TORONTO, ONTARIO--(Marketwired - July 28, 2016) - YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY) ("Yamana" or "the Company") is herein reporting its financial and operational results for the second quarter 2016, including total gold production of 313,086 ounces, revenue of $466.5 million, net earnings(1) of $32.9 million or $0.03 per share, and adjusted earnings(1,2) of $5.4 million or $0.01 per share. Additional highlights are provided below.

In addition, the Company is herein providing an exploration update for its 50% owned Odyssey deposit, which is located east of the main open pit at Canadian Malartic. The exploration program at Odyssey continues to return positive results and an Inferred Mineral Resource for the Odyssey North zone is expected by year end 2016. The Company expects to provide an exploration update with further details in the coming weeks on several of its properties, in particular, Chapada, Jacobina, Gualcamayo and C1 Santa Luz.

OPERATIONAL HIGHLIGHTS
•Total gold production of 313,086 ounces at by-product cash costs(2) and all-in sustaining costs ("AISC")(2) per ounce of $664 and $964, respectively.
•Silver production of approximately 1.8 million ounces at co-product cash costs and AISC per ounce of $8.50 and $12.31, respectively.
•Copper production of 23.2 million pounds at co-product cash costs and AISC per pound of $1.80 and $2.43, respectively.

FINANCIAL HIGHLIGHTS
•Revenue of $466.5 million, an increase of $11.5 million compared to the second quarter of 2015 due to increased gold sales, partly offset by lower silver and copper production and significantly lower realized copper price.
•Net earnings(1) of $32.9 million or $0.03 per share, an increase of $39.9 million or $0.04 per share compared to the second quarter of 2015.
•Adjusted earnings(1,2) of $5.4 million or $0.01 per share, an increase of $13.7 million or $0.02 per share compared to the second quarter of 2015.
•Mine operating earnings of $63.7 million, an increase of $7.5 million compared to the second quarter of 2015.
•Cash flows from operating activities after net change in working capital(3) of $202.0 million, an increase of $78.6 million compared to the second quarter of 2015.
•Cash flows from operating activities before net change in working capital(2,3) of $202.0 million, an increase of $52.7 million compared to the second quarter of 2015.
•Net free cash flow(2) of $37.4 million, an increase of $15.2 million compared to the second quarter of 2015.
•General and administrative expenses of $23.6 million, a decrease of $6.2 million compared to the second quarter of 2015.

(All amounts are expressed in United States dollars unless otherwise indicated.)

1. From continuing operations attributable to Yamana equity holders.
2. Refers to a non-GAAP measure. Reconciliation of non-GAAP measures are available at www.yamana.com/Q22016.
3. Includes a $56.0 million payment on the metal purchase agreement with Altius.

Key operating and financial statistics for the second quarter 2016 are outlined in the following tables:

KEY STATISTICS

Three Months
Ending Jun 30th Six Months
Ending Jun 30th
(In millions of United States Dollars except for shares and per share amounts, unaudited) 2016 2015 2016 2015
Net earnings/(loss) from continuing operations 32.9 (7.0 ) 71.4 (142.3 )
Per share 0.03 (0.01 ) 0.08 (0.15 )
Adjusted earnings/(loss) from continuing operations 5.4 (8.3 ) 34.3 (45.8 )
Per share 0.01 (0.01 ) 0.04 (0.05 )
Revenue 466.5 455.0 896.8 913.0
Cost of sales excluding depletion, depreciation and amortization (283.5 ) (274.5 ) (516.3 ) (556.8 )
Depletion, depreciation and amortization (119.3 ) (124.3 ) (226.8 ) (262.2 )
Mine operating earnings 63.7 56.2 153.7 94.0
General and administrative expenses (23.6 ) (29.8 ) (45.4 ) (56.9 )
Cash flow from operating activities from continuing operations 202.0 123.4 325.0 137.8
Per share 0.21 0.13 0.34 0.15
Cash flow from operating activities before net change in working capital 202.0 149.3 330.5 245.3
Average realized gold price per ounce 1,267 1,195 1,229 1,206
Average realized silver price per ounce 16.82 16.28 15.85 16.51
Average realized copper price per pound 2.12 2.75 2.12 2.70

PRODUCTION SUMMARY - FINANCIAL AND OPERATING SUMMARY

Three Months
Ending Jun 30th Six Months
Ending Jun 30th
2016 2015 2016 2015
Gold produced 313,086 293,707 621,146 592,814
Gold sold 312,356 292,181 612,234 588,348
Silver produced (millions of ounces) 1.79 2.37 3.72 4.85
Silver sold (millions of ounces) 1.78 2.33 3.67 4.77
Copper produced - Chapada (millions of pounds) 23.2 33.6 49.0 60.5
Copper sold - Chapada (millions of pounds) 26.0 31.5 48.7 58.2

Three Months
Ending Jun 30th Six Months
Ending Jun 30th
Gold 2016 2015 2016 2015
Cash costs per ounce $664 $577 $627 $615
Co-product cash costs per ounce $699 $705 $652 $702
All-in sustaining costs per ounce $964 $860 $884 $875
All-in sustaining costs per ounce, co-product basis $949 $941 $868 $919
Silver 2016 2015 2016 2015
Cash costs per ounce $7.98 $7.14 $7.70 $7.30
Co-product cash costs per ounce $8.50 $9.30 $8.09 $8.68
All-in sustaining costs per ounce $12.31 $11.71 $11.45 $11.35
All-in sustaining costs per ounce, co-product basis $12.08 $13.12 $11.22 $12.06
Copper 2016 2015 2016 2015
Cash costs per pound of copper - Chapada $1.80 $1.40 $1.66 $1.58
All-in sustaining costs per pound of copper - Chapada $2.43 $1.69 $2.12 $1.89

PRODUCTION BREAKDOWN

Three Months
Ending Jun 30th Six Months
Ending Jun 30th
Gold Ounces 2016 2015 2016 2015
Chapada 17,299 30,172 38,338 52,532
El Peñón 54,123 55,404 110,570 115,931
Canadian Malartic (50%) 72,502 68,441 146,115 136,334
Gualcamayo 40,264 37,558 76,867 83,734
Mercedes 22,948 19,306 47,252 43,576
Minera Florida 24,211 26,298 49,923 54,411
Jacobina 29,002 21,318 58,972 39,908
Pilar 22,806 21,237 44,654 40,390
Fazenda Brasiliero 16,873 13,974 35,397 25,998
RDM (i) 13,058 - 13,058 -
Continuing Operations 313,086 293,708 621,146 592,814
Ernesto/Pau-a-Pique - - - 460
TOTAL 313,086 293,708 621,146 593,274

Three Months
Ending Jun 30th Six Months
Ending Jun 30th
Silver Ounces 2016 2015 2016 2015
Chapada 52,642 72,978 112,157 134,920
El Peñón 1,522,242 2,028,975 3,130,479 4,194,176
Mercedes 103,262 78,932 227,883 192,371
Minera Florida 112,760 191,162 247,036 333,489
TOTAL 1,790,906 2,372,047 3,717,555 4,854,956
(i) For the period from acquisition on April 29, 2016 to June 30, 2016.

OUTLOOK AND STRATEGY

Since its inception, the Company has taken a portfolio approach to managing its business in which every mine and asset in its portfolio is evaluated based on production, costs, potential and planned returns. In general, the Company looks at a balance among variables including size and scale, cost, location and opportunity for development and improvement. In addition, the Company evaluates the amount of management time required by a given asset compared to its inherent value, potential and opportunities associated with the asset.

The Company continues to focus on operational execution, namely tracking or exceeding operational guidance, as it advances efforts to create further value within its portfolio including the ramp up of RDM towards expected steady-state production in early 2017, and development of C1 Santa Luz towards production in 2018 and Cerro Moro earlier that year. The Company is targeting continuous production growth, and will continue to evaluate opportunities for optimizations and other operational improvements across its portfolio to further increase its production profile. The Company will pursue these and other organic production growth opportunities, the latter including Canadian Malartic developments such as Odyssey, the Monument Bay project, Kirkland Lake opportunities and the Deep Carbonates project at Gualcamayo. Additionally, the Company will pursue internal initiatives to surface value from dormant assets including Agua Rica, Jeronimo, La Pepa, Suyai and Don Sixto, all of which have well-defined delineated mineral reserves and/or mineral resources.

Second quarter operational performance was in line with expectations for all mines except for Chapada. At Chapada, several factors impacted production including a mechanical failure with its in-pit gyratory crusher and weather related issues which made access to higher grade ores more difficult. Mine management believed throughout the quarter that the operation would be able to compensate for the disabled in-pit crusher while it was under repair by mining higher grade, softer ores. These softer ores could be processed directly at the plant, bypassing the in-pit crusher which creates more efficient management for harder and lower grade ores. However, those higher grade, softer ores required significantly more development work, the access to which was meaningfully delayed because of restrictions created by the adverse weather. Exacerbating the issue, the in-pit crusher was idled further, as operational management developed and initiated a plan to repair and improve reliability, with the intent of avoiding similar issues in the future. The in-pit crusher is now operating as expected. In order to further optimize the in-pit crusher's performance, management is planning to replace the mantle and concave during the next planned maintenance shutdown, scheduled during the fourth quarter.

As a result of the production shortfall in the second quarter, production at Chapada is now expected to be 110 million pounds of copper and 106,000 ounces of gold in 2016. While the size and scale of Chapada implies that now at full operation, more production is possible, the Company believes the foregoing is a reasonable baseline level of production for 2016. Production expectations for Chapada remain unchanged for 2017 and 2018.

On a consolidated basis, the Company continues to be well positioned to deliver on gold and silver production guidance for the full year, based on current assumptions, as other mines have exceeded and continue to exceed expectations. Additionally, second half production for all metals, as customary, is expected to be higher than first half production.

Cash costs were impacted by the anomalous events at Chapada during the quarter and by foreign exchange rates. Given the strengthening of local currencies, primarily the Brazilian Real, Canadian Dollar and Chilean Peso, as compared to the Company's budgeted assumptions in early 2016, cash costs have increased in the second quarter compared to the first quarter. Some of the cost increases in the second quarter were foreseeable although the local currency strengthened more than anticipated which increased costs more than expected. The impact from Reais denominated expenditures is partially mitigated as a hedge against the variability of the United States Dollar was executed during the quarter. The Company entered into zero-cost collar contracts totaling 510.0 million Reais with average call and put strike prices of 3.40 and 4.13 respectively.

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