"Our focus remains on our core portfolio of assets. These cornerstone assets are our best contributors to cash flow, hold most of our production and best costs, and have significant upside and potential. However, we have the potential to unlock additional value through the advancement of ongoing strategic initiatives in our secondary portfolio holding of our non-core assets," commented Peter Marrone, Chairman and Chief Executive Officer. "We have advanced plans to corporately segregate a number of our more modest Brazilian assets and we will now take a longer term and disciplined approach to looking at strategic alternatives designed to maximize their potential and longer term value creation. In addition, at Agua Rica, we are continuing to demonstrate its impressive potential and significant mineral wealth in a mining friendly jurisdiction as we continue to explore various ways to realize the value this project represents."


The Company has made significant progress in separating its core and non-core portfolios and, in the case of the latter, improving the prospects for certain previously underperforming assets that have yet to reach their potential, notably Pilar and C1 Santa Luz. To this end, the Company is advanced in the process of structuring its intercorporate holdings to form a new subsidiary company, Brio Gold Inc. ("Brio Gold") that will hold Fazenda Brasileiro, Pilar and C1 Santa Luz as well as some related exploration concessions, all of which are currently held as non-core assets within Yamana.

Starting in 2015, this new Yamana subsidiary and the operational management, optimization and improvement of its assets will be led by Gil Clausen as Chief Executive Officer. Mr. Clausen is an experienced mining executive with over 30 years of experience in both executive and operational roles within the base and precious metals industry. He most recently held the position of President and Chief Executive Officer of Augusta Resource Corporation ("Augusta"), which was acquired earlier in 2014. Mr. Clausen will be joined by Joseph Longpré as Chief Financial Officer, Lance Newman as Vice President, Technical Services, and Mark Stevens, as Vice President, Exploration, who all most recently held executive positions at Augusta, to form the senior management team given the mandate to maximize value for Yamana and its shareholders from these assets.

"We are delighted to invite Gil and his management into Brio Gold," said Mr. Marrone. "We believe this new management will carry on Yamana’s efforts at operating, improvement and optimizing our secondary portfolio of non-core assets which will allow Yamana to focus on its core portfolio while also providing oversight and direction to management of the non-core portfolio. This approach segregates our portfolios, better focuses our efforts, reduces our overall costs and allows us in the fullness of time to evaluate how to best maximize value for our non-core portfolio. We are delighted also with the third party technical endorsement of the non-core portfolio and now we will prudently and over time evaluate our various options."

Brio Gold is expected to initially produce more than 130,000 ounces of gold annually from Fazenda Brasileiro and Pilar. At C1 Santa Luz, Brio Gold management will continue the process started by Yamana to evaluate several identified metallurgical processes with the objective of improving recoveries. C1 Santa Luz has the potential to produce upwards of an additional 100,000 ounces of gold per year with a successful modification to its processing circuit bringing Brio Gold’s expected annual production to more than 230,000 ounces of gold. In addition, further increases in production levels and improved costs are expected with the development of the Maria Lazarus deposit at Pilar and the additional significant exploration potential that exists in the surrounding land packages associated with these three assets.

Although this company will initially be a 100% owned subsidiary, Yamana is entrusting Brio Gold’s management to both manage these assets and evaluate various strategic alternatives with respect to Brio Gold. All of these efforts will progress through 2015 with an optimization plan and evaluation of strategic options expected by end of 2015.The Company will provide oversight as these alternatives are evaluated and will also provide initial working capital in the form of a bridge loan of up to $10 million to Brio Gold, such loan being repayable to Yamana. Further funding of operations will be part of Brio Gold’s management role in cooperation with Yamana. This approach is consistent with the Company’s continuing focus on its cornerstone assets, those assets that currently or have the potential to most significantly contribute to growth in production and cash flow.

"We are very excited about this opportunity," commented Gil Clausen, Brio Gold’s Chief Executive Officer. "We have completed detailed due diligence on these assets and are encouraged by the potential they hold. Moreover, we are impressed with the existing facilities, operational management and site personnel at the mines. We are confident that we will be able to unlock the true value of these assets for Yamana shareholders."

The Company has engaged National Bank Financial Markets and CIBC World Markets Inc. as financial advisors to assist in the process of evaluating strategic alternatives with respect to Brio Gold.

Both Chapada and Jacobina will continue to be managed by the existing but significantly scaled back management team in Brazil.


The Company has received a positive independent technical review relating to previous studies on Agua Rica and on the potential development options for Agua Rica. The Company engaged RungPincockMinarco Ltd Latin America Limitada ("RPM") to undertake an independent review of Agua Rica, including comparing and consolidating prior technical studies done on the Project. The scope of work included a review of the technical work and studies prepared by Yamana in 2010 as well as additional feasibility level work completed in 2013. The RPM review also includes the evaluation of various conceptual development alternatives, as well as providing an updated view on projected operating costs, capital expenditures and conceptual economics. The RPM review was prepared to facilitate third party evaluation of the Project and its potential.

The results of the RPM review continue to support the potential for Yamana to deliver significant value from this high quality asset, and help to validate the various potential development options for the Project. This update provides a basis for the Company to continue to pursue multiple options to unlock value from this asset including potential joint ventures with other financial and/or industry participants, the sale of a majority interest in the project or an outright sale. Discussions with third parties in this regard are soon to commence and the Company has retained Credit Suisse Securities (Canada), Inc. to assist in this process.

"This is another major milestone for us," said Mr. Marrone. "We can now evaluate the various strategic options for Agua Rica in a disciplined way with full knowledge of this robust project in a quality jurisdiction."

Agua Rica is a low cost, large scale porphyry copper, molybdenum, gold and silver deposit located in the province of Catamarca, Argentina with proven and probable mineral reserves of approximately 10 billion pounds of copper and 6.5 million ounces of gold contained in approximately 910 million tonnes at copper and gold grades of 0.49% and 0.22 grams per tonne ("g/t") respectively. Agua Rica’s mineral reserves and mineral resources as at December 31, 2013 provide the basis for this technical review, remain current to date and are presented at the end of this press release. Agua Rica’s complete mineral reserves and mineral resources, and RPM’s review is available through the Company’s website at www.yamana.com.

The two development scenarios for Agua Rica primarily focused on by RPM in their review are summarized below. Although there is a significant amount of historic technical work supporting RPM’s review and the specific development scenarios presented, much of which is at feasibility study standards, the economic analysis is meant to provide order of magnitude estimates.


The Base Case Scenario assumes the full integration of Agua Rica with existing infrastructure at Alumbrera and considers a 110,000 tonnes per day ("tpd") operation. In effect, Agua Rica would be the mine replacement for Alumbrera as Alumbrera is currently projected to exhaust its mineral reserves in 2019. The Company has begun discussions to secure access to Alumbrera’s infrastructure. The integrated operation would produce a copper concentrate with low arsenic ("As") content in the first five years. This concentrate would be transported using existing Alumbrera infrastructure (pipeline, railway, port and ship loading facilities) for sale to smelters outside Argentina. After the first five years, the processing facilities would be modified such that a dual concentrate would be produced. Approximately 80% of the concentrate would contain low As levels and would continue to be shipped to smelters via currently existing infrastructure. The remaining concentrate would be further treated through a POX/CIL and SX/EW process to produce copper cathodes for domestic sale. The costs for the construction of the POX/CIL and SX/EW plants are included in the sustaining capital expenditure estimate. The low As content concentrate is expected to be highly marketable.


The Alternative Case Scenario is based on a stand-alone project and considers a 90,000 tpd operation utilizing the POX/CIL and SX/EW process to treat 100% of the concentrate to produce copper cathodes for domestic sale. The Alumbrera facilities or infrastructure would not be required under this scenario.

The key advantages offered by the Alternative Case Scenario include:

  • Expected additional copper recoveries and more gold per tonne of concentrate;
  • Improved margins from incremental processing of copper;
  • Reduced freight and port services costs;
  • Reduced export tax as cathode can be sold in domestic market for internal consumption; and
  • Reduced penalty costs relating to content of arsenic and other impurities.

For the Alternative Case Scenario, the recovery rates for recovered metal were assumed to be the same as they are for the Base Case Scenario. This could ultimately be proven to be conservative given that the process methods used for the production of cathode copper typically yield higher recoveries for copper, molybdenum and gold. However, further metallurgical test work would be required for more certainty on projected recoveries.