El Penon

Yamana Gold announced the discovery of a new vein system at Pampa Augusta Victoria located north of El Peñón mine in Chile. The vein system consist of structurally controlled low sulphidation quartz, stockworks and hydrothermal breccias that are emplaced within acidic volcanic rocks. The main structure has been traced along strike for approximately 270m and down dip to approximately 200m and is open in all directions. The best results from 21 RC drill holes totaling 6,368m was returned from DAV0017 with 2m at 54.40g/t gold and 5,575g/t silver from 56m downhole.

El Peñón produced 92,016 gold equivalent ounces during the second quarter, compared with 113,150 gold equivalent ounces and 84,351 gold equivalent ounces produced in the second quarter of 2008 and first quarter of 2009, respectively. Due to the nature of the ore body at El Peñón, the grade is subject to short term variation. The grade in the second quarter increased 8% from the prior quarter although below the grade in the second quarter of 2008. For the third quarter the grade is expected to be approximately 6 g/t, which would represent an increase of 10% over the second quarter of 2009. Cash costs were $339 in the quarter ended June 30, 2009, compared with $284 per ounce in the second quarter in 2008 and $366 per ounce in the first quarter of 2009.

Yamana received the license to increase throughput at El Peñón to 3,600 tonnes per day. Yamana expects to be mining at an effective rate of 500,000 GEO per year in 2009, targeting production of approximately 435,000 to 460,000 GEO and the creation of a stockpile. For the month of December 2008, average tonnage increased to approximately 110,000 tonnes and production totaled approximately 36,000 GEOs. The decision to increase plant capacity to 5,000 tonnes per day for a run rate of 600,000 GEO per year will depend on further work in the North Block area and additional development at Bonanza and Al Este in particular. Yamana intends to mine at a rate of 3,600 tonnes per day for the next two years before further increasing plant capacity although it will evaluate the further expansion as the proven and probable reserves increase. Production at El Peñón is expected to ramp up quarter over quarter as ore grade and throughput increases. Cash costs at El Peñón are expected to be between $280-310 per GEO in 2009. The El Peñón mine is targeted to have a mine life of at least 10 years. (Dec 31/08) News Updates