005 2006 2007 2008 2009

Office leases $ 333 $ 298 $ 261 $ 148 $ -

Fazenda Brasileiro
Operating leases and
service contracts 3,161 515 - - -

Fazenda Nova
Operating leases and
service contacts 2,736 2,481 618 - -

Sao Francisco
Construction and
service contacts 13,707 - - - -

Chapada
Construction and
service contacts 26,999 1,883 - - -
-----------------------------------------

$ 46,936 $ 5,177 $ 879 $ 148 $ -
-----------------------------------------



-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Yamana Gold Inc.
    Peter Marrone
    President & Chief Executive Officer
    (416) 815-0220
    investor@yamana.com
    or
    Yamana Gold Inc.
    Chuck Main
    Chief Financial Officer
    (416) 945-7354
    cmain@yamana.com