Yamana boasts big fat Chapada mine

With the startup of two mines since last August, Yamana Gold (YRI-T, AUY-N, YAU-L) is at ease with its goal to be a 1-million-oz. producer by the end of 2008.

The companys flagship Chapada copper-gold mine in Goias state, Brazil, has surpassed production targets since its start-up on Feb. 11. So far production has averaged more than 660 tonnes of concentrate per day above the 500-tonne-per-day goal. Grades for copper and gold in concentrate produced have been between 27.7% and 28.4% copper and 26.3 to 29.1 grams gold per tonne, also higher than expected.

Chapada is this big fat massive cash cow thats the best way I could describe it, said president and CEO Peter Marrone in a conference call March 21. We are now looking at and coming to the conclusion that perhaps the feasibility study didnt get it entirely right.

The Chapada deposit consists of two different types of ore a softer, higher-grade ore and a harder lower-grade ore.

There may be more of the softer than the harder lower grade material, said Marrone. Which means we would be producing more of the softer rock and more of the higher grade material, less power consumption, and more copper and gold at a lower cost.

Yamana expects to produce 180,000 to 205,000 oz. gold and 130 million to 145 million lbs. copper from Chapada in 2007. The company plans to produce 600,000 oz. gold in total this year.

Yamana, which has properties in Argentina and Honduras as well, produced a total of 359,000 oz. gold in 2006 and had a commercial production rate of 283,000 oz. at an average cash cost of US$326 per oz.

Yamana reported net earnings of US$19.5 million or US7 per share in 2006 on revenue of US$169.2 million a 270% increase from 2005.

The company also brought the Sao Francisco mine, located in the west-central Brazilian state of Mato Grosso into production last August, which produced nearly 58,000 oz. gold in 2006. The 2007 production target for Sao Francisco is 120,000 to 130,000 oz.

Although production at the Jacobina mine, along the Bahia gold belt in north-eastern Brazil, has been affected by the collapse of historic sill pillars at an older portion of the mine, Marrone was not concerned about the projected loss of 30,000 oz. of gold. Jacobinas original target was 120,000 to 130,000 oz. gold.

The other mines will make up the shortfall and perhaps then some, Marrone said.