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Yamana Gold reports higher adjusted profit

Yamana Gold's Jacobina operation in northern Brazil


Miner Yamana Gold Inc. reported Wednesday an 8-per-cent boost in adjusted profit on higher precious metal prices and a boost in concentrate sales volume.

The Toronto-based gold miner also announced an 11-per-cent boost in its overall reserves and said it would increase its annual dividend by 10 per cent to 22 cents.

On an adjusted basis, earnings for the quarter ended Dec. 31, rose to $184.2-million, or 25 cents per share, from $170.98-million, or 23 cents per share. That was slightly above analyst expectations of 24 cents per share on revenue of $601.5-million, according to Thomson Reuters I/B/E/S.

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Revenue rose 6 per cent to $568.8-million, as the average realized gold price climbed more than 21 per cent to $1,670 per ounce and the silver price rose 11 per cent to $31.29.

For the full year, revenue rose to $2.2-billion from $1.7-billion in 2010 as the company boosted production by 5 per cent to 1.1 million gold equivalent ounces. Production for the quarter rose to 276,918 gold equivalent ounces.

Net earnings for the quarter fell to $89.6-million, or 12 cents per share, as the miner was hit with an $81-million non-cash impairment charge on an investment. In the year-ago period, the company had net income of $125.6-million, or 17 cents per share.

Yamana operates mines in Argentina, Brazil, Chile and Mexico. In January, the company said it would boost production by 13 per cent in 2012, as the Mercedes mine in Mexico ramps up to its commercial production rate.

Yamana boosted its overall reserves by 11 per cent to 18.6 million gold equivalent ounces. That includes a 10-per-cent increase in gold ounces to 17 million ounces and a 28-per-cent jump in silver reserves to 82.9 million ounces.

Yamana has budgeted some $125-million for exploration in 2012 and is not focused on mergers and acquisitions right now, chief executive Peter Marrone told Reuters.

"I'm not feeling good about it," he said of the current climate for dealmaking. "I still think that the best way for us to deliver value to shareholders is organic growth."

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Mr. Marrone said that Yamana will spend some $25-million to $35-million of its exploration budget at the El Penon project in Chile and a significant amount at the Pilar project in Brazil.

Overall, exploration spending will be 40 to 45 per cent focused in Chile and about 30 to 35 per cent in Brazil, with the balance in Argentina and Mexico.

Yamana, which started up its Mercedes project in Mexico in the fourth quarter of 2011, said construction is on track at its two development-stage projects in Brazil, Ernesto and C1 Santa Luz. Both are expected to start production this year.

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