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UPDATE: Yamana Gold Little Changed; Q3 Adjusted Earnings Down, But Just Beats Expectations

Yamana Gold (YRI.TO) said third quarter adjusted earnings were $178 million or $0.24 basic and diluted earnings per share in the third quarter of 2012, compared with $190 million or $0.26 per share in the same quarter of 2011. Lower adjusted earnings is attributed to lower metal prices, primarily copper and silver prices, partly offset by higher volume of gold sales and increased equity earnings from the company's interest in Alumbrera.

Analysts, on average, had expected earnings of 23 cents a share, according to Thomson Reuters I/B/E/S.

Net earnings for the quarter were $60 million or $0.08 per share on a basic and diluted basis, compared with net earnings of $116 million or basic and diluted earnings per share of $0.16 for the third quarter of 2011. Net earnings for the third quarter of 2012 were impacted by an increase in the Chilean tax rate, enacted in late September which affects the tax rates on both current and deferred income taxes. The company has applied the new tax rate on all of its Chilean deferred income tax liabilities resulting in an adjustment to net earnings during the reporting period although deferred income taxes may never be paid unless the assets are sold through a direct asset sale. The additional taxes from the change in the Chilean tax rate may never be paid.

Revenues were $612 million in the third quarter compared with $555 million in the same quarter of 2011. Mine operating earnings were $279 million in the quarter, compared with $272 million in the third quarter of 2011. Higher revenues and mine operating earnings were mainly due to higher sales volume of gold from the production of the new Mercedes mine, which was under construction during the comparative period, partly offset by lower metal prices and lower volume of copper concentrate sales.

Revenues for the quarter were generated from the sale of 297,406 GEO and 37.1 million pounds of copper, excluding Alumbrera which is accounted for as an equity investment. This compares to production excluding Alumbrera of 266,351 GEO and 38.7 million pounds of copper in the third quarter of 2011.

During the quarter, market fundamentals remained firm for gold and gold prices started to trend upward largely in reaction to the easing of monetary policy by most of the major economies. Compared with the third quarter of 2011, current quarter average realized gold price in 2012 was $1,680 per ounce versus $1,697 per ounce in 2011, current quarter average realized copper price was $3.54 per pound versus $3.98 per pound and current quarter average realized silver price was $30.76 per ounce compared to $37.52 per ounce in the third quarter of 2011. Although average realized prices for gold, copper and silver were lower than those in the third quarter of 2011, average realized prices for gold and silver trended upward from the second quarter of 2012, increased by 5% and 14%, respectively, consistent with market prices.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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