You can't accuse Yamana Gold
Chapada, Yamana's largest mine, produces a copper/gold concentrate. The open-pit Brazilian mine, which Yamana built, was completed late in 2006, and this marks its first full quarter of operations. To get a grasp on how well things are going, consider that Chapada is already producing ore at an annualized rate in excess of its design capacity. Gold production rose 13%, and recovery rates improved for both gold and copper. All of these trends are forecasted to continue in the back half of the year.
Back in April, Yamana discovered that one of its other big mines, Sao Francisco, contains more gold. Originally, the company thought the mine was waste, so operations got shuffled a bit. This pickup of additional low-grade ore has lowered gold production over the past two quarters, but it also raises total resources and expands the life of the mine. However, members of management assert that they're developing "operational competence and expertise" in determining where the higher-grade areas are. They believe the decision between what is waste in ore will become more predictable as they expand their expertise in the mine.
I should mention that Sao Francisco was also an organic growth project. I'm just as guilty as others for pegging Yamana as a serial acquirer, but the company has clearly done a lot more than simply buy other companies's mines. That won't stop with the two mines I discussed here. The Gualcamayo feasibility study is running a bit behind schedule, but management believes the results are promising so far. Production is now scheduled to begin in the middle of 2008. In addition, following that, the company will begin focusing on starting up operations in the C1-Santa Luz study.
The press release is chock-full of numbers and data that would take up too much space to write about here, but the company completed a solid quarter and displays promising growth both organically and through strategic acquisitions. The proposed three-way Yamana-Northern Orion