Yamana
Gold Inc.
(Translation
of registrant's name into English)
|
150
York Street
Suite
1902
Toronto,
Ontario M5H 3S5
(Address
of principal executive offices)
|
Form
20-F o
|
Form
40-F x
|
Yes
o
|
No
x
|
YAMANA GOLD INC. | ||
Date:
March 31, 2006
|
/s/ Charles
Main
|
|
|
Name:
Charles Main
|
|
Title:
CFO
|
1. |
Core
Business
|
2. |
Change
in Year End
|
3. |
Highlights
|
· |
Cash
balance of $151.6 million as at December 31, 2005
|
· |
Cash
flow from operations of $6.4 million before changes in non-cash
working
capital items and cash flow from operations of $3.4 million after
a
reduction in non-cash working capital items of $3
million
|
· |
Achieved
average cash costs of $289 per ounce from its Fazenda Nova and
Fazenda
Brasileiro mines.
|
· |
Commenced
commercial production at its Fazenda Nova Mine.
|
· |
Commenced
the start-up of mine operations at its São Francisco
Mine.
|
· |
Ahead
of schedule with the construction of its Chapada copper-gold project.
|
· |
Raised
gross proceeds of $49.6 million from the early exercise of its
publicly
traded warrants that otherwise would not have been available to
the
Company until July 2008.
|
· |
Raised
$105.3 million in net proceeds from the public issue of 26 million
common
shares.
|
· |
Drew
down on debt financing in the amount of $100 million for the construction
of the Chapada copper-gold project.
|
· |
Entered
into smelter off-take agreements for 150,000 tonnes of copper concentrate
from its Chapada copper-gold project currently under
construction.
|
· |
Initiated
a copper hedging program that is intended to help secure a less
than two
year payback at its Chapada copper-gold
project.
|
· |
Pursued
the purchase of RNC Gold Inc. whereby the Company acquired two
additional
mines: San Andrés and La Libertad bringing total forecast gold production
up to more than 500,000 ounces by 2007. The transaction was approved
by
RNC Gold Inc. shareholders on February 17, 2006, received court
approval
on February 22, 2006 and closed February 28,
2006.
|
· |
Advanced
three projects through exploration to the point where they now
each have
the potential to become our next new
mine.
|
· |
Increased
proven and probable reserves by 1.2 million
ounces.
|
· |
Continued
drilling and the development E-Deep at the Fazenda Brasileiro Mine
to
further define and expand the size of the ore
body.
|
4. |
Subsequent
events - Acquisitions
|
5. |
Overview
of Financial Results
|
|
Dec
31,
2005
|
Dec
31,
2004
|
Feb
29,
2004
|
|||||||
|
|
(ten
months)
|
|
|||||||
|
|
|
||||||||
Financial
results (in thousands of dollars)
|
|
|
||||||||
Revenues1
|
$
|
46,038
|
$
|
32,298
|
$
|
19,811
|
||||
Mine
operating earnings for the year4
|
$
|
8,569
|
$
|
10,377
|
$
|
6,754
|
||||
Net
earnings (loss) for the year2
|
$
|
(4,111
|
)
|
$
|
2,783
|
$
|
1,008
|
|||
Adjusted
net earnings for the year3
|
$
|
1,991
|
$
|
2,696
|
$
|
1,788
|
||||
Cash
flow from operations (after
changes in non-cash working capital items)
|
$
|
3,410
|
$
|
8,536
|
$
|
5,491
|
||||
|
||||||||||
Cash
flow from operations (before
changes in non-cash working capital items)
|
$
|
6,445
|
$
|
9,293
|
$
|
4,953
|
||||
|
|
|
||||||||
|
|
|
||||||||
Per
share financial results
|
|
|
||||||||
Basic
(loss) earnings per share2
|
$
|
(0.03
|
)
|
$
|
0.03
|
$
|
0.02
|
|||
Diluted
(loss) earnings per share2
|
$
|
(0.03
|
)
|
$
|
0.02
|
$
|
0.02
|
|||
Adjusted
earnings per share3
|
$
|
0.01
|
$
|
0.03
|
$
|
0.04
|
||||
Financial
position (in thousands of dollars)
|
|
|
||||||||
Total
assets
|
$
|
465,697
|
$
|
177,106
|
$
|
93,948
|
||||
Total
long-term liabilities
|
$
|
119,281
|
$
|
9,572
|
$
|
7,657
|
|
Dec
31,
2005
|
Dec
31,
2004
|
Feb
29,
2004
|
|||||||
|
(ten months) |
|
||||||||
|
|
|
||||||||
Gold
Production (ounces):
|
|
|
||||||||
Pre-Commercial
|
|
|
||||||||
Fazenda
Nova
|
7,379
|
2,849
|
-
|
|||||||
São
Francisco pilot plant
|
4,843
|
3,214
|
283
|
|||||||
|
12,222
|
6,063
|
283
|
|||||||
Commercial
|
|
|
||||||||
Fazenda
Brasileiro
|
74,570
|
78,168
|
56,794
|
|||||||
Fazenda
Nova
|
28,780
|
-
|
-
|
|||||||
|
103,350
|
78,168
|
56,794
|
|||||||
|
115,572
|
84,231
|
57,077
|
Gold
Sales (ounces)
|
|
|
||||||||
Pre-Commercial
|
|
|
||||||||
Fazenda
Nova
|
4,694
|
1,704
|
-
|
|||||||
São
Francisco pilot plant
|
4,050
|
2,883
|
-
|
|||||||
|
8,744
|
4,587
|
-
|
|||||||
Commercial
|
|
|
||||||||
Fazenda
Brasileiro
|
72,074
|
79,822
|
49,989
|
|||||||
Fazenda
Nova
|
31,698
|
-
|
-
|
|||||||
|
103,772
|
79,822
|
49,989
|
|||||||
|
112,516
|
84,409
|
49,989
|
|||||||
|
|
|
||||||||
Non-GAAP
Measures3
|
|
|
||||||||
Per
ounce data:
|
|
|
||||||||
Cash
costs per ounce produced
|
|
|
||||||||
Fazenda
Brasileiro4
|
$
|
320
|
$
|
205
|
$
|
208
|
||||
Fazenda
Nova
|
$
|
208
|
-
|
-
|
||||||
|
$
|
289
|
$
|
205
|
$
|
208
|
||||
|
|
|
||||||||
Average
gold price realized (1)
|
$
|
448
|
$
|
409
|
$
|
396
|
||||
Average
gold spot price
|
$
|
445
|
$
|
409
|
$
|
372
|
||||
|
|
|
||||||||
Operating
statistics
|
|
|
||||||||
Gold
ore grade (g/t)
|
|
|
||||||||
Fazenda
Brasileiro
|
2.44
|
3.13
|
3.42
|
|||||||
Fazenda
Nova
|
0.87
|
-
|
-
|
|||||||
|
|
|
||||||||
Gold
recovery rate (%)
|
|
|
||||||||
Fazenda
Brasileiro
|
89.3
|
91.9
|
95.5
|
|||||||
Fazenda
Nova
|
81.0
|
-
|
-
|
|||||||
|
|
|
|
A
non-GAAP Measure
|
Dec.
31, 2005
|
Dec.
31, 2004
(ten
months)
|
Feb.
29, 2004
|
|||||||
Net
earnings (loss) per consolidated financial statements
|
$
|
(4,111
|
)
|
$
|
2,783
|
$
|
1,008
|
|||
Adjustments:
|
||||||||||
Stock-based
compensation
|
2,303
|
2,191
|
612
|
|||||||
Foreign
exchange gain
|
(369
|
)
|
(1,848
|
)
|
(157
|
)
|
||||
Unrealized
losses on commodity contracts
|
8,615
|
-
|
-
|
|||||||
Future
income tax (recovery) expense
|
(4,447
|
)
|
(430
|
)
|
324
|
|||||
Adjusted
net earnings
|
$
|
1,991
|
$
|
2,696
|
$
|
1,787
|
||||
Adjusted
earnings per share
|
$
|
0.01
|
$
|
0.03
|
$
|
0.04
|
||||
Mine
|
Increase
(Decrease) in Contained Ounces
|
|
000’s)
|
Fazenda
Brasileiro
|
(26)
|
Fazenda
Nova
|
(54)
|
C-1
Santa Luz
|
556
|
São
Francisco
|
324
|
São
Vicente
|
309
|
Chapada
|
54
|
Total
Increase
|
1,163
|
6. |
Mine
Operations
|
Quarter
ended December 31, 2005
|
Quarter
ended December 31, 2004
|
||||||||||||
Production
(oz.)
|
Cash
costs per oz.
(a
non-GAAP measure)
|
Production
(oz.)
|
Cash
costs per oz.
(a
non-GAAP measure)
|
||||||||||
Fazenda
Nova
|
12,740
|
$
|
177
|
-
|
$
|
-
|
|||||||
Fazenda
Brasileiro
|
17,810
|
$
|
357
|
20,854
|
$
|
234
|
|||||||
TOTAL
COMMERCIAL PRODUCTION
|
30,550
|
$
|
282
|
20,854
|
$
|
234
|
|||||||
Fazenda
Nova Pre-operating
|
-
|
$
|
-
|
2,745
|
$
|
-
|
|||||||
São
Francisco Pilot Plant
|
1,212
|
$
|
-
|
846
|
$
|
-
|
|||||||
TOTAL
PRODUCTION
|
31,762
|
$
|
-
|
24,445
|
$
|
-
|
|||||||
|
For
the twelve months ended December 31, 2005
|
For
the ten months ended December 31, 2004
|
|||||||||||
|
Production
(oz.
|
) |
Cash
costs per oz.
(a
non-GAAP measure
|
)
|
Production
(oz.
|
)
|
Cash
costs per oz.
(a
non-GAAP measure
|
)
|
|||||
Fazenda
Nova
|
28,780
|
$
|
208
|
-
|
$
|
-
|
|||||||
Fazenda
Brasileiro
|
74,570
|
$
|
320
|
78,168
|
$
|
218
|
|||||||
TOTAL
COMMERCIAL PRODUCTION
|
103,350
|
$
|
289
|
78,168
|
$
|
218
|
|||||||
Fazenda
Nova Pre-operating
|
7,379
|
$
|
-
|
2,849
|
$
|
-
|
|||||||
São
Francisco Pilot Plant
|
4,843
|
$
|
-
|
3,214
|
$
|
-
|
|||||||
TOTAL
PRODUCTION
|
115,572
|
$
|
-
|
84,231
|
$
|
-
|
|||||||
Dec.
31, 2005
|
Dec.
31, 2004 (ten months)
|
Feb.
29, 2004
|
|||||||||||||||||||||||||||||||||||
Production
|
Cash
Costs1
|
Production
|
Cash
Costs1
|
Production
|
Cash
Costs1
|
||||||||||||||||||||||||||||||||
oz.
|
%
change
|
$/oz
|
%
change
|
oz.
|
%
change
|
$/oz
|
%
change
|
oz.
|
%
change
|
$/oz
|
%
change
|
||||||||||||||||||||||||||
Pre-Commercial
Production:
|
|||||||||||||||||||||||||||||||||||||
Fazenda
Nova
|
7,379
|
59
|
%
|
-
|
-
|
2,849
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
São
Francisco
|
4,843
|
51
|
%
|
-
|
-
|
3,214
|
1036
|
%
|
-
|
-
|
283
|
-
|
-
|
-
|
|||||||||||||||||||||||
12,222
|
102
|
%
|
-
|
-
|
6,063
|
2042
|
%
|
-
|
-
|
283
|
-
|
-
|
-
|
||||||||||||||||||||||||
Commercial
Production:
|
|||||||||||||||||||||||||||||||||||||
Fazenda
Nova
|
28,780
|
-
|
$
|
208
|
-
|
-
|
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||
Fazenda
Brasileiro
|
74,570
|
(5
|
%)
|
$
|
320
|
56
|
%
|
78,168
|
38
|
%
|
$
|
205
|
(1
|
%)
|
56,794
|
-
|
$
|
208
|
-
|
||||||||||||||||||
103,350
|
32
|
%
|
$
|
289
|
41
|
%
|
78,168
|
38
|
%
|
$
|
205
|
(1
|
%)
|
56,794
|
-
|
$
|
208
|
-
|
|||||||||||||||||||
115,572
|
37
|
%
|
$
|
289
|
41
|
%
|
84,231
|
48
|
%
|
$
|
205
|
(1
|
%)
|
57,077
|
-
|
$
|
208
|
-
|
Ore
Stacked (tonnes)
|
Production
(oz.)
|
Cash
costs/oz.
(A
non-GAAP Measure)
|
||||||||
Pre-commercial
|
306,900
|
7,379
|
-
|
|||||||
Commercial
Production:
|
||||||||||
Second
Quarter (as
of May 1, 2005)
|
272,800
|
5,676
|
$
|
265
|
||||||
Third
Quarter
|
479,600
|
10,364
|
$
|
215
|
||||||
Fourth
Quarter
|
506,400
|
12,740
|
$
|
177
|
||||||
Commercial
Production
|
1,258,800
|
28,780
|
$
|
208
|
||||||
Total
Production
|
1,565,700
|
36,159
|
-
|
December
31, 2005
|
|||||||
Cash
costs / oz.
(A
non-GAAP Measure)
|
Percentage
of
cash
costs / oz.
|
||||||
Mining
|
$
|
69
|
33
|
%
|
|||
Crushing,
agglomeration and stacking
|
63
|
30
|
%
|
||||
Leaching
and solution neutralization
|
19
|
9
|
%
|
||||
Recovery
plant
|
12
|
6
|
%
|
||||
General
and administrative
|
22
|
11
|
%
|
||||
Other
(i)
|
23
|
11
|
%
|
||||
Total
|
$
|
208
|
100
|
%
|
December
31, 2005
(12
months)
|
December
31, 2004
(10
months)
|
|||||||||||||
Cash
costs / oz.
(A
non-GAAP Measure)
|
Percentage
of
cash
costs / oz.
|
Cash
costs / oz.
(A
non-GAAP Measure)
|
Percentage
of
cash
costs / oz.
|
|||||||||||
Mining
|
$
|
170
|
53
|
%
|
$
|
107
|
49
|
%
|
||||||
Milling
|
97
|
30
|
%
|
63
|
29
|
%
|
||||||||
General
and admin
|
41
|
13
|
%
|
37
|
17
|
%
|
||||||||
Other
(i)
|
12
|
4
|
%
|
11
|
5
|
%
|
||||||||
Total
|
$
|
320
|
100
|
%
|
$
|
218
|
100
|
%
|
7. |
Liquidity
and Capital Resources
|
§ |
draw
down of the previously announced $100 million loan facility for
the
construction and development of the Chapada copper-gold project,
|
§ |
$48.1
million net proceeds received on the early conversion program of
its
publicly traded warrants which closed in August 2005, and
|
§ |
$105.3
million in net proceeds from a public share equity issue that closed
in
October 2005.
|
§ |
$48.1
million of net proceeds received on the issue of common shares
related to
the warrant early conversion program introduced in June
2005,
|
§ |
$105.3
net proceeds received from an equity financing that closed in October
2005,
|
§ |
$1.6
million received on the exercise of options and warrants, and
|
§ |
$100
million advanced under a loan facility for the construction and
development of the Chapada copper-gold Project.
|
(in
millions of US$)
|
Dec.
31, 2005
|
Dec.
31, 2004
|
Feb
29, 2004
|
|||||||
(ten
months)
|
||||||||||
Construction
of Chapada (1)
|
$
|
76.7
|
$
|
3.2
|
$
|
-
|
||||
Construction
of São Francisco (1)
|
55.3
|
1.9
|
-
|
|||||||
Construction
of Fazenda Nova (1)
|
-
|
6.5
|
0.1
|
|||||||
Acquisition
of Fazenda Brasileiro
|
-
|
-
|
22.1
|
|||||||
Exploration
|
15.4
|
4.8
|
2.5
|
|||||||
Capital
expenditures at Fazenda Brasileiro
|
8.3
|
8.2
|
1.7
|
|||||||
Capital
expenditures at Fazenda Nova
|
2.6
|
-
|
||||||||
Feasibility
studies
|
1.1
|
1.5
|
0.3
|
|||||||
Mineral
rights
|
0.9
|
-
|
||||||||
Other
|
0.7
|
0.4
|
1.4
|
|||||||
$
|
161.0
|
$
|
26.5
|
28.1
|
8. |
Capitalization
|
9. |
General
and Administrative
Expenses
|
10. |
Foreign
Exchange
|
11. |
Investment
Income and Currency
Hedging
|
12. |
Income
Taxes
|
13. |
Closure
and Reclamation Costs
|
14. |
Contractual
Commitments (in
thousands)
|
Year
|
2006
|
2007
|
2008
|
2009
|
2010
|
|||||||||||
Office
leases
|
$
|
375
|
$
|
402
|
$
|
274
|
$
|
274
|
$
|
274
|
||||||
Fazenda
Brasileiro mine operating and service
contracts
|
4,301
|
399
|
-
|
-
|
-
|
|||||||||||
Fazenda
Nova Mine operating and service
contracts
|
3,105
|
718
|
-
|
-
|
-
|
|||||||||||
Chapada
construction service contracts
|
49,417
|
1,320
|
289
|
-
|
-
|
|||||||||||
São
Francisco construction service contracts
|
2,936
|
-
|
-
|
-
|
-
|
|||||||||||
Notes
payable (principal and
interest)
|
-
|
8,651
|
3,294
|
3,285
|
103,726
|
|||||||||||
$
|
60,134
|
$
|
11,490
|
$
|
3,857
|
$
|
3,559
|
$
|
103,550
|
15. |
Related
Party Transactions
|
16. |
Contingency
|
17. |
Fourth
Quarter Analysis
|
A
non-GAAP Measure
|
Dec.
31, 2005 Quarter
|
Dec.
31, 2004
Quarter
|
|||||
Net
earnings (loss) per consolidated financial statements
|
$
|
(73
|
)
|
$
|
804
|
||
Adjustments:
|
|||||||
Foreign
exchange loss (gain)
|
3,057
|
(519
|
)
|
||||
Unrealized
losses on commodity contracts
|
8,615
|
-
|
|||||
Future
income tax expense (recovery)
|
(8,288
|
)
|
(1,548
|
)
|
|||
Adjusted
net earnings (loss)
|
$
|
3,311
|
$
|
(1,263
|
)
|
||
Adjusted
earnings per share
|
$
|
0.02
|
$
|
(0.01
|
)
|
||
December 31, | September 30, | June 30, | March 31, | ||||||||||
2005
|
2005
|
2005
|
2005
|
||||||||||
Financial
results (in
thousands of dollars)
|
|||||||||||||
Revenue
(i)
|
$
|
16,655
|
$
|
10,749
|
$
|
10,785
|
$
|
7,850
|
|||||
Net
earnings (loss) for the period
|
$
|
(73
|
)
|
$
|
3,246
|
$
|
(7,576
|
)
|
$
|
292
|
|||
Per
share financial results
|
|||||||||||||
Basic
and diluted earnings (loss) per share
|
$
|
(0.00
|
)
|
$
|
0.02
|
$
|
(0.06
|
)
|
$
|
0.00
|
|||
Financial
Position (in
thousands of dollars)
|
|||||||||||||
Total
assets
|
$
|
465,697
|
$
|
345,206
|
$
|
289,433
|
$
|
177,902
|
|||||
Total
long-term liabilities
|
$
|
119,281
|
$
|
118,557
|
$
|
113,586
|
$
|
8,924
|
|||||
Gold
sales (ounces):
(iii)
|
|||||||||||||
Fazenda
Brasileiro
|
19,257
|
16,137
|
18,131
|
18,549
|
|||||||||
Fazenda
Nova
|
15,463
|
8,809
|
7,426
|
-
|
|||||||||
34,720
|
24,946
|
25,557
|
18,549
|
||||||||||
Gold
production (ounces):
|
|||||||||||||
Commercial
production:
|
|||||||||||||
Fazenda
Brasileiro
|
17,810
|
19,558
|
18,143
|
19,059
|
|||||||||
Fazenda
Nova
|
12,740
|
10,364
|
5,676
|
-
|
|||||||||
30,550
|
29,922
|
23,819
|
19,059
|
||||||||||
Pre-operating
production:
|
|||||||||||||
Fazenda
Nova
|
-
|
-
|
2,150
|
5,229
|
|||||||||
São
Francisco Pilot Plant
|
1,212
|
1,033
|
1,376
|
1,222
|
|||||||||
1,212
|
1,033
|
3,526
|
6,451
|
||||||||||
Total
production
|
31,762
|
30,955
|
27,345
|
25,510
|
December 31, | September 30, | June 30, | March 31, | ||||||||||
2005
|
2005
|
2005
|
2005
|
||||||||||
Non-GAAP
Measures (iv)
|
|||||||||||||
Per
ounce data:
|
|||||||||||||
Cash
costs per ounce produced: (ii),(iii)
|
|||||||||||||
Fazenda
Brasileiro
|
$
|
357
|
$
|
332
|
$
|
330
|
$
|
263
|
|||||
Fazenda
Nova
|
$
|
177
|
$
|
215
|
$
|
265
|
$
|
-
|
|||||
$
|
282
|
$
|
291
|
$
|
314
|
$
|
263
|
||||||
Average
gold price realized: (i),(iii)
|
|||||||||||||
Fazenda
Brasileiro
|
$
|
483
|
$
|
436
|
$
|
426
|
$
|
427
|
|||||
Fazenda
Nova
|
$
|
487
|
$
|
433
|
$
|
427
|
$
|
-
|
|||||
$
|
485
|
$
|
435
|
$
|
426
|
$
|
427
|
||||||
Operating
statistics (iii)
|
|||||||||||||
Gold
ore grade (g/t):
|
|||||||||||||
Fazenda
Brasileiro
|
2.31
|
2.47
|
2.33
|
2.66
|
|||||||||
Fazenda
Nova
|
0.87
|
0.86
|
0.90
|
-
|
|||||||||
Gold
recovery rate (%):
|
|||||||||||||
Fazenda
Brasileiro
|
88.3
|
89.6
|
89.6
|
90.4
|
|||||||||
Fazenda
Nova
|
90.0
|
78.0
|
83.0
|
-
|
|||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||
2004
|
2004
|
2004
|
2005
|
||||||||||
Financial
results (in
thousands of dollars)
|
|||||||||||||
Revenue
(i)
|
$
|
10,305
|
$
|
8,827
|
$
|
13,166
|
$
|
10,453
|
|||||
Net
earnings (loss) for the period
|
$
|
804
|
$
|
6
|
$
|
1,973
|
$
|
639
|
|||||
Per
share financial results
|
|||||||||||||
Basic
and diluted earnings (loss) per share
|
$
|
0.01
|
$
|
0.00
|
$
|
0.02
|
$
|
0.01
|
|||||
Financial
Position (in
thousands of dollars)
|
|||||||||||||
Total
assets
|
$
|
177,106
|
$
|
101,196
|
$
|
96,363
|
$
|
93,948
|
|||||
Total
long-term liabilities
|
$
|
9,572
|
$
|
8,145
|
$
|
7,240
|
$
|
7,657
|
|||||
Gold
sales (ounces):
(iii)
|
|||||||||||||
Fazenda
Brasileiro
|
23,982
|
22,246
|
33,594
|
26,617
|
|||||||||
Gold
production (ounces):
|
|||||||||||||
Commercial
production:
|
|||||||||||||
Fazenda
Brasileiro
|
20,854
|
23,214
|
34,099
|
25,944
|
|||||||||
Pre-operating
production:
|
|||||||||||||
Fazenda
Nova
|
2,745
|
104
|
-
|
-
|
|||||||||
São
Francisco pilot plant
|
846
|
1,157
|
1,211
|
283
|
|||||||||
3,591
|
1,261
|
1,211
|
283
|
||||||||||
Total
Production
|
24,445
|
24,475
|
35,310
|
26,227
|
|||||||||
December 31, | September 30, | June 30, | March 31, | ||||||||||
2004
|
2004
|
2004
|
2005
|
||||||||||
Non-GAAP
Measures (iv)
|
|||||||||||||
Per
ounce data:
|
|||||||||||||
Cash
costs per ounce produced: (ii),(iii)
|
|||||||||||||
Fazenda
Brasileiro
|
$
|
224
|
$
|
215
|
$
|
188
|
$
|
204
|
|||||
Average
gold price realized: (i),
(iii)
|
|||||||||||||
Fazenda
Brasileiro
|
$
|
434
|
$
|
401
|
$
|
396
|
$
|
407
|
|||||
Operating
statistics (iii)
|
|||||||||||||
Gold
ore grade (g/t):
|
|||||||||||||
Fazenda
Brasileiro
|
2.82
|
3.07
|
3.44
|
3.50
|
|||||||||
Gold
recovery rate (%):
|
|||||||||||||
Fazenda
Brasileiro
|
92.5
|
92.4
|
95.5
|
95.3
|
(i) | Revenues consist of sales net of sales taxes. Revenue per ounce data is calculated based on gross sales. |
(ii) | Certain mine general and administrative costs have been reclassified from mine operating earnings and cash costs to general and administrative expenses. |
(iii) | During commercial production. |
(iv) | A cautionary note regarding non-GAAP measures follows at the end of this Management’s Discussion and Analysis of Operations and Financial Condition. |
(v)
|
Net
(loss) earnings, basic (loss) earnings per share and diluted
earnings per
share for the quarter ended December 31, 2005 include an unrealized
non-cash loss on commodity contracts of $8.6 million.
|
18. |
Critical
Accounting Policies and
Estimates
|
19. |
Construction
Project
|
· |
Civil
construction (80% completed)
|
· | Concrete structure underneath the stockpile area is completed |
· | Construction of the camps (completed) |
· | Erection of the temporary power line (completed) |
· | Construction of the maintenance and administration buildings (completed) |
· | Site preparation (completed) |
· | Explosives and solid waste storage buildings and the fuel containment area (completed) |
· | Purchase of vehicles and machinery: conveyor system, belt feeders, concentrate thickener, cyclones, flotation columns and cells |
· | Started erection of the structural steel for the concentrate storage building |
Dec.
31,
2005
|
Dec.
31,
2004
|
||||||||||||
Cost
|
Accumulated
Amortization
|
Net
Book Value
|
Net
Book
Value
|
||||||||||
Land
|
$
|
396
|
$
|
-
|
$
|
396
|
$
|
396
|
|||||
Machinery
And
equipment
|
33
|
12
|
21
|
22
|
|||||||||
Furniture
and office
equipment
|
13
|
11
|
2
|
3
|
|||||||||
$
|
442
|
$
|
23
|
$
|
419
|
$
|
421
|
||||||
Assets
under construction
|
85,348
|
1,811
|
83,537
|
3,221
|
|||||||||
$
|
85,790
|
$
|
1,834
|
$
|
83,956
|
$
|
3,642
|
20. |
Off-take
Agreements
|
21. |
Hedging
Program
|
· |
Providing
support for the payback of Chapada which at $1.00 per pound of
copper
price and $400 per ounce of gold price has a two year
payback;
|
· |
Increasing
the value of Chapada and thereby the net asset value per share
of the
Company;
|
· |
Ensuring
that the Company participates in higher copper prices especially
for the
balance of its copper production;
|
· |
Ensuring
that the Company fully participates in any increase in gold prices
from
its significant gold production at Chapada as no gold is being
hedged;
|
· |
Better
positioning the Company and Chapada as a significant gold producer
as
copper is monetized into cash; and
|
· |
As
copper is monetized, that cash flow will be available for development
and
acquisition of other gold projects.
|
22. |
Off-Balance
Sheet Arrangements
|
23. |
Reserve
Estimates
|
Increase
in contained ounces (000;s)
|
|
C-1
Santa Luz
|
556
|
São
Francisco
|
324
|
São
Vicente
|
309
|
Mine/Project
|
Gold
price per oz./price per lb.
|
||||||
2005
|
2004
|
||||||
Fazenda
Brasileiro
|
$
|
421
|
$
|
350
|
|||
Chapada
|
$
|
425/$1.00
|
$
|
325/$0.85
|
|||
São
Francisco
|
$
|
425
|
$
|
350
|
|||
São
Vicente
|
$
|
425
|
$
|
325
|
|||
Fazenda
Nova
|
$
|
500
|
$
|
345
|
|||
C1
Santa Luz
|
$
|
425
|
$
|
-
|
|||
Ernesto
|
$
|
425
|
$
|
-
|
24. |
Exploration
and Development
|
2006
|
||||
Itapicaru
Greenstone Belt/Fazenda Brasileiro
|
43
|
%
|
||
Santa
Elina Gold Belt
|
51
|
%
|
||
Fazenda
Nova
|
2
|
%
|
||
Chapada
|
3
|
%
|
||
Generative
|
1
|
%
|
||
100
|
%
|
|||
25. |
Sale
of Argentine Assets
|
26. |
Outlook
and Strategy
|
· |
Advance
exploration and development
projects
|
· |
Complete
construction of the Chapada copper-gold
mine
|
· |
Pursue
acquisition targets
|
· |
Continue
an extensive exploration program in Brazil and Central
America
|
Gold
Production Estimates
|
2006E
|
|||
Fazenda
Brasileiro
|
80-85,000
|
|||
Fazenda
Nova
|
30-33,000
|
|||
São
Francisco
|
120-126,000
|
|||
Chapada
|
15-19,000
|
|||
San
Andrés
|
50-60,000
|
|||
La
Libertad
|
45-50,000
|
|||
Total
|
340-373,000
|
|||
Average
Projected Total Cash Costs/Ounce
|
$
|
260-275
|
27. |
Depletion
and Impairment of Mineral
Properties
|
28. |
Risks
and Uncertainties
|
29. |
Disclosure
Controls and Procedures
|
/s/ Peter Marrone | /s/ Charles B. Main | ||
Peter Marrone | Charles B. Main | ||
President and Chief Executive Officer | Chief Financial Officer |
/s/ Deloitte & Touche LLP | ||
Independent Registered Chartered Accountants | ||
Vancouver, British Columbia, Canada |
|
|
March 20, 2006 | ||
Yamana Gold Inc. |
Yamana Gold Inc. | |||||||
As
at the Periods Ended
|
|||||||
(In
thousands of U.S. Dollars)
|
|||||||
December
31,
|
December
31,
|
||||||
2005
|
2004
|
||||||
Assets
|
|||||||
Current
|
|||||||
Cash
and cash equivalents
|
$
|
151,633
|
$
|
87,054
|
|||
Receivables,
advances and deposits
|
6,160
|
3,245
|
|||||
Inventory
(Note
5)
|
11,353
|
5,862
|
|||||
Income
taxes recoverable
|
1,261
|
-
|
|||||
|
|
|
|||||
170,407
|
96,161
|
||||||
Capital
|
|||||||
Property,
plant and equipment
(Note 6)
|
24,992
|
17,938
|
|||||
Assets
under construction (Note
7)
|
154,345
|
12,085
|
|||||
Mineral
properties (Note
8)
|
61,506
|
38,256
|
|||||
Assets
held for sale (Note
4)
|
5,667
|
5,413
|
|||||
|
|
|
|||||
246,510
|
73,692
|
||||||
Other
|
|||||||
Investments
(Note
9)
|
2,259
|
-
|
|||||
Loan
receivable (Note
10)
|
18,986
|
-
|
|||||
Other
assets (Note
11)
|
20,974
|
5,797
|
|||||
Future
income tax assets (Note
17)
|
6,561
|
1,456
|
|||||
$
|
465,697
|
$
|
177,106
|
||||
|
|
||||||
Liabilities
|
|||||||
Current
|
|||||||
Accounts
payable and accrued liabilities
|
$
|
22,827
|
$
|
7,225
|
|||
Derivative
related liabilities (Note
22i)
|
8,615
|
-
|
|||||
|
|
|
|||||
31,442
|
7,225
|
||||||
Long
term
|
|||||||
Notes
payable
(Note 12)
|
106,847
|
-
|
|||||
Asset
retirement obligations (Note
13)
|
8,012
|
4,972
|
|||||
Future
income tax liabilities (Note
17ii)
|
2,922
|
3,100
|
|||||
Liabilities
associated with assets held for sale (Note 4)
|
1,500
|
1,500
|
|||||
|
|
|
|||||
150,723
|
16,797
|
||||||
|
|
|
December
31,
|
December
31,
|
||||||
2005
|
2004
|
||||||
Shareholders' Equity | |||||||
Capital Stock | |||||||
Authorized
Unlimited number of first preference shares without par
value
issuable in seriesn Ulimited number of common shares without
par
|
|||||||
value
Issued
and outstanding 191,341,932
common shares (December 31, 2004-122,286,716 shares( Note
14i)
|
310,409
|
147,407
|
|||||
Share
purchase warrants (Note
15)
|
3,737
|
10,864
|
|||||
Contributed
surplus (Note
14ii)
|
4,676
|
1,775
|
|||||
(Deficit)
retained earnings
|
(3,848
|
)
|
263
|
||||
|
|
|
|||||
314,974
|
160,309
|
||||||
|
|
|
|||||
$
|
465,697
|
$
|
177,106
|
||||
|
|
Contingencies and commitments (Notes 21, 24) | ||||||||||
Yamana Gold Inc. | ||||||||||
For the Periods Ended | ||||||||||
(In thousands of U.S. Dollars) | ||||||||||
December
31,
|
December
31,
|
February
29,
|
||||||||
2005
|
2004
|
2004
|
||||||||
(10
months)
|
||||||||||
|
|
|
|
|||||||
Sales
|
$
|
46,038
|
$
|
32,298
|
$
|
19,811
|
||||
Cost
of sales
|
(30,371
|
)
|
(17,016
|
)
|
(10,465
|
)
|
||||
Depreciation,
amortization and depletion
|
(6,740
|
)
|
(4,541
|
)
|
(2,430
|
)
|
||||
Accretion
of asset retirement obligations (Note 13)
|
(358
|
)
|
(364
|
)
|
(162
|
) | ||||
Mine
Operating Earnings
|
8,569
|
10,377
|
6,754
|
|||||||
Expenses
|
||||||||||
General
and administrative
|
(10,415
|
)
|
(6,226
|
)
|
(4,599
|
)
|
||||
Foreign
exchange gain
|
369
|
1,848
|
75
|
|||||||
Stock-based
compensation (Note
16)
|
(2,298
|
)
|
(2,191
|
)
|
(612
|
)
|
||||
|
|
|
|
|||||||
Operating
(Loss) Earnings
|
(3,775
|
)
|
3,808
|
1,618
|
||||||
Investment
and other business income
|
4,049
|
792
|
483
|
|||||||
Interest
and financing expense
|
(94
|
)
|
-
|
(255
|
)
|
|||||
Unrealized
loss on commodity contracts (Note 22i)
|
(8,615
|
)
|
-
|
-
|
||||||
(Loss)
Earnings Before Income Taxes
|
(8,435
|
)
|
4,600
|
1,846
|
||||||
Income
Tax Recovery (Expense) (Note
17i)
|
4,324
|
(1,817
|
)
|
(838
|
)
|
|||||
|
|
|
|
|||||||
Net
(Loss) Earnings
|
(4,111
|
)
|
2,783
|
1,008
|
||||||
Retained
earnings (deficit), beginning of period
|
263
|
(2,520
|
)
|
(3,491
|
)
|
|||||
Interest
on Convertible Notes
|
-
|
-
|
(37
|
)
|
||||||
|
|
|
|
|||||||
(Deficit)
retained earnings, end of Period
|
$
|
(3,848
|
)
|
$
|
263
|
$
|
(2,520
|
)
|
||
|
|
|
||||||||
(Loss)
Basic Earnings per Share
|
$
|
(0.03
|
)
|
$
|
0.03
|
$
|
0.02
|
|||
Diluted
(loss) Earnings per Share
|
|
|
|
|||||||
Weighted
average number of Shares (Note 14iii)
|
$
|
(0.03
|
)
|
$
|
0.02
|
$
|
0.02
|
|||
144,888
|
100,036
|
43,674
|
Yamana Gold Inc. | ||||||||||
For the Periods Ended | ||||||||||
(In thousands of U.S. Dollars) | ||||||||||
|
||||||||||
December
31,
|
December 31, | February 29 | ||||||||
2005
|
2004 |
2004
|
||||||||
|
|
(10
months)
|
||||||||
Operating Activities | ||||||||||
Net
earnings (loss) for the year
|
$ | (4,111 | ) | $ |
2,783
|
$ |
1,008
|
|||
Asset retirement obligations realized (Note 13) | (309 | ) |
(237
|
) | - | |||||
Items not involving cash | ||||||||||
Depreciation,
amortization and depletion
|
6,740
|
4,541
|
2,430
|
|||||||
Stock-based
compensation (Note 16)
|
2,298
|
2,191
|
612 | |||||||
Future
income taxes (Note 17)
|
(4,447 | ) | 430 | (324 | ) | |||||
Accretion
of asset retirement obligations (Note 13)
|
358
|
364
|
162
|
|||||||
Unrealized
foreign exchange
|
(3,252 | ) | (1,792 | ) | (100 |
)
|
||||
Unrealized
loss on commodity contracts (Note 22i)
|
8,615
|
-
|
- | |||||||
Other
|
553
|
1,013
|
1,165
|
|||||||
Net
change in non-cash working capital (Note
18)
|
(3,035
|
)
|
(757
|
)
|
538
|
|||||
|
||||||||||
3,410
|
8,536
|
5,491
|
||||||||
Financing
Activities
|
||||||||||
Issue
of common shares and warrants for cash (net of issue
costs)
|
155,099
|
71,931
|
56,349
|
|||||||
Deferred
financing charges (Note 11)
|
(4,630
|
)
|
(3,049
|
)
|
-
|
|||||
Loan
proceeds
|
100,000
|
-
|
-
|
|||||||
250,469
|
68,882
|
56,349
|
||||||||
Investing
Activities
|
||||||||||
Business
acquisition of Fazenda Brasileiro
|
-
|
-
|
(22,098
|
)
|
||||||
Expenditures
on mineral properties
|
(23,199
|
)
|
(11,512
|
)
|
(4,191
|
)
|
||||
Acquisition
of property, plant and equipment
|
(5,752
|
)
|
(3,079
|
)
|
(1,770
|
)
|
||||
Expenditures
on assets under construction
|
(132,031
|
)
|
(11,965
|
)
|
-
|
|||||
Purchase
of investment
|
(2,258
|
)
|
-
|
-
|
||||||
Loan
receivable
|
(18,986
|
)
|
-
|
-
|
||||||
Other
Assets
|
(10,326
|
)
|
(531
|
)
|
-
|
|||||
|
||||||||||
(192,552
|
)
|
(27,087
|
)
|
(28,059
|
)
|
|||||
Increase
in cash and cash equivalents
|
61,327
|
50,331
|
33,781
|
|||||||
Effect
of foreign exchange on non-US dollar denominated cash and cash
equivalents
|
3,252
|
2,120
|
100
|
|||||||
Cash
and cash equivalents, beginning of Period
|
87,054
|
34,603
|
722
|
|||||||
|
||||||||||
Cash
and cash equivalents, end of Period
|
$
|
151,633
|
$
|
87,054
|
$
|
34,603
|
||||
Cash
and cash equivalents are comprised of the following:
|
||||||||||
Cash
at bank
|
$
|
20,576
|
$
|
11,903
|
$
|
6,977
|
||||
Bank
term deposits
|
131,057
|
75,151
|
$
|
27,626
|
||||||
$
|
151,633
|
$
|
87,054
|
$
|
34,603
|
|||||
Supplementary
cash flow information (Note 18)
|
1. |
Basis
of presentation/The
Company
|
2. |
Change
in year end
|
3. |
Significant
accounting policies
|
4. |
Assets
held for sale
|
Dec.
31,
2005
|
Dec.
31,
2004
|
||||||
Assets
|
|||||||
Property,
plant and equipment
|
$
|
350
|
$
|
377
|
|||
Mineral
properties
|
5,317
|
5,036
|
|||||
Total
assets held for sale
|
5,667
|
5,413
|
|||||
Liabilities
Future
income tax liability
|
(1,500
|
)
|
(1,500
|
)
|
|||
Net
assets held for sale
|
$
|
4,167
|
$
|
3,913
|
5. |
Inventory
|
Dec.
31, 2005
|
Dec.
31, 2004
|
||||||
Metal
in circuit and gold in process
|
$
|
8,343
|
$
|
2,729
|
|||
Product
inventories
|
461
|
996
|
|||||
Materials
and supplies
|
2,549
|
2,137
|
|||||
$
|
11,353
|
$
|
5,862
|
6. |
Property,
plant and equipment
|
Dec.
31, 2005
|
Dec.
31, 2004
|
||||||||||||||||||
Cost
|
|
Accumulated
Amortization
|
|
Net
Book Value
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
Book Value
|
|||||||||
Land
|
$
|
1,116
|
$
|
-
|
$
|
1,116
|
$
|
1,020
|
$
|
-
|
$
|
1,020
|
|||||||
Buildings
|
12,141
|
3,024
|
9,117
|
8,106
|
2,006
|
6,100
|
|||||||||||||
Machinery
and Equipment
|
14,826
|
3,383
|
10,903
|
9,196
|
1,890
|
7,306
|
|||||||||||||
Vehicles
|
2,632
|
728
|
1,904
|
2,654
|
526
|
2,128
|
|||||||||||||
Furniture
and office
equipment
|
1,817
|
418
|
1,399
|
1,262
|
304
|
958
|
|||||||||||||
Computer
equipment
and software
|
750
|
197
|
553
|
516
|
90
|
426
|
|||||||||||||
$
|
32,742
|
$
|
7,750
|
$
|
24,992
|
$
|
22,754
|
$
|
4,816
|
$
|
17,938
|
7. |
Assets
under construction
|
Dec.
31, 2005
|
Dec.
31, 2004
|
||||||
Fazenda
Nova (i)
|
$
|
-
|
$
|
6,949
|
|||
Sao
Francisco
|
63,018
|
1,915
|
|||||
Chapada
(ii)
|
91,327
|
3,221
|
|||||
$
|
154,345
|
$
|
12,085
|
(i) |
The
Fazenda Nova Mine commenced commercial production effective May 1,
2005.
|
(ii) |
Net
interest capitalized during the period was $6.7 million (December
31, 2004
- $Nil). Amortization of deferred financing fees capitalized during
the
period was $1.1 million (December 31, 2004 -
$Nil)
|
8. |
Mineral
properties
|
Dec.
31, 2005
|
Dec.
31, 2004
|
||||||||||||||||||
Cost
|
|
Accumulated
Amortization
|
|
Net
Book Value
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
Book Value
|
|
||||||||
Fazenda
Brasileiro
|
$
|
30,711
|
$
|
5,843
|
$
|
24,868
|
$
|
17,787
|
$
|
3,704
|
$
|
14,083
|
|||||||
Santa
Elina Properties
|
26,407
|
2,116
|
24,291
|
14,471
|
671
|
13,800
|
|||||||||||||
Chapada
|
11,747
|
-
|
11,747
|
10,118
|
-
|
10,118
|
|||||||||||||
Other
|
600
|
-
|
600
|
255
|
-
|
255
|
|||||||||||||
$
|
69,465
|
$
|
7,959
|
$
|
61,506
|
$
|
42,631
|
$
|
4,375
|
$
|
38,526
|
9. |
Investments
|
10. |
Loans
receivable
|
11. |
Other
assets
|
Dec.
31, 2005
|
Dec.
31, 2004
|
||||||
Deferred
financing charges (i)
|
$
|
10,138
|
$
|
5,191
|
|||
Long
term tax credits (ii)
|
8,864
|
-
|
|||||
Deferred
acquisition costs
|
940
|
-
|
|||||
Restricted
Cash (iii)
|
583
|
-
|
|||||
Other
|
449
|
606
|
|||||
$
|
20,974
|
$
|
5,797
|
(i) |
Deferred
financing charges relate to a $100 million debt facility for the
development of the Chapada copper-gold project. Financing charges
are
amortized over the life of the loan as of the funding date of April
29,
2005. Amortization is capitalized to property development costs.
The
balance includes 2.5 million warrants issued in 2005 in respect to
the
debt facility which were valued at fair value of $1.4 million as
calculated using the Black-Scholes pricing model. Balance is net
of
accumulated amortization of $1.1 million (December 31, 2004 -
$Nil).
|
(ii) |
Long
term tax credits consist of Brazilian sales taxes which are recoverable
against other taxes payable.
|
(iii) |
Restricted
cash consists of interest income earned on funds previously held
in
escrow. Funds held in escrow consisted of funds advanced under the
loan
facility for the development and construction of the Chapada copper-gold
project. Upon funding, loan proceeds were held in an escrow account
pending perfection and registration of security and were subsequently
released during the period. As at December 31, 2005, $583,000 of
interest
income was held in escrow. These funds were released from escrow
subsequent to the period end.
|
12. |
Notes
payable
|
13. |
Asset
retirement obligations
|
Dec.
31, 2005
|
Dec.
31, 2004 (10 months)
|
||||||
Opening
balance
|
$
|
4,972
|
$
|
5,191
|
|||
Accretion
incurred in the current period
|
358
|
364
|
|||||
Additions
to site reclamation during
the current period
|
3,422
|
491
|
|||||
Reduction
of estimated liabilities
|
(999
|
)
|
(920
|
)
|
|||
Foreign
exchange loss
|
568
|
331
|
|||||
Expenditures
during the current period
|
309
|
(237
|
)
|
||||
$
|
8,012
|
$
|
4,972
|
14. |
Capital
stock
|
Number
of Common Shares (000’s)
|
Amount
(000’s)
|
||||||
Balance
as at February 28, 2003
|
2,911
|
$
|
3,515
|
||||
Private
placements, net of warrants and
issue costs
|
29
|
35
|
|||||
Issued
on conversion of subscription receipts
|
46,250
|
29,181
|
|||||
Public
offering, net of issue costs
|
8,665
|
19,734
|
|||||
Payment
of accounts payable
|
842
|
875
|
|||||
Exercise
of options and share appreciation
rights
|
25
|
31
|
|||||
Issued
on purchase of First Preference Shares
|
388
|
1,277
|
|||||
Issued on conversion of convertible notes | |||||||
Principal
|
1,027 | 1,480 | |||||
Interest
|
38
|
49
|
|||||
Issued
on acquisition of Santa Elina assets
|
34,886
|
18,250
|
|||||
Balance
as at February 29, 2004
|
95,061
|
$
|
74,427
|
||||
Exercise
of options and share appreciation
rights
|
41
|
101
|
|||||
Public
offering, net of issue costs
|
26,377
|
71,858
|
|||||
Issue
of common shares
|
808
|
1,021
|
|||||
Balance
as at December 31, 2004
|
122,287
|
$
|
147,407
|
||||
Exercise
of options and share appreciation
rights (1)
|
1,282
|
1,973
|
|||||
Shares
issued pursuant to an early exercise
of publicly traded warrants, net
of costs (2)
|
41,286
|
55,554
|
|||||
Shares
issued pursuant to an exchange of
publicly traded warrants (2)
|
476
|
131
|
|||||
Public
offering, net of issue costs (3)
|
26,000
|
105,289
|
|||||
Exercise
of warrants
|
11
|
55
|
|||||
Balance
as at December 31, 2005
|
191,342
|
$
|
310,409
|
(1)
The Company issued 1.3 million shares to optionees on the exercise
of 1.1
million share options and 0.3 million options exercised under share
appreciation rights. Previously recognized compensation expense in
the
amount of $0.3 million on options exercised during the year was charged
to
share capital with a corresponding decrease to contributed surplus.
|
(3)
On
October 5, 2005, the Company completed a public offering for 26 million
common shares at a price of Cdn$5.00 per share for aggregate gross
proceeds of $110.9 million (Cdn$130 million) less issue costs of
$5.6
million.
|
Dec.
31,
2005
|
Dec.
31,
2004
(10
months)
|
||||||
Balance
as at beginning of period
|
$
|
1,775
|
$
|
633
|
|||
Transfer
of stock based compensation on the exercise of stock option and share
appreciation rights
|
(324
|
)
|
(25
|
)
|
|||
Expired
warrants
|
927
|
-
|
|||||
Stock
based compensation on options granted
|
2,298
|
1,167
|
|||||
Balance
as at end of period
|
$
|
4,676
|
$
|
1,775
|
|||
Dec.
31, 2005
|
Dec.
31, 2004
|
Feb.
29, 2004
|
||||||||
Weighted
average number of common shares of
common shares
|
144,888
|
100,036
|
43,674
|
|||||||
Weighted
average number of dilutive warrants
|
17,531
|
22,347
|
18,808
|
|||||||
Weighted
average number dilutive stock
options
|
3,620
|
2,622
|
2,864
|
|||||||
166,039
|
125,005
|
65,346
|
15. |
Share
purchase warrants
|
Dec.
31,
2005
|
|
Dec. 31,
2004
(10
months)
|
|
Feb.
29,
2004
|
|||||||||||||||
Number
of Warrants
(000’s)
|
Weighted
Average Exercise Price (Cdn$)
|
Number
of Warrants
(000’s)
|
Weighted
Average Exercise Price (Cdn$)
|
Number
of Warrants
(000’s)
|
Weighted
Average Exercise Price (Cdn$)
|
||||||||||||||
Outstanding,
beginning of
period
|
43,434
|
$
|
1.78
|
41,431
|
$
|
1.59
|
903
|
$
|
6.04
|
||||||||||
Issued
|
2,500
|
4.70
|
2,500
|
4.05
|
40,600
|
1.50
|
|||||||||||||
Expired
and exercised
|
(40,626
|
)
|
1.51
|
(497
|
)
|
5.88
|
(72
|
)
|
8.36
|
||||||||||
Outstanding
and exercisable, end of period
|
5,308
|
$
|
4.43
|
43,434
|
$
|
1.78
|
41,431
|
$
|
1.59
|
Exercise
Price (Cdn$)
|
Weighted
Number of Warrants Outstanding (000’s)
|
Average
Remaining Contractual Life (years)
|
|||||
$
5.57
|
284
|
0.16
|
|||||
$
5.29
|
|
1
|
0.16
|
||||
$
4.70
|
2,500
|
4.31
|
|||||
$
4.05
|
2,500
|
3.88
|
|||||
$
2.09
|
23
|
1.52
|
|||||
5,308
|
3.87
|
16. |
Stock
options
|
Dec.
31,
2005
|
Dec.
31,
2004
(10 month)
|
Feb.
29,
2004
|
||||||||
Dividend
yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||
Expected
volatility
|
34
|
%
|
50.5
|
%
|
37.5
|
%
|
||||
Risk-free
interest rate
|
3.4
|
%
|
3.5
|
%
|
3
|
%
|
||||
Expected
life
|
3
years
|
3
years
|
3
years
|
|||||||
Forteitures
|
Nil
|
Nil
|
Nil
|
Dec.
31,
2002
|
Dec.
31,
2004
|
Feb.
29,
2004
|
|||||||||||||||||
Number
of Options (000’s)
|
Weighted
Average Exercise Price (Cdn$)
|
Number
of Options (000’s)
|
Weighted
Average Exercise Price (Cdn$)
|
Number
of Options (000’s)
|
Weighted
Average Exercise Price (Cdn$)
|
||||||||||||||
Outstanding,
beginning of period
Issued
Exercised
Expired
and Cancelled
|
6,660
2,785
(1,485
(6
|
)
)
|
$
|
2.04
3.78
1.97
2.93
|
5,453
1,250
(41
(2
|
)
)
|
$
|
1.73
3.38
2.25
2.93
|
298
5,325
(14
(156
|
)
)
|
$
|
2.93
1.72
2.93
3.07
|
|||||||
Outstanding,
end of period
|
7,954
|
$
|
2.67
|
6,660
|
$
|
2.04
|
5,453
|
$
|
1.73
|
||||||||||
Exercisable
|
7,954
|
$
|
2.67
|
6,535
|
$
|
2.03
|
5,288
|
$
|
1.72
|
Exercise
Price
(Cdn$)
|
Quantity
(000’s)
|
Outstanding
Weighted Average Remaining Contractual Life (years)
|
||
$4.63
|
150
|
9.60
|
||
$4.45
|
150
|
9.50
|
||
$3.69
|
2,485
|
9.37
|
||
$3.62
|
11
|
1.75
|
||
$3.44
|
1,015
|
8.07
|
||
$3.34
|
7
|
1.58
|
||
$2.93
|
21
|
4.68
|
||
$2.85
|
125
|
3.40
|
||
$2.25
|
60
|
2.86
|
||
$1.67
|
3,930
|
7.59
|
||
7,954
|
8.16
|
17. |
Income
taxes
|
(i) |
Income
tax expense
|
Dec.
31, 2005
|
Dec.
31, 2004
(10
months)
|
Feb.
29, 2004
|
||||||||
Earnings
(loss) before income
taxes
Statutory
rate
|
$
|
(8,435)
36.12
|
%
|
$
|
4,600
36.12
|
%
|
$
|
1,846
38.00
|
%
|
|
Expected
income tax expense (recovery)
|
$
|
(3,047
|
)
|
$
|
1,662
|
$
|
701
|
|||
Effect
of lower tax rates in foreign jurisdictions
|
(883
|
)
|
(154
|
)
|
(503
|
)
|
||||
Unrecognized
tax benefits
|
1,935
|
19
|
1,364
|
|||||||
Non-taxable
items
|
(550
|
)
|
106
|
(724
|
)
|
|||||
Change
in valuation allowance
|
(4,297
|
)
|
184
|
-
|
||||||
Foreign
exchange on inter-corporate
debt
|
2,518
|
-
|
-
|
|||||||
Income
tax (recovery) expense
|
$
|
(4,324
|
)
|
1,817
|
$
|
838
|
||||
Current
income tax (expense) recovery
|
(123
|
)
|
(1,387
|
)
|
(1,162
|
)
|
||||
Future
income tax (recovery) expense
|
$
|
(4,447
|
)
|
430
|
$
|
(324
|
)
|
(ii) |
Future
income taxes
|
Dec.
31, 2005
|
Dec.
31, 2004
|
||||||
Amounts
related to tax
loss and credit carry-forwards
in Canada
and United States
|
$
|
11,971
|
$
|
7,175
|
|||
Financing
costs
|
3,979
|
3,126
|
|||||
Other
temporary differences
|
(424
|
)
|
-
|
||||
Net
future tax asset
|
15,526
|
10,301
|
|||||
Valuation
allowance
|
(8,965
|
)
|
(8,845
|
)
|
|||
Future
income tax assets
|
$
|
6,561
|
$
|
1,456
|
Dec.
31, 2005
|
Dec.
31, 2004
|
||||||
Mineral
properties and property, plant
and equipment
|
$
|
(2,431
|
)
|
$
|
(2,492
|
)
|
|
Asset
retirement obligation
|
733
|
621
|
|||||
Unrealized
foreign exchange gains on
inter-company loans
|
(2,816
|
)
|
(1,317
|
)
|
|||
Amounts
related to tax loss and credit
carry-forwards
|
1,592
|
-
|
|||||
Other
|
-
|
88
|
|||||
Future
income tax liabilities
|
$
|
(2,922
|
)
|
$
|
(3,100
|
)
|
(iii) |
Non-capital
losses
|
US
Dollar
|
||||||||||
Local
currency
|
Equivalent
|
Expiry
Date
|
||||||||
Canada
|
Cdn$
28,700
|
$
|
24,700
|
2006
to 2015
|
||||||
United
States
|
US$
1,100
|
$
|
1,100
|
2013
to 2025
|
||||||
Brazil
|
$
|
R
11,841
|
$
|
5,100
|
Unlimited
subject to 30% of taxable income for each subsequent year
to
30% of taxable income
for each
|
18. |
Supplementary
cash flow information
|
Dec.
31, 2005
|
Dec.
31, 2004 (10 months)
|
Feb.
29, 2004
|
||||||||
Transfer
of contributed surplus
upon issue of common shares
on exercise of options
|
$
|
324
|
$
|
28
|
$
|
-
|
||||
Increase
in contributed surplus
on the expiry of warrants
|
$
|
927
|
$
|
-
|
$
|
-
|
||||
Deferred
financing charges on
the issue of warrants
|
$
|
1,374
|
$
|
2,142
|
$
|
-
|
||||
Issue
of common shares for interest
and principal due on
convertible notes
|
$
|
-
|
$
|
-
|
$
|
1,529
|
||||
Issue
of common shares for Santa
Elina assets
|
$
|
-
|
$
|
-
|
$
|
18,496
|
||||
Amortization
of deferred financing
fees
|
$
|
1,058
|
$
|
-
|
$
|
-
|
||||
Accrued
interest capitalized
to assets under
construction
|
$
|
6,847
|
$
|
-
|
$
|
-
|
Dec.
31, 2005
|
Dec.
31, 2004 (10 months)
|
Feb.
29, 2004
|
||||||||
Net
decrease (increase) in
Accounts
receivable
Advances
and deposits 92)
(1,249)
(972)
Inventory 91)
(2,014)
(1,611)
Income
tax recoverable
|
$
|
876
(3,792
(5,491
(1,261
|
)
)
)
|
$
|
311
(1,249)
(2,014)
-
|
$
|
(1,154)
(972)
(1,611)
-
|
|||
Net
increase (decrease) in Accrued
liabilities and accounts
payable (net of accounts
payable relating to
assets under
construction)
|
6,633
|
2,195
|
4,275
|
|||||||
$
|
(3,035
|
)
|
$
|
(757
|
)
|
$
|
538
|
19. |
Segmented
information
|
(i) |
Capital
assets referred to below consist of land, buildings and equipment
and
mineral properties.
|
Dec.
31, 2005
|
Dec.
31, 2004
|
||||||
Mineral
properties, assets under construction
and property, plant
and equipment
|
|||||||
Brazil
|
$
|
240,644
|
$
|
68,163
|
|||
Argentina
|
5,667
|
5,413
|
|||||
Corporate
|
200
|
116
|
|||||
$
|
246,511
|
$
|
73,692
|
||||
Less:
Assets held for sale
|
(5,667
|
)
|
(5,413
|
)
|
|||
$
|
240,844
|
$
|
68,279
|
Dec.
31,
2005
|
Dec.
31,
2004
(10
months)
|
Feb.
29,
2004
|
||||||||
Mine
Revenues
|
||||||||||
Brazil
|
$
|
46,038
|
$
|
32,298
|
$
|
19,811
|
||||
20. |
Related
party transactions
|
Dec.
31,
2005
|
Dec.
31,
2004
(10
months)
|
Feb.
29,
2004
|
||||||||
Pursuant
to the reimbursement of third party costs relating to the Company’s
financing and property acquisitions incurred on behalf of the company
|
$
|
-
|
$
|
-
|
$
|
438
|
||||
Legal
fees paid to a law firm that had partners who are either a former
director
or a former officer of the Company
|
$
|
-
|
$
|
-
|
$
|
295
|
||||
Directors
fees and consulting fees to associates thereof
|
$
|
243
|
$
|
179
|
$
|
117
|
||||
Consulting
fees paid to an officer prior to becoming an officer
|
$
|
-
|
$
|
-
|
$
|
72
|
||||
21. |
Contractual
commitments
|
Year
|
2006
|
2007
|
2008
|
2009
|
2010
|
|||||||||||
Office
leases
|
$
|
375
|
$
|
402
|
$
|
274
|
$
|
274
|
$
|
274
|
||||||
Fazenda
Brasileiro mine operating and service contracts
|
4,301
|
399
|
-
|
-
|
-
|
|||||||||||
Fazenda
Nova mine operating and service contracts
|
3,105
|
718
|
-
|
-
|
-
|
|||||||||||
Chapada
construction service
contracts
|
49,417
|
1,320
|
289
|
-
|
-
|
|||||||||||
São
Francisco construction service contracts
|
2,936
|
-
|
-
|
-
|
-
|
|||||||||||
$
|
60,134
|
$
|
2,839
|
$
|
563
|
$
|
274
|
$
|
274
|
22. |
Financial
instruments
|
Dec.
31,
|
Dec.
31,
|
Feb.
29,
|
||||||||
2005 |
2004
|
2004
|
||||||||
(10
months)
|
||||||||||
Forward
contracts
|
$
|
(13,355
|
)
|
$
|
-
|
$
|
-
|
|||
Long-call
option contracts
|
9,097
|
-
|
-
|
|||||||
Option
premium
|
(4,357
|
)
|
-
|
-
|
||||||
$
|
(8,615
|
)
|
$
|
-
|
$
|
-
|
||||
Future
income tax - 36.12%
|
3,112
|
-
|
-
|
|||||||
$
|
(5,503
|
)
|
$
|
-
|
$
|
-
|
23. |
Subsequent
Events
|
Purchase
of RNC shares (4,868,283 common shares)
|
$
|
25,217,703
|
||
Purchase
of Minosa
|
18,903,000
|
|||
Purchase
of RNC (Honduras) Limited
|
517,400
|
|||
Estimated
transaction costs
|
1,500,000
|
|||
Fair
value of options and warrants acquired
|
1,126,080
|
|||
RNC
management severance
|
760,000
|
|||
$
|
52,024,183
|
|||
The
purchase price was allocated as follows:
|
||||
Net
working capital acquired
|
(773,088
|
)
|
||
Property,
plant and equipment, net
|
8,359,691
|
)
|
||
Mineral
properties and other assets
|
(20,357,727
|
)
|
||
Long-term
liabilities
|
7,055,872
|
|||
$
|
42,434,634
|
|||
$
|
9,589,549
|
|||
Future
income tax credit - 25%
|
3,196,517
|
|||
Excess
of purchase price over carrying value
of assets acquired
|
$
|
12,786,066
|
||
|
24. |
Contingency
|
25. |
Comparative
figures
|
26. |
Summary
of principal differences between Canadian GAAP and United States
generally
accepted accounting principles (“US
GAAP”)
|
Dec.
31,
|
Dec
31,
|
Feb.
29,
|
||||||||
2005
|
2004
|
2004
|
||||||||
(10
months)
|
||||||||||
|
||||||||||
Net
(loss) earnings per Canadian
GAAP
|
$
|
(4,111
|
)
|
$
|
2,783
|
$
|
1,008
|
|||
Adjustment
for depreciation, amortization and depletion
|
(1,420
|
)
|
(1,091
|
)
|
(937
|
)
|
||||
Write-off
of deferred mineral property
costs
|
(11,583
|
)
|
(2,434
|
)
|
(723
|
)
|
||||
Interest
on convertible notes
|
-
|
-
|
(37
|
)
|
||||||
Stock
compensation expense
|
-
|
(630
|
)
|
-
|
||||||
Pre-operating
costs
|
(331
|
)
|
(439
|
)
|
-
|
|||||
(17,445
|
)
|
(1,811
|
)
|
(689
|
)
|
|||||
Tax effect of reconciling items | 4,534 | 1,175 | 318 | |||||||
Net loss attributable to common shareholders under US GAAP | $ | (12,911 | ) | $ | (636 | ) | $ | (371 | ) | |
Basic and diluted loss per share under US GAAP | $ | (0.09 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |
Weighted average number of shares outstanding under US GAAP (in thousands) | 144,888 | 100,036 | 43,674 |
Dec.
31,
|
Dec.
31,
|
Feb.
29,
|
||||||||||
2005
|
2004 |
2004
|
||||||||||
Total
assets under Canadian
GAAP
|
$
|
465,697
|
$
|
177,106
|
$
|
93,948
|
||||||
Write-off
deferred mineral
property costs
|
(19,939
|
)
|
(8,356
|
)
|
(5,922
|
)
|
||||||
Adjustment
to mineral properties
|
(4,352
|
)
|
(2,524
|
)
|
(1,100
|
)
|
||||||
Adjustment to inventory |
134
|
57
|
163
|
|||||||||
Future
income tax asset
|
4,606
|
-
|
-
|
|||||||||
Total
assets under US GAAP
|
$
|
446,146
|
$ | 166,283 | $ | 87,089 | ||||||
Total
liabilities under Canadian
GAAP
|
$
|
150,723
|
$
|
16,797
|
$
|
12,687
|
||||||
Future income tax liability |
(2,922
|
)
|
(2,994
|
)
|
(1,819
|
)
|
||||||
Total liabilities under US GAAP |
147,801
|
13,803
|
10,868
|
|||||||||
Shareholders’
equity under Canadian
GAAP
|
314,974
|
160,309
|
81,261
|
|||||||||
Write-off
of deferred mineral property
costs
|
(19,939
|
)
|
(8,356
|
)
|
(5,922
|
)
|
||||||
Adjustment for depreceiation, amortization and depletion |
(3,448
|
)
|
(2,028
|
)
|
(937
|
)
|
||||||
Write-off
of pre-operating Costs
|
(770
|
)
|
(439
|
)
|
-
|
|||||||
Future
income taxes
|
7,528
|
2,994
|
1,819
|
|||||||||
|
||||||||||||
Shareholders’
equity under US
GAAP
|
298,345
|
152,480
|
76,221
|
|||||||||
|
||||||||||||
Total
liabilities and shareholders’ equity under US
GAAP
|
$
|
446,146
|
$
|
166,283
|
$
|
87,089
|
Dec.
31,
|
Dec.
31,
|
Feb.
29,
|
||||||||
2005
|
2004
|
2004
|
||||||||
Shareholders’
equity
|
||||||||||
Common
shares
|
$
|
310,263
|
$
|
147,261
|
$
|
74,281
|
||||
Additional paid-in capital |
9,410
|
13,636
|
9,721
|
|||||||
Deficit
|
(21,328
|
)
|
(8,417
|
)
|
(7,781
|
)
|
||||
|
||||||||||
Total
Shareholders’ equity
|
$
|
298,345
|
$
|
152,480
|
$
|
76,221
|
Dec.31,
|
Dec.
31,
|
Feb.
29,
|
||||||||
2005
|
2004
|
2004
|
||||||||
(10
months)
|
||||||||||
|
||||||||||
Cash
flows from operating activities er
Canadian GAAP
|
$
|
3,410
|
$
|
8,536
|
$
|
5,491
|
||||
|
||||||||||
Write-off
of deferred mineral
property costs
|
(11,914
|
)
|
(2,873
|
)
|
(723
|
)
|
||||
Cash
flows from operating activities
per US GAAP
|
$
|
(8,504
|
)
|
$
|
5,663
|
$
|
4,768
|
|||
Cash
flows from financing Activities
per US GAAP
|
$
|
250,469
|
$
|
68,882
|
$
|
56,349
|
||||
Cash
flows from investing activities per Canadian GAAP
|
$
|
(192,552
|
)
|
$
|
(27,087
|
)
|
$
|
(28,059
|
)
|
|
Write-off
of deferred mineral property
costs
|
11,914
|
2,873
|
723
|
|||||||
Cash flows from investingactivities per US GAAP |
($180,638
|
)
|
$
|
(24,214
|
)
|
$
|
(27,336
|
)
|
(i) |
Mineral
properties
|
(ii) |
Pre-operating
costs
|
(iii) |
Income
taxes
|
(iv) |
Stock-based
compensation
|
Dec.
31,
|
Feb. 29, | |||||||||
2005
|
2004 | 2004 | ||||||||
(10 months) | ||||||||||
Net loss attributable to common shareholders under US GAAP | $ |
(12,911
|
) |
$
|
(636
|
) | $ |
(371
|
) | |
Other comprehensive income (loss) Adjustment to unrealized loss on available for sale securities | $ |
(106
|
) | $ | - |
$
|
-
|
|||
Comprehensive loss under US GAAP | $ |
(13,017
|
) | $ |
(636
|
)
|
$ |
(371
|
) | |
(vi) |
Impact
of Recent United States Accounting
Pronouncements
|