Yamana Says Future Results Will Improve Even More

TORONTO (CP) -- The chief executive of Yamana Gold Inc.[TSX:YRI; NYSE:AUY] says success at the El Penon mine in Chile and high gold prices will lead to stronger financial results in the coming months following a better-than-expected first quarter.

"This was our first full quarter as an integrated company; this is just the first step of what is to come," chief executive Peter Marrone said in an interview Thursday.

"As we have integrated the assets and the people, as we become familiar with the assets, as we absorb them into our corporation, we've delivered first-quarter results and those will be modest in comparison with the quarters to follow."

Yamana's key focus remains El Penon, the gold-silver mine acquired as part of its takeover of Meridian Gold Inc. last year, when Yamana also purchased Northern Orion.

El Penon is considered to be one of Yamana's top priorities because it's a big cash-flow generator, while some of the company's other acquisitions are still in the development stage.

"We've (had) some very, very good results at Bonanza, and that North block (of El Penon) continues to be like a gift that keeps on giving," Marrone said.

Shares in Yamana rose nearly 7% on the TSX following its first-quarter results, trading up 96 cents at C$14.77 at mid-afternoon.

Marrone said Yamana isn't interested in any new acquisitions, saying its focus is organic growth and "there's nothing that we're looking to acquire or would want to acquire."

The company said Wednesday evening it earned US$63.1 million, nine cents per share, on US$356.1 million in revenue for the three months ended March 31. That compared with US$27.4 million or seven cents per share on US$145.1 million in revenue in the first three months of 2007.

The latest quarter's results were aided by rising gold prices - which Marrone expects to rise even higher.

U.S. financial-industry stresses, geopolitical tensions, inflationary pressures, growing wealth in developing nations, high oil prices, and bullion supply-demand imbalances have all led to "a perfect storm" for rising precious metal prices, he said.

"Does a good gold price and copper price and silver price contribute to our earnings and cash flow? The answer is yes. But this company has always been about containing costs . . . and growth and production," Marrone said.

"We should be able to get the margin to the gold price even if the gold price were more modest than where it has been and where it is."

The company reported adjusted earnings for the quarter of US$134.7 million or 20 cents per share, well above analyst expectations of 14 cents per share. Mine operating earnings rose 156% to US$195.2 million.

Yamana also said it would begin paying a monthly dividend of a penny per share, up from a penny per share quarterly.

Yamana, with properties in Brazil, Argentina, Chile, Mexico, Central America and the United States, is targeting production of 1.3 million gold equivalent ounces this year, increasing to 2.2 million ounces in 2012.

(c) The Canadian Press 2008

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