Yamana CEO hopes to increase production to two million ounces through acquisitions

TORONTO - Yamana Gold Inc. (TSX:YRI) is heading into the new year forecasting a 30 to 40 per cent increase in production and a "continually increasing gold price."

And Yamana CEO Peter Marrone hopes to take advantage of this bright outlook through acquisitions that will further increase production to as much as two million ounces before 2012.

"What happened in the market in late 2008 has actually given us a very unique opportunity," Marrone said in an interview Tuesday.

"With many companies having fallen in price and in value as dramatically as they have, and with the lack of availability of credit for companies with development-stage assets, it gives us the opportunity to have a look-see at what's in the marketplace."

Marrone projected Yamana can reach its production goal of two million ounces organically by 2012, but he hopes to accelerate that through acquisitions.

Yamana said Monday it expects to produce 1.3 million to 1.4 million gold equivalent ounces in 2009 at a cash cost of between $345 and $375 per ounce. This compares to production of one million ounces in 2008, produced at an average cost of $385 per ounce.

The company said production is projected to increase to approximately 1.4 million to 1.5 million gold equivalent ounces in 2010 from mines currently in production.

Marrone said the increase in production is attributable to two new mines that came online at the end of 2008 - the Gualcamayo mine in Argentina and the Sao Vicente mine in Brazil - as well as increased throughput from El Penon in Chile and an expansion at Minera Florida, also in Chile.

Meanwhile, the Toronto company cut its dividend to one cent a share per quarter from one cent a month to conserve cash and help finance its expansion projects.

Marrone said the move is in response to the slump in copper prices and is expected to save Yamana $58 million this year.

"When we increased the dividend (in 2008), we said we would be in line from a yield point of view to our peer group, and what happened was the dividend had gotten significantly out of line with the peer group," he added.

"We were about three times what the peer group was paying in terms of a yield on dividend."