40-F

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 40-F

(Check One)

o Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934

or

ý Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For fiscal year ended: December 31, 2013 Commission File number: 1-31880

YAMANA GOLD INC.
(Exact name of Registrant as specified in its charter)

Canada  (Province or Other Jurisdiction of Incorporation or Organization)	1041  (Primary Standard Industrial Classification Code Number, if applicable)	Not Applicable  (I.R.S. Employer Identification Number, if applicable)
	Royal Bank Plaza, North Tower 200 Bay Street, Suite 2200 Toronto, Ontario M5J 2J3 (416) 815 0220
(Address and Telephone Number of Registrant’s principal executive office)
	Meridian Gold Company4635 Longley Lane Unit 110-4A Reno, Nevada 89502 (775) 850-3700
(Name, Address and Telephone Number of Agent for Service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Common Shares, no par value	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: none

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: none

For annual reports, indicate by check mark the information filed with this form:

ýAnnual Information Form        ýAudited Annual Financial Statements    

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 753,303,613

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements in the past 90 days.

Yes ý        No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o        No o

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FORWARD-LOOKING STATEMENTS

This annual report on Form 40-F and the exhibits attached hereto contain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” under applicable Canadian securities legislation. Except for statements of historical fact relating to Yamana Gold Inc. (the “Company”), information contained herein constitutes forward-looking statements, including any information as to the Company's strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as “plan,” “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur.

Forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include:

• the Company's expectations in connection with the expected production and exploration, development and expansion plans at the Company's projects being met,

• the impact of proposed optimizations at the Company's projects,

• the impact of the proposed new mining law in Brazil,

• the new tax reform bill in Mexico and the amended federal income tax statute in Argentina,

• the impact of general business and economic conditions,

• global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions,

• fluctuating metal prices (such as gold, copper, silver and zinc),

• currency exchange rates (such as the Brazilian Real, the Chilean Peso, the Argentine Peso and the Mexican Peso versus the United States Dollar),

• the impact of inflation,

• possible variations in ore grade or recovery rates,

• changes in the Company's hedging program,

• changes in accounting policies,

• changes in mineral resources and mineral reserves,

• risks related to non-core mine disposition,

• risks related to acquisitions,

• changes in project parameters as plans continue to be refined,

• changes in project development, construction, production and commissioning time frames,

• risks related to joint venture operations,

• the possibility of project cost overruns or unanticipated costs and expenses,

• higher prices for fuel, steel, power, labor and other consumables contributing to higher costs and general risks of the mining industry,

• failure of plant, equipment or processes to operate as anticipated,

• unexpected changes in mine life,

• final pricing for concentrate sales,

• unanticipated results of future studies,

• seasonality and unanticipated weather changes,

• costs and timing of the development of new deposits,

• success of exploration activities,

• permitting time lines,

• government regulation and the risk of government expropriation or nationalization of mining operations,

• risks related to relying on local advisors and consultants in foreign jurisdictions,

• environmental risks,

• unanticipated reclamation expenses,

• title disputes or claims,

• limitations on insurance coverage and

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• timing and possible outcome of pending litigation and labor disputes,

• risks related to enforcing legal rights in foreign jurisdictions,

• as well as those risk factors discussed or referred to in the Company's annual Management's Discussion and Analysis and Annual Information Form for the year ended December 31, 2013 included as exhibits to this annual report on Form 40-F.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management's estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company's expected financial and operational performance and results as at and for the periods ended on the dates presented in the Company's plans and objectives and may not be appropriate for other purposes.

CURRENCY

Unless otherwise indicated, all dollar amounts in this annual report on Form 40-F are in United States dollars. The exchange rate of Canadian dollars into United States dollars on December 31, 2013, based upon the noon spot rate as reported by the Bank of Canada, was U.S.$1.00 = CDN$1.0636.

RESOURCE AND RESERVE ESTIMATES

The Company's Annual Information Form, which is attached hereto as Exhibit 99.1, has been prepared in accordance with the requirements of the securities laws in effect in Canada as of December 31, 2013, which differ in certain material respects from the disclosure requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the disclosure requirements promulgated by the Securities and Exchange Commission (the “Commission”) and contained in Industry Guide 7 (“Industry Guide 7”). Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101. However, these terms are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the Commission. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations. In contrast, the Commission only permits U.S. companies to report mineralization that does not constitute “reserves” by Commission standards as in place tonnage and grade without reference to unit measures.

Accordingly, information contained in this annual report on Form 40-F, the documents attached hereto and the documents incorporated by reference herein containing descriptions of our mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations of the Commission thereunder.

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DISCLOSURE CONTROLS AND PROCEDURES

A. Evaluation of disclosure controls and procedures. Disclosure controls and procedures are designed to ensure that (i) information required to be disclosed by the Company in reports that it files or submits to the Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in the Company's reports filed under the Exchange Act is accumulated and communicated to the Company's management, including its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow for timely decisions regarding required disclosure.

At the end of the period covered by this report, an evaluation was carried out under the supervision of and with the participation of the Company's management, including the CEO and CFO, of the effectiveness of the design and operations of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act). The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate in the circumstances. Based on that evaluation, the Company's CEO and CFO have concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were effective.

B. Management's report on internal control over financial reporting. The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2013, based on the criteria set forth in Internal Control - Integrated Framework(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management has concluded that the Company's internal control over financial reporting was effective as of December 31, 2013.

The Company's independent registered public accounting firm, Deloitte LLP, have audited the consolidated financial statements included in this annual report and have issued a report dated February 18, 2014 on the Company's internal control over financial reporting based on the criteria set forth in Internal Control - Integrated Framework(1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

C. Attestation report of the registered public accounting firm. Deloitte LLP's attestation report, “Report of Independent Registered Public Accounting Firm”, accompanies the Company's Audited Consolidated Financial Statements for the fiscal year ended December 31, 2013, which are attached hereto as Exhibit 99.3.

D. Changes in internal control over financial reporting. During the period covered by this annual report on Form 40-F, no change occurred in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

No changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses, were made as a result of the evaluation.

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The Company's management, including the CEO and CFO, does not expect that its disclosure controls and procedures or internal controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

NOTICES PURSUANT TO REGULATION BTR

The Company was not required by Rule 104 of Regulation BTR to send any notices to any of its directors or executive officers during the fiscal year ended December 31, 2013.

AUDIT COMMITTEE FINANCIAL EXPERT

The Company's board of directors (the “Board”) has determined that it has at least one audit committee financial expert serving on its audit committee. The Board has determined that Mr. Richard Graff is an audit committee financial expert and is independent, as that term is defined by the Exchange Act and the New York Stock Exchange's corporate governance standards applicable to the Company.

The Commission has indicated that the designation of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose on such person any duties, obligations or liability that are greater than those imposed on such person as a member of the audit committee and the Board in the absence of such designation and does not affect the duties, obligations or liability of any other member of the audit committee or Board.

CODE OF ETHICS

The Board has adopted a written code of ethics entitled, “Code of Business Conduct and Ethics” (the “Code”), by which it and all officers and employees of the Company, including the Company's principal executive officer, principal financial officer and principal accounting officer or controller, abide. There were no amendments, or waivers granted in respect of, the Code during the fiscal year ended December 31, 2013. The Code is posted on the Company's website at www.yamana.com. A copy of the Code may also be obtained by contacting the Corporate Secretary of the Company at the address or telephone number indicated on the cover page of this annual report on Form 40-F. If there is an amendment to the Code, or if a waiver of the Code is granted to any of Company's principal executive officer, principal financial officer, principal accounting officer or controller, the Company intends to disclose any such amendment or waiver by posting such information on the Company's website. Unless and to the extent specifically referred to herein, the information on the Company's website shall not be deemed to be incorporated by reference in this annual report on Form 40-F.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Deloitte LLP acted as the Company's independent registered public accounting firm for the fiscal year ended December 31, 2013. See page 94 of the Company's Annual Information Form, which is attached hereto as Exhibit 99.1, for the total amount billed to the Company by Deloitte LLP for services performed in the last two fiscal years by category of service (for audit fees, audit-related fees, tax fees and all other fees) in Canadian dollars.

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AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES

See page 94 of the Company's Annual Information Form, which is attached hereto as Exhibit 99.1. No audit-related fees, tax fees or other non-audit fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any material off-balance sheet arrangements, and the Company does not have any relationships with unconsolidated special purpose entities.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The disclosure provided under Section 10, “Liquidity, Capital Resources and Contractual Commitments-Contractual Commitments”, on page 43 of Exhibit 99.2, “Management's Discussion and Analysis”, is incorporated by reference herein.

IDENTIFICATION OF THE AUDIT COMMITTEE

The Company's Board of Directors has a separately designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act and satisfies the requirements of Exchange Act Rule 10A-3. The Company's Audit Committee is comprised of John Begeman, Richard Graff, Patrick Mars and Carl Renzoni, all of whom, in the opinion of the Company's Board of Directors, are independent (as determined under Rule 10A-3 of the Exchange Act and the New York Stock Exchange Listed Company Manual) and are financially literate.

CORPORATE GOVERNANCE PRACTICES

There are certain differences between the corporate governance practices applicable to the Company and those applicable to U.S. companies under NYSE listing standards. A summary of the significant differences can be found on the Company's website at www.yamana.com.

INCORPORATION BY REFERENCE

The Company's annual report on Form 40-F for the Year Ended December 31, 2013 is incorporated by reference into the Registration Statements on Form S-8 (Commission File No. 333-159047, File No. 333-148048 and File No. 333-145300) of the Company.

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UNDERTAKING AND CONSENT TOSERVICE OF PROCESS

A. Undertaking

Yamana Gold Inc. undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

B. Consent to Service of Process

The Company has filed an Appointment of Agent for Service of Process and Undertaking on Form F-X with respect to the class of securities in relation to which the obligation to file this Form 40-F arises.

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SIGNATURES

Pursuant to the requirements of the Exchange Act, Yamana Gold Inc. certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

Date: March 28, 2014

	YAMANA GOLD INC.
By:	/s/ Peter Marrone
	Name: Peter Marrone
	Title: Chairman and Chief Executive Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Annual Information Form for the year ended December 31, 2013
99.2	Management’s Discussion and Analysis for the year ended December 31, 2013
99.3	Audited annual financial statements for the fiscal year ended December 31, 2013
99.4	Certificate of Peter Marrone required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.5	Certificate of Charles Main required by Rule 13a-14(a) or Rule 15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.6	Certificate of Peter Marrone pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.7	Certificate of Charles Main pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.8	Consent of Deloitte LLP, Independent Registered Public Accounting Firm
99.9	Consent of Renato Petter
99.10	Consent of Evandro Cintra
99.11	Consent of Marco Antonio Alfaro Sironvalle
99.12	Consent of Chester M. Moore
99.13	Consent of Emerson Ricardo Re
99.14	Consent of Stuart E. Collins
99.15	Consent of Wayne W. Valliant
99.16	Consent of Robert Michaud
99.17	Consent of Robin J. Young
99.18	Consent of Javier Suazo Guzmán
99.19	Consent of Guillermo Bagioli Arce

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99.20	Consent of Normand L. Lecuyer
99.21	Consent of Kevin C. Scott
99.22	Consent of Dominique François-Bongarçon
99.23	Consent of Marcos Valencia
99.24	Consent of Marcelo Trujillo
99.25	Consent of Alvaro Vergara
99.26	Consent of David Coupland
99.27	Consent of Marcelo Antonio Batelochi
99.28	Consent of Julio Bruna Novillo
99.29	Consent of Carlos Guzman
99.30	Consent of Carlos Bottinelli Otárola
99.31	Consent of Max Iribarren Parra
99.32	Consent of Sebastián Ramírez Cuadra
99.33	Consent of Ricardo Miranda Díaz
99.34	Consent of Peter Mokos
99.35	Consent of Rodney Webster
99.36	Consent of Dennis Bergen
99.37	Consent of Dafne Herreros Van Norden
99.38	Consent of William Wulftange
99.39	Consent of Enrique Munoz Gonzalez

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EX-99.1

YAMANA GOLD INC.

ANNUAL INFORMATION FORM

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013

March 28, 2014

200 Bay Street, Suite 2200

Royal Bank Plaza, North Tower

Toronto, Ontario M5J 2J3

TABLE OF CONTENTS

INTRODUCTORY NOTES	3
Cautionary Note Regarding Forward-Looking Statements	3
Cautionary Note to United States Investors Concerning Estimates of Mineral Reserves and Mineral Resources	3
Currency Presentation And Exchange Rate Information	4
CORPORATE STRUCTURE	4
GENERAL DEVELOPMENT OF THE BUSINESS	7
Overview of Business	7
History	7
DESCRIPTION OF THE BUSINESS	9
Principal Products	9
Competitive Conditions	9
Operations	9
Environment and Communities	10
Risks of the Business	12
Technical Information	25
Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred
Mineral Resources	27
Mineral Projects	28
Material Mineral Properties	31
Chapada Mine	31
El Peñón Mine	39
Mercedes Mine	48
Gualcamayo Mine	54
Jacobina Mining Complex	67
Other Producing Mines	74
Minera Florida Mine	74
Fazenda Brasileiro Mine	75
Alumbrera Mine	75
Additional Projects	76
Pilar Project	76
C1 Santa Luz Project	78
Ernesto/Pau-a-Pique Project	78
Cerro Moro Project	79
Suyai Project	80
Agua Rica Project	80
DIVIDENDS	80

DESCRIPTION OF CAPITAL STRUCTURE	81
MARKET FOR SECURITIES	81
DIRECTORS AND OFFICERS	82
Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions	89
Conflicts of Interest	90
PROMOTER	90
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	90
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	91
TRANSFER AGENTS AND REGISTRAR	91

MATERIAL CONTRACTS	91
AUDIT COMMITTEE	92
INTERESTS OF EXPERTS	94
ADDITIONAL INFORMATION	97
SCHEDULE “A” — CHARTER OF THE AUDIT COMMITTEE	98

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ITEM 1

INTRODUCTORY NOTES

Cautionary Note Regarding Forward-Looking Statements

This annual information form contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” under applicable Canadian securities legislation. Except for statements of historical fact relating to the Company (as defined herein), information contained herein constitutes forward-looking statements, including any information as to the Company’s strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as “plan”, “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the Company’s expectations in connection with the production and exploration, development and expansion plans at the Company’s projects discussed herein being met, the impact of proposed optimizations at the Company’s projects, the impact of the proposednew mining law in Brazil, the new tax reform bill in Mexico and the amended federal income tax statute in Argentina, and the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating metal prices (such as gold, copper, silver and zinc), currency exchange rates (such as the Brazilian real, the Chilean peso, the Argentine peso and the Mexican peso versus the United States dollar), possible variations in ore grade or recovery rates, changes in the Company’s hedging program, changes in accounting policies, changes in Mineral Resources (as defined herein) and Mineral Reserves (as defined herein), risks related to non-core mine disposition, risks related to acquisitions, changes in project parameters as plans continue to be refined, changes in project development, construction, production and commissioning time frames, risks related to joint venture operations, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other consumables contributing to higher costs and general risks of the mining industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life, final pricing for concentrate sales, unanticipated results of future studies, seasonality and unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, permitting timelines, government regulation and the risk of government expropriation or nationalization of mining operations, risks related to relying on local advisors and consultants in foreign jurisdictions, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation and labour disputes, risks related to enforcing legal rights in foreign jurisdictions, as well as those risk factors discussed or referred to herein and in the Company’s annual management’s discussion and analysis filed with the securities regulatory authorities in all provinces of Canada and available under the Company’s SEDAR profile at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and operational performance and results as at and for the periods ended on the dates presented in the Company’s plans and objectives and may not be appropriate for other purposes.

Cautionary Note to United States Investors Concerning Estimates of Mineral Reserves and Mineral Resources

This annual information form has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ in certain material respects from the disclosure requirements of United States securities laws.  The terms “Mineral Reserve”, “Proven Mineral Reserve” and “Probable Mineral Reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the “CIM Standards”). These

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definitions differ from the definitions in the disclosure requirements promulgated by the Securities and Exchange Commission (the “Commission”) and contained in Industry Guide 7 (“Industry Guide 7”).  Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report Mineral Reserves, the three-year historical average price is used in any Mineral Reserve or cash flow analysis to designate Mineral Reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource” are defined in and required to be disclosed by NI 43-101.  However, these terms are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the Commission.  Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into Mineral Reserves. Inferred Mineral Resources (as defined herein) have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies. Investors are cautioned not to assume that all or any part of an Inferred Mineral Resource exists or is economically or legally mineable.  Disclosure of “contained ounces” in a Mineral Resource is permitted disclosure under Canadian regulations.  In contrast, the Commission only permits United States companies to report mineralization that does not constitute Mineral Reserves by Commission standards as in place tonnage and grade without reference to unit measures. Accordingly, information contained in this annual information form may not be comparable to similar information made public by United States companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations of the Commission thereunder.

Currency Presentation And Exchange Rate Information

This annual information form contains references to both United States dollars and Canadian dollars. All dollar amounts referenced, unless otherwise indicated, are expressed in United States dollars and Canadian dollars are referred to as “Canadian dollars” or “Cdn$”.

The closing, high, low and average exchange rates for the United States dollar in terms of Canadian dollars for the years ended December 31, 2013, December 31, 2012, December 31, 2011, and December 31, 2010 based on the noon spot rate reported by the Bank of Canada, were as follows:

	Year-Ended December 31
	2013		2012		2011		2010
Closing		$1.06		$0.99		$1.02		$0.99
High	1.07		1.04		1.06		1.08
Low	0.98		0.97		0.94		0.99
Average(1)	1.03		1.00		0.99		1.03

⁽¹⁾Calculated as an average of the daily noon rates for each period.

On March27, 2014, the Bank of Canada noon rate of exchange was US$1.00 = Cdn$1.1057 or Cdn$1.00 = US$0.9044.

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ITEM 2

CORPORATE STRUCTURE

Yamana Gold Inc. (the “Company” or “Yamana”) was continued under the Canada Business Corporations Act by Articles of Continuance dated February 7, 1995. On February 7, 2001, pursuant to Articles of Amendment, the Company created and authorized the issuance of a maximum of 8,000,000 first preference shares, Series 1. On July 30, 2003, pursuant to Articles of Amendment, the name of the Company was changed from Yamana Resources Inc. to Yamana Gold Inc. On August 12, 2003, the authorized capital of the Company was altered by consolidating all of the then issued and outstanding common shares of the Company on the basis of one new common share for 27.86 existing common shares.

The Company’s head office is located at 200 Bay Street, Royal Bank Plaza, North Tower, Suite 2200, Toronto, Ontario M5J 2J3 and its registered office is located at 2100 Scotia Plaza, 40 King Street West, Toronto, Ontario M5H 3C2.

The corporate chart that follows on the next page illustrates the Company’s principal subsidiaries (collectively, the “Subsidiaries”), together with the jurisdiction of incorporation of each company and the percentage of voting securities beneficially owned, controlled or directed, directly or indirectly, by the Company. As used in this annual information form, except as otherwise required by the context, reference to the “Company” or “Yamana” means Yamana Gold Inc. and the Subsidiaries.

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ITEM 3

GENERAL DEVELOPMENT OF THE BUSINESS

Overview of Business

Yamana is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties and land positions in Brazil, Chile, Argentina and Mexico. Yamana plans to continue to build on this base through existing operating mine expansions, throughput increases, development of new mines, advancement of its exploration properties and by targeting other gold consolidation opportunities with a primary focus in the Americas.

The Company’s portfolio includes: (i) seven operating gold mines, namely Chapada (copper/gold), El Peñón (gold/silver), Jacobina, Gualcamayo, Minera Florida (gold/silver/zinc), Fazenda Brasileiro, Mercedes (gold/silver) plus a 12.5% indirect interest in the Alumbrera mine (copper/gold/molybdenum), and (ii) various advanced and near development stage projects and exploration properties in Brazil, Chile, Argentina and Mexico.

Set out below is a list of Yamana’s main properties and mines:

Producing Mines

•Chapada Mine (Brazil)
•    El Peñón Mine (Chile)
•    Mercedes Mine (Mexico)

•Gualcamayo Mine (Argentina)

•Jacobina Mining Complex (Brazil)

•    Minera Florida Mine (Chile)

•    Fazenda Brasileiro Mine (Brazil)

•    Alumbrera Mine (Argentina) – 12.5% indirect interest

Additional Projects

•Pilar Project (Brazil)
•    C1 Santa Luz Project (Brazil)
•    Ernesto/Pau-a-Pique Project (Brazil)

•    QDD Lower West (Argentina)
•    Cerro Moro Project (Argentina

•    Suyai Project (Argentina)

•    Agua Rica Project (Argentina)

History

Over the three most recently completed financial years, the following events contributed materially to the development of the Company’s business:

Cerro Moro Project – Acquisition

On August 22, 2012, the Company acquired all the issued and outstanding common shares of Extorre Gold Mines Limited (“Extorre”). Each Extorre shareholder received $4.28 per share comprised of $3.50 in cash and 0.0467 of a Yamana common share for each Extorre common share held. Total consideration paid was approximately $451.5 million, comprised of 4.7 million common shares, transaction costs and issued options.

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With the completion of the acquisition, the Company adds several exploration and development stage precious metals projects, the most advanced of which is Cerro Moro, an advanced stage, high grade vein system located in the Santa Cruz province of Argentina. At the end of 2013, Cerro Moro hosted Probable Mineral Reserves (as defined herein) of approximately 1.53 million gold equivalent ounces (“GEO”), Indicated Mineral Resources (as defined herein) of 352,000 GEO and Inferred Mineral Resources of 486,000 GEO. The Cerro Moro Project covers 177 square kilometres and is located approximately 70 kilometres southwest of the coastal port city of Puerto Deseado, and 130 kilometres east of the Cerro Vanguardia gold silver mine.

Evaluation of exploration and development plans of Cerro Moro is underway. An update to the feasibility study is advancing and expected to be completed in 2014. In addition, certain pre-development work, including the development of a decline to one of the ore bodies, continues. The Company is currently evaluating a plan for production start-up in 2016, targeting 150,000 GEO per year.

Mercedes Mine – Commercial Production

The Mercedes Mine, located in Sonora, Mexico, is Yamana’s newest mine reaching commercial production as of February 1, 2012. With mine development and plant commissioning well advanced and a sufficient stockpile having been created during the mine development period, a first gold pour occurred in mid-November 2011, marking the formal start-up of commissioning production at the mine, which was originally planned for the middle of 2012. After a successful ramp-up, Mercedes surpassed its production plan, reaching approximately 126,000 GEO for 2012. In 2013, Mercedes produced approximately 140,000 GEO. The Company continued development of the Barrancas zone, reaching ore within the higher grade Lagunas Norte vein, one of the newest discoveries at the mine. Confirmation of the width and grades of mineralization by infill drilling at Lupita and the recent discovery of high-grade mineralization at Rey de Oro that may be amenable to underground mining methods have positively impacted Measured Mineral Resources (as defined herein) and Indicated Mineral Resources. Development of Diluvio will commence in 2014. The Company expects production of 129,000 GEO in 2014.

Agua Rica Project – Integration into Alumbrera

In September 2011, GlencoreXstrata plc (“GlencoreXstrata”), the successor company to Xstrata Copper, Goldcorp Inc. (“Goldcorp”) and the Company reached a definitive agreement, pursuant to which Minera Alumbrera Limited Sucursal Argentina (“Minera Alumbrera”) holds an exclusive four-year option to acquire Yamana’s interest in the Agua Rica Project for cumulative payments made by GlencoreXstrata and Goldcorp of $110 million, as set out below. During the option period, Minera Alumbrera will manage the Agua Rica Project and fund a feasibility study and all development costs. Minera Alumbrera can elect to exercise the option at any time during the four-year period. A formal decision to purchase Agua Rica will be made at the time of a construction decision. Should GlencoreXstrata and Goldcorp decide not to make a construction decision, or should the four year option period expire, Yamana will retain a 100% interest in Agua Rica, retain all payments received prior to termination and be entitled to all work product, technical studies and reports developed with respect to Agua Rica during the option period.

The terms of the definitive agreement provide for Yamana to receive from GlencoreXstrata and Goldcorp a combination of payments summarized as follows:

Initial payments totaling $110 million, payable as follows:

• $10 million payable upon announcement of the arrangement, which payment has been made;

• $20 million payable upon execution of formal transaction documents (“closing”), which payment has been made;

• $20 million payable 12 months from closing, which payment has been made;

• $30 million payable 24 months from closing, which payment was deferred; and

• $30 million payable 36 months from closing.

Further payments totaling $200 million, which include:

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• $150 million payable upon approval to proceed with construction; and

• $50 million payable upon achieving commercial production.

In addition to the above consideration, the Company will also receive a deferred consideration revenue stream. The deferred consideration to be received by Yamana will be based on a formula (subject to certain adjustments) as follows:  65% of payable gold produced * the lesser of spot gold price and [$450 + 10% * (spot gold price - $1,000)].

During the third quarter of 2013, the Company, GlencoreXstrata and Goldcorp agreed to an extension period of twelve months in which certain optimizations for a feasibility study would be undertaken with respect to the development of Agua Rica. An option payment payable by GlencoreXstrata and Goldcorp in 2013 was deferred to 2014 as part of this agreement, and the cap on the number of ounces of payable gold on which the deferred consideration related to was removed.

ITEM 4

DESCRIPTION OF THE BUSINESS

Yamana is a Canadian-based gold producer with significant gold production, gold development stage properties, exploration properties and land positions in Brazil, Chile, Argentina and Mexico. Yamana plans to continue to build on this base through existing operating mine expansions, throughput increases, development of new mines, advancement of its exploration properties and by targeting other gold consolidation opportunities with a primary focus in the Americas.

Principal Products

The Company’s principal product is gold, with gold production forming a significant part of revenues. There is a global gold market into which Yamana can sell its gold and, as a result, the Company is not dependent on a particular purchaser with regard to the sale of the gold that it produces.

The Company produces gold-copper concentrate at its Chapada Mine, gold and silver doré bars at its El Peñón Mine, Mercedes Mine and Jacobina Mining Complex (the “JMC”), gold doré bars at its Fazenda Brasileiro Mine and Gualcamayo Mine, and gold and silver doré bars and zinc concentrate at its Minera Florida Mine. Additionally, the Company has a 12.5% indirect interest in the Alumbrera Mine which produces copper and gold concentrate and gold doré bars. The Company has contracts with a number of smelters, refineries and trading companies to sell gold and silver doré and gold-copper and zinc concentrate.

Competitive Conditions

The precious metal mineral exploration and mining business is a competitive business. The Company competes with numerous other companies and individuals in the search for and the acquisition of attractive precious metal mineral properties. The ability of the Company to acquire precious metal mineral properties in the future will depend not only on its ability to develop its present properties, but also on its ability to select and acquire suitable producing properties or prospects for precious metal development or mineral exploration.

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Operations

Employees

As at December 31, 2013, the Company had the following employees and contractors at its operations:

Country	Employees	Contractors	Total
Canada	83	13	96
Argentina	1,059	508	1,567
Brazil	2,972	2,670	5,642
Chile	1,981	2,049	4,030
Mexico	508	204	712
United States	11	6	17

Foreign Operations

The Company’s mine and mineral projects are located in Brazil, Chile, Argentina and Mexico (see “General Development of the Business – Overview of Business” for a summary of the Company’s projects). Any changes in regulations or shifts in political attitudes in any of these jurisdictions, or other jurisdictions in which Yamana has projects from time to time, are beyond the control of the Company and may adversely affect its business. Future development and operations may be affected in varying degrees by such factors as government regulations (or changes thereto) with respect to the restrictions on production, export controls, income taxes, expropriation of property, repatriation of profits, environmental legislation, land use, water use, land claims of local people, mine safety and receipt of necessary permits. The effect of these factors cannot be accurately predicted. See “– Risks of the Business”.

Environment and Communities

In common with other natural resources and mineral processing companies, the Company’s operations generate hazardous and non-hazardous waste, effluent and emissions into the atmosphere, water and soil in compliance with local and international regulations and standards. There are numerous environmental laws in Brazil, Chile, Argentina, Mexico, the United States and elsewhere in the Americas that apply to the Company’s operations, exploration, development projects and land holdings. These laws address such matters as protection of the natural environment, air and water quality, emissions standards and disposal of waste.

Yamana’s operating mine sites seek to adopt the best environmental practices programs to manage environmental matters and compliance with local and international legislation. Programs include: promotion of rational water use; solid waste management; control of emissions and fossil fuel consumption; rationing of energy; soil and biodiversity protection; archaeological sites identification and rescue and ruins preservation and monitoring; environmental education; surface and groundwater monitoring; air monitoring; land reclamation and revegetation; native seedlings production; and native forest conservation.

In 2013, Yamana has continued its attention towards environmental performance indicators and continued to track its consumption of diesel, electricity, fresh water and its non-mineral solid waste generation. The inclusion of new projects and expansions at existing mining operations has resulted in net increases in these categories as follows: diesel consumption (l/GEO) by 25%; electricity consumption (MWh/GEO) by 23%; fresh water consumption (m³/GEO) by 15%; and generation of non-mineral solid waste (t/GEO) by 3%. The increase in diesel consumption was mainly due to civil works for new construction and expansion, as well as greater hauling distances caused by increasing mine depths. Electricity consumption was also affected by increasing mine depths due to additional ventilation and lighting, as well as by the continued ramp up of new projects in Brazil.

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In 2013, as a result of increased focus by Yamana on greenhouse gas emissions, the Company studied the risks, opportunities and impacts related to climate. Efforts have been focused on an energy efficiency program which aims to improve energy management systems currently in place and identify opportunities to reduce both energy consumption and greenhouse gas emissions.

Yamana has a corporate integrated management system for Safety, Health, Environment and Community (“SHEC”) Relations and Social Responsibility (the “YMS”) which was created in October 2006. This system was developed based on the best practices and international standards – ISO 14001 – Environmental Management System, OHSAS 18001 – Occupational Health and Safety Management System and SA 8000 – Social Accountability, the International Cyanide Management Code (the “ICMC”) and local laws.

In early 2009, the Company was added to the Jantzi Social Index (“JSI”). Companies included in the JSI must pass a set of broadly based environmental, social and governance criteria. Inclusion in this index is a testament to the Company’s social, environmental, health and safety management programs which are considered by JSI to be above average. To date, all seven of the Company’s wholly-owned operating mines have achieved ISO 14001 certification for their Environmental Management Systems. This exceeds the industry average.

The YMS involves: corporate policies, standards and procedures; risk assessment; identification of all legal and contractual requirements; definition of Company objectives and targets; and also includes internal auditing systems to ensure that Yamana operates in compliance with its policies and management programs. The implementation of the YMS commenced in Brazil in 2007 and in Chile in 2008. Yamana has continued to consolidate YMS across existing operations and has extended this consolidation to both exploration and construction areas, including Pilar, Ernesto/Pau-a-Pique and C1 Santa Luz. In order to verify compliance with the YMS, corporate cross audits are conducted at each mine site, exploration project and construction project. In 2013, the average adherence with the YMS was 86.4%, increasing from 83.7% in 2012.

Yamana has mapped all environmental risks at its mine sites as part of the YMS. High level risks, including those associated with tailings dam facilities, waste rock dumps, heap leach piles or cyanide usage, have enhanced and specific management measures in order to be better able to mitigate potential failures, spills or slides. These systems are based on the permanent monitoring of the particular structure, using specific tools that assist in monitoring such risks. In addition, reports on tailings dam facilities are prepared by third party consultants on a monthly basis and reviewed periodically by the Company.

Geomechanical, geotechnical and geochemical risks are also assessed periodically by third party consultants in order to minimize related risks, such as rock falls, as well as environmental contamination. These, and other high level risks, are dealt with as part of Yamana’s emergency response plan with emergency simulation tests being conducted during the year to evaluate the plan’s effectiveness.

Each of the Company’s mining operations has established a SHEC committee (collectively, the “SHEC Committees”) which are chaired by the General Manager at each mine. The SHEC Committees meet at least once a month to discuss issues and solutions related to SHEC relations and other operational practices. The goal of each SHEC Committee is to measure the effectiveness and performance of the Company’s sustainability programs. Yamana also maintains a corporate SHEC Committee (the “Corporate SHEC Committee”), comprised of certain vice presidents and directors of the Company and chaired by the President and Chief Operating Officer of the Company, to discuss strategic SHEC issues and to deliberate solutions for the various mine sites.

Since 2012, as part of the YMS, the Company defined a process to help mitigate, prevent and avoid negative environmental and safety incidents, and to prevent environmental and property damage. The general process with respect to key risks were reviewed and approved by the Corporate SHEC Committee, with local SHEC Committees at the Company’s mining operations evaluating particular risks associated with the respective operations. Local SHEC Committees review major risks and processes, along with what actions have been taken to address and mitigate risks to an acceptable level (which actions are checked during corporate auditing and technical visits).

Certain of the Company’s mining operations utilize cyanide. These mines include the JMC and Fazenda Brasileiro Mine in Brazil; the El Peñόn Mine and Minera Florida Mine in Chile; the Mercedes Mine in Mexico and the

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Gualcamayo Mine in Argentina. The JMC, Fazenda Brasileiro Mine, El Peñόn Mine and Minera Florida Mine have been signatories to the ICMC since September 2008. Upon becoming a signatory to the ICMC, a company is granted three years to obtain certification confirming compliance with ICMC principles and standards. With the exception of the Mercedes Mine, all of the mine sites noted above are ICMC certified. The Company expects the Mercedes Mine to obtain ICMC certification in 2014. The Company’s new projects, Ernesto/Pau-a-Pique, Pilar and C1 Santa Luz, will also utilize cyanide in their operations and have been preparing for the certification process.

The Company has also made several investments in connection with infrastructure improvements to enhance community relations in the locations where it operates. The Company’s social responsibility programs are focused on local development, income generation and improvements in quality of life in the local communities. Through programs such as the Partnership Seminar, the Integration Program and the Open Doors Program, Yamana has provided support to local communities in many different areas such as education, culture, health, environment and the generation of employment and income. To further develop these programs, the Company conducts various education projects and cultural activities in each of the communities where the Company operates.

The Company’s compliance with its environmental policies and obligations is overseen by the Sustainability Committee.

Risks of the Business

The operations of the Company are speculative due to the high-risk nature of its business, which is the acquisition, financing, exploration, development and operation of mining properties. These risk factors could materially affect the Company’s financial condition and/or future operating results and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.

Exploration, Development and Operating Risks

Mining operations generally involve a high degree of risk. Yamana’s operations are subject to all the hazards and risks normally encountered in the exploration, development and production of gold, copper and silver, including unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding, pit wall failure and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property and environmental damage, all of which may result in possible legal liability. Although adequate precautions to minimize risk will be taken, mining operations are subject to hazards such as fire, rock falls, geomechanical issues, equipment failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and consequent liability.

The exploration for and development of mineral deposits involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish Mineral Reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration or development programs planned by Yamana will result in a profitable commercial mining operation. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices that are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in Yamana not receiving an adequate return on invested capital.

There is no certainty that the expenditures made by Yamana towards the search and evaluation of mineral deposits will result in discoveries or development of commercial quantities of ore.

Health, Safety and Environmental Risks and Hazards

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Mining, like many other extractive natural resource industries, is subject to potential risks and liabilities due to accidents that could result in serious injury or death and/or material damage to the environment and Company assets. The impact of such accidents could affect the profitability of the operations, cause an interruption to operations, lead to a loss of licenses, affect the reputation of the Company and its ability to obtain further licenses, damage community relations and reduce the perceived appeal of the Company as an employer. Yamana has rigorous procedures in place to manage health and safety protocols in order to reduce the risk of occurrence and the severity of any accident and is continually investing time and resources to enhance health and safety at all operations.

All phases of the Company’s operations are also subject to environmental regulation in the various jurisdictions in which it operates. These regulations mandate, among other things, water quality standards and land reclamation and regulate the generation, transportation, storage and disposal of hazardous waste. Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that the Company has been or will at all times be in full compliance with all environmental laws and regulations or hold, and be in full compliance with, all required environmental and health and safety permits. The potential costs and delays associated with compliance with such laws, regulations and permits could prevent the Company from proceeding with the development of a project or the operation or further development of a mine. There is no assurance that existing or future environmental laws, regulations and permits, and the potential costs and delays associated with compliance therewith, will not materially adversely affect the Company’s business, financial condition and results of operations.

At the Alumbrera Mine, in which Yamana holds a 12.5% interest, a sulphate seepage plume has developed in the natural groundwater downstream of the tailings facility, currently within the mining concession. After completing the original model, an initial pump back well mesh was designed and completed before start up, in order to capture the seepage, which is characterized by high levels of dissolved calcium and sulphate. It will be necessary to augment the pump-back wells over the life of the mine in order to contain the plume within the concession and to provide for monitoring wells for the Vis Vis River. Based on the latest groundwater model, the pump-back system will need to be operated for several years after mine closure. The concentrate pipeline at the Alumbrera Mine crosses areas of mountainous terrain, significant rivers, high rainfall and active agriculture. Although various control structures and monitoring programs have been implemented, any rupture of the pipeline poses an environmental risk from spillage of concentrate. Yamana does not have any indemnities from the previous vendors of its interests in the Alumbrera Mine against any potential environmental liabilities that may arise from operations, including, but not limited to, potential liabilities that may arise from the seepage plume or a rupture of the pipeline.

Environmental hazards may also exist on the properties on which the Company holds interests that are unknown to the Company at present and that have been caused by previous or existing owners or operators of the properties.

Government environmental approvals and permits are currently, or may in the future be, required in connection with the Company’s operations. To the extent such approvals are required and not obtained, the Company may be curtailed or prohibited from proceeding with planned exploration or development of mineral properties.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations, including the Company, may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in exploration expenses, capital expenditures or production costs, reduction in levels of production at producing properties, or abandonment or delays in development of new mining properties.

In certain jurisdictions, the Company may be required to submit, for government approval, a reclamation plan for each of its mining/project sites. The reclamation plan establishes the Company’s obligation to reclaim property

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after minerals have been mined from the sites. In some jurisdictions, bonds or other forms of financial assurances are required as security to ensure performance of the required reclamation activities. The Company may incur significant reclamation costs which may materially exceed the provisions the Company has made for such reclamation. In addition, the potential for additional regulatory requirements relating to reclamation or additional reclamation activities may have a material adverse effect on the Company’s financial condition, liquidity or results of operations. When a previously unrecognized reclamation liability becomes known or a previously estimated cost is increased, the amount of that liability or additional cost may be expensed, which may materially reduce net income in that period.

Production at certain of the Company’s mines involves the use of cyanide which is toxic material if not handled properly. Should cyanide leak or otherwise be discharged from the containment system, the Company may become subject to liability for clean-up work that may not be insured. While appropriate steps will be taken to prevent discharges of pollutants into the ground water and the environment, the Company may become subject to liability for hazards that it may not be insured against. The Company became a signatory to the ICMC in September 2008. Further information regarding the ICMC can be found at the International Cyanide Management Institute website located at www.cyanidecode.org.

Nature and Climatic Condition Risk

The Company and the mining industry are facing continued geotechnical challenges, which could adversely impact the Company’s production and profitability. No assurances can be given that unanticipated adverse geotechnical and hydrological conditions, such as landslides, droughts and pit wall failures, will not occur in the future or that such events will be detected in advance. Geotechnical instabilities and adverse climatic conditions can be difficult to predict and are often affected by risks and hazards outside of the Company’s control, such as severe weather and considerable rainfall, which may lead to periodic floods, mudslides, wall instability and seismic activity, which may result in slippage of material.

Geotechnical failures could result in limited or restricted access to mine sites, suspension of operations, government investigations, increased monitoring costs, remediation costs, loss of ore and other impacts, which could cause one or more of the Company’s projects to be less profitable than currently anticipated and could result in a material adverse effect on the Company’s results of operations and financial position.

Counterparty, Credit, Liquidity and Interest Rate Risks and Access to Financing

The Company is exposed to various counterparty risks including, but not limited to: (i) financial institutions that hold the Company’s cash and short term investments; (ii) companies that have payables to the Company, including concentrate and bullion customers; (iii) providers of its risk management services; (iv) shipping service providers that move the Company’s material; (v) the Company’s insurance providers; and (vi) the Company’s lenders. The Company limits counterparty risk by entering into business arrangements with high credit-quality counterparties, limiting the amount of exposure to each counterparty and monitoring the financial condition of counterparties. For cash, cash equivalents and accounts receivable, credit risk is represented by the carrying amount on the balance sheet. For derivatives, the Company assumes no credit risk when the fair value of the instruments is negative. When the fair value of the instruments is positive, this is a reasonable measure of credit risk. The Company is also exposed to liquidity risks in meeting its operating and capital expenditure requirements in instances where cash positions are unable to be maintained or appropriate financing is unavailable. Under the terms of the Company’s trading agreements, counterparties cannot require the Company to immediately settle outstanding derivatives except upon the occurrence of customary events of default. The Company mitigates liquidity risk through the implementation of its capital management policy by spreading the maturity dates of derivatives over time, managing its capital expenditures and operation cash flows, and by maintaining adequate lines of credit. The Company is exposed to interest rate risk on its variable rate debt and enters into interest rate swap agreements to hedge this risk. These factors may impact the ability of the Company to obtain loans and other credit facilities and refinance existing facilities in the future and, if obtained, on terms favourable to the Company.

Construction and Start-up of New Mines

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The success of construction projects and the start up of new mines by the Company is subject to a number of factors including the availability and performance of engineering and construction contractors, mining contractors, suppliers and consultants, the receipt of required governmental approvals and permits in connection with the construction of mining facilities and the conduct of mining operations (including environmental permits), the successful completion and operation of ore passes, the adsorption/desorption/recovery plants and conveyors to move ore, among other operational elements. Any delay in the performance of any one or more of the contractors, suppliers, consultants or other persons on which the Company is dependent in connection with its construction activities, a delay in or failure to receive the required governmental approvals and permits in a timely manner or on reasonable terms, or a delay in or failure in connection with the completion and successful operation of the operational elements in connection with new mines could delay or prevent the construction and start-up of new mines as planned. There can be no assurance that current or future construction and start-up plans implemented by the Company will be successful; that the Company will be able to obtain sufficient funds to finance construction and start-up activities; that available personnel and equipment will be available in a timely manner or on reasonable terms to successfully complete construction projects; that the Company will be able to obtain all necessary governmental approvals and permits; and that the completion of the construction, the start-up costs and the ongoing operating costs associated with the development of new mines will not be significantly higher than anticipated by the Company. Any of the foregoing factors could adversely impact the operations and financial condition of the Company.

Some of the Company’s projects have no operating history upon which to base estimates of future cash flow. The capital expenditures and time required to develop new mines or other projects are considerable and changes in costs or construction schedules can affect project economics. Thus, it is possible that actual costs may change significantly and economic returns may differ materially from the Company’s estimates.

Currently, the Company has three mines under construction in Brazil, namely, the Pilar Project, C1 Santa Luz Project and Ernesto/Pau-a-Pique Project. While the Pilar Project and C1 Santa Luz Project commenced commissioning in the second half of 2013, both of which remain within the normal progression expectation of the commissioning process, Ernesto/Pau-a-Pique has been commissioning since the fourth quarter of 2012. Commercial viability of a new mine or development project is predicated on many factors. There is no certainty that the realization of Mineral Reserves and Mineral Resources projected by feasibility studies and technical assessments performed on the projects may be realized, and future metal prices to ensure commercial viability will materialize. Consequently, there is a risk that start-up of new mine and development projects may be subject to write-down and/or closure as there is no certainties that they are commercially viable.

Uncertainty in the Estimation of Mineral Reserves and Mineral Resources

To extend the lives of its mines and projects, ensure the continued operation of the business and realize its growth strategy, it is essential that the Company continues to realize its existing identified Mineral Reserves, convert Mineral Resources into Mineral Reserves, increase its Mineral Resource base by adding new Mineral Resources from areas of identified mineralized potential, and/or undertake successful exploration or acquire new Mineral Resources.

The figures for Mineral Reserves and Mineral Resources contained in this annual information form are estimates only and no assurance can be given that the anticipated tonnages and grades will be achieved, that the indicated level of recovery will be realized or that Mineral Reserves could be mined or processed profitably. Actual Mineral Reserves may not conform to geological, metallurgical or other expectations, and the volume and grade of ore recovered may differ from estimated levels. There are numerous uncertainties inherent in estimating Mineral Reserves and Mineral Resources, including many factors beyond the Company’s control. Such estimation is a subjective process, and the accuracy of any Mineral Reserve or Mineral Resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgments used in engineering and geological interpretation. Short-term operating factors relating to the Mineral Reserves, such as the need for orderly development of the ore bodies or the processing of new or different ore grades, may cause the mining operation to be unprofitable in any particular accounting period. In addition, there can be no assurance that gold recoveries in small scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production. Lower market prices, increased production costs, reduced recovery rates and other factors may result in a revision of its Mineral Reserve estimates from time to time or may render the Company’s Mineral Reserves uneconomic to exploit. Mineral Reserve data are not indicative of future results of operations. If the Company’s actual Mineral Reserves and Mineral Resources are less than current estimates

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or if the Company fails to develop its Mineral Resource base through the realization of identified mineralized potential, its results of operations or financial condition may be materially and adversely affected. Evaluation of Mineral Reserves and Mineral Resources occurs from time to time and they may change depending on further geological interpretation, drilling results and metal prices. The category of Inferred Mineral Resource is often the least reliable Mineral Resource category and is subject to the most variability. The Company regularly evaluates its Mineral Resources and it often determines the merits of increasing the reliability of its overall Mineral Resources.

Replacement of Depleted Mineral Reserves

Given that mines have limited lives based on Proven Mineral Reserves (as defined herein) and Probable Mineral Reserves, the Company must continually replace and expand its Mineral Reserves at its gold mines. The life-of-mine estimates included in this annual information form may not be correct. The Company’s ability to maintain or increase its annual production of gold will be dependent in part on its ability to bring new mines into production and to expand Mineral Reserves at existing mines.

Uncertainty Relating to Mineral Resources

Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Due to the uncertainty which may attach to Inferred Mineral Resources, there is no assurance that Inferred Mineral Resources will be upgraded to Proven Mineral Reserves and Probable Mineral Reserves as a result of continued exploration.

Commodity Prices

The profitability of the Company’s operations will be dependent upon the market price of mineral commodities produced, as well as the cost and availability of commodities which are consumed or otherwise used in connection with the Company’s operations and projects, including, but not limited to diesel, fuel, natural gas, electricity, steel, concrete and cyanide. Commodity prices fluctuate widely and are affected by numerous factors beyond the control of the Company. The level of interest rates, the rate of inflation, the world supply of and demand for mineral commodities and the stability of exchange rates can all cause significant fluctuations in prices. Such external economic factors are in turn influenced by changes in international investment patterns, monetary systems and political developments. The price of mineral commodities has fluctuated widely in recent years, and future price declines could cause commercial production to be impracticable, thereby having a material adverse effect on the Company’s business, financial condition and results of operations.

Furthermore, Mineral Reserve calculations and life-of-mine plans using significantly lower metal prices could result in material write‑downs of the Company’s investment in mining properties and increased amortization, reclamation and closure charges.

In addition to adversely affecting the Company’s Mineral Reserve estimates and its financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if the project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.

Joint Ventures

Yamana holds an indirect 12.5% interest in the Alumbrera Mine, the other 37.5% and 50% interests being held by Goldcorp and GlencoreXstrata, respectively. The Company accounts for this investment under the equity method of accounting. The Company’s interest in the Alumbrera Mine is subject to the risks normally associated with the conduct of joint ventures. The existence or occurrence of one or more of the following circumstances and events, for example, could have a material adverse impact on Company’s profitability or the viability of its interests held through joint ventures, which could have a material adverse impact on future cash flows, earnings, results of operations and financial condition: disagreement with joint venture partners on how to develop and operate mines efficiently; inability of joint venture partners to meet their obligations to the joint venture or third parties; or litigation arising between joint venture partners regarding joint venture matters.

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Infrastructure

Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges, power sources and water supply are important determinants, which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect the Company’s operations, financial condition and results of operations.

Permitting

The Company’s operations are subject to receiving and maintaining permits from appropriate governmental authorities. There is no assurance that delays will not occur in connection with obtaining all necessary renewals of permits for the existing operations, additional permits for any possible future changes to operations, or additional permits associated with new legislation. Prior to any development on any of its properties, the Company must receive permits from appropriate governmental authorities. There can be no assurance that the Company will continue to hold all permits necessary to develop or continue operating at any particular property.

Insurance and Uninsured Risks

Yamana’s business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labour disputes, unusual or unexpected geological conditions, ground or slope failures, cave-ins, catastrophic equipment failures or unavailability of materials and equipment, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes. Such occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to the Company’s properties or the properties of others, delays in mining, monetary losses and possible legal liability.

Although Yamana maintains insurance to protect against certain risks in such amounts as it considers to be reasonable, its insurance will not cover all the potential risks associated with a mining company’s operations. Yamana may also be unable to maintain insurance to cover these risks at economically feasible premiums. Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability. Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and production such as underground coverage is not generally available to Yamana or to other companies in the mining industry on acceptable terms. Yamana might also become subject to liability for pollution or other hazards that may not be insured against or that Yamana may elect not to insure against because of premium costs or other reasons. Losses from these events, the lack of, or insufficiency of insurance coverage could cause Yamana to incur significant costs that could have a material adverse effect upon its financial performance and results of operations. Should the Company be unable to fully fund the cost of remedying an environmental problem, the Company might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy, which may have a material adverse effect. The Company mitigates the likelihood and potential severity of these environmental risks it encounters in its day-to-day operations through the application of its high operating standards as dictated by the Yamana management system.

Foreign Operations and Political Risk

The Company holds mining and exploration properties in Brazil, Argentina, Chile and Mexico exposing it to the socioeconomic conditions as well as the laws governing the mining industry in those countries. Inherent risks with conducting foreign operations include, but are not limited to: high rates of inflation; military repression; war or civil war; social and labour unrest; organized crime; hostage taking; terrorism; violent crime; extreme fluctuations in currency exchange rates; expropriation and nationalization; renegotiation or nullification of existing concessions, licences, permits and contracts; illegal mining; changes in taxation policies; restrictions on foreign exchange and repatriation; and changing political norms, currency controls and governmental regulations that favour or require the Company to award contracts in, employ citizens of, or purchase supplies from, a particular jurisdiction.

Changes, if any, in mining or investment policies or shifts in political attitude in any of the jurisdictions in which the Company operates may adversely affect the Company’s operations or profitability. Operations may be affected in varying degrees by government regulations with respect to, but not limited to, restrictions on production,

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price controls, export controls, currency remittance, importation of parts and supplies, income and other taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use and mine safety.

Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or other interests.

The governments in those countries are currently generally supportive of the mining industry but changes in government laws and regulations including taxation, royalties, the repatriation of profits, restrictions on production, export controls, changes in taxation policies, environmental and ecological compliance, expropriation of property and shifts in the political stability of the country could adversely affect the Company’s exploration, development and production initiatives in these countries.

In efforts to tighten capital flows and protect foreign exchange reserves, the Argentine government issued a foreign exchange resolution with respect to export revenues. This resulted in a temporary suspension of export sales of concentrate at the Alumbrera Mine during the second quarter of 2012 as management evaluated how to comply with the new resolution. The Argentine government subsequently announced an amendment to the foreign exchange resolution which extended the time for exporters to repatriate net proceeds from export sales, enabling the Alumbrera Mine to resume exports in July 2012. The Argentine government has also introduced certain protocols relating to the importation of goods and services and providing, where possible, for the substitution of Argentine produced goods and services. During 2012, the Alumbrera Mine was unable to obtain permission to repatriate dividends even though certain accommodations have since been made to permit distribution of profits from Argentina. Discussion between the joint venture and the Argentine government on approval to remit dividends are ongoing. The Company continues to monitor developments and policies in all its jurisdictions and the impact thereof to its operations.

Brazil is in the process of reviewing the royalty rates for mining companies. Finalization of the royalty rates is subject to change during the review and approval process and therefore the final rates are not determinable at this time. The magnitude of change in royalty rates may affect net earnings and cash flows from the Company’s operations in Brazil.

In Mexico, a tax reform bill was enacted on December 26, 2013 with respect to the reform of the Mining and Fiscal Coordination Laws. The proposals submitted through this bill include a 7.5% compensation payment on taxable revenues generated by mining companies with producing mines. In addition, the bill includes a new royalty of 0.5% on all sales. These amounts are deductible for income tax purposes which would bring the effective rate of the taxes to approximately 5.8%. The Company has determined this to be approximately 3.8% on a net smelter royalty basis. The bill also doubles the payment of duties by hectare by differentiating nonproductive mining concessions. The magnitude of new royalty rates might affect net earnings and cash flows from the Company’s operations in Mexico.

On September 23, 2013, Argentina’s federal income tax statute was amended to include a 10% income tax withholding on dividend distributions by Argentine corporations.

Consistent with its risk management protocol, to mitigate land title risks, the Company makes no commitments and does not undertake exploration without first determining that necessary property rights are in good standing. However, despite the Company’s best efforts, land title may still be affected by undetected defects.

The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on the Company’s operations or profitability.

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Increase in Production Costs

Changes in the Company’s production costs could have a major impact on its profitability. Its main production expenses are personnel and contractor costs, materials, and energy. Changes in costs of the Company’s mining and processing operations could occur as a result of unforeseen events, including international and local economic and political events, a change in commodity prices, increased costs (including oil, steel and diesel) and scarcity of labour, and could result in changes in profitability or Mineral Reserve estimates. Many of these factors may be beyond the Company’s control.

The Company relies on third party suppliers for a number of raw materials. Any material increase in the cost of raw materials, or the inability by the Company to source third party suppliers for the supply of its raw materials, could have a material adverse effect on the Company’s results of operations or financial condition.

The Company prepares estimates of future cash costs and capital costs for its operations and projects. There is no assurance that actual costs will not exceed such estimates. Exceeding cost estimates could have an adverse impact on the Company’s future results of operations or financial condition.

Energy Risk

The Company consumes energy in mining activities, primarily in the form of diesel fuel, electricity and natural gas. As many of the Company’s mines are in remote locations and energy is generally a limited resource, the Company faces the risk that there may not be sufficient energy available to carry out mining activities efficiently or that certain sources of energy may not be available. The Company manages this risk by means of long-term electricity agreements with local power authorities and inventory control process on consumables including fuel. Many of the mines have on-site generator sets as back-up to mitigate the anticipated and unanticipated interruptions from the energy providers. Furthermore, the Company’s operations are continually improved to reduce input costs and maximize output.

Land Title

The acquisition of title to mineral properties is a very detailed and time-consuming process. Title to, and the area of, mineral concessions may be disputed. Although the Company believes it has taken reasonable measures to ensure proper title to its properties, there is no guarantee that title to any of its properties will not be challenged or impaired. Third parties may have valid claims underlying portions of the Company’s interests, including prior unregistered liens, agreements, transfers or claims, including native land claims, and title may be affected by, among other things, undetected defects. In addition, the Company may be unable to operate its properties as permitted or to enforce its rights with respect to its properties.

Termination of Mining Concessions

The Company’s mining concessions may be terminated in certain circumstances. Under the laws of the jurisdictions where the Company’s operations, development projects and prospects are located, Mineral Resources belong to the state and governmental concessions are required to explore for, and exploit, Mineral Reserves. The Company holds mining, exploration and other related concessions in each of the jurisdictions where it is operating and where it is carrying on development projects and prospects. The concessions held by the Company in respect of its operations, development projects and prospects may be terminated under certain circumstances, including where minimum production levels are not achieved by the Company (or a corresponding penalty is not paid), if certain fees are not paid or if environmental and safety standards are not met. Termination of any one or more of the Company’s mining, exploration or other concessions could have a material adverse effect on the Company’s financial condition or results of operations.

Competition

The mining industry is intensely competitive in all of its phases and the Company competes with many companies possessing greater financial and technical resources than itself. Competition in the precious metals mining industry is primarily for: mineral rich properties that can be developed and produced economically; the technical

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expertise to find, develop, and operate such properties; the labour to operate the properties; and the capital for the purpose of funding such properties. Many competitors not only explore for and mine precious metals, but conduct refining and marketing operations on a global basis. Such competition may result in the Company being unable to acquire desired properties, to recruit or retain qualified employees or to acquire the capital necessary to fund its operations and develop its properties. Existing or future competition in the mining industry could materially adversely affect the Company’s prospects for mineral exploration and success in the future.

Additional Capital

The exploration and development of the Company’s properties, including continuing exploration and development projects, and the construction of mining facilities and commencement of mining operations, may require substantial additional financing. Failure to obtain sufficient financing will result in a delay or indefinite postponement of exploration, development or production on any or all of the Company’s properties or even a loss of a property interest. Additional financing may not be available when needed or if available, the terms of such financing might not be favourable to the Company and might involve substantial dilution to existing shareholders. Failure to raise capital when needed would have a material adverse effect on the Company’s business, financial condition and results of operations.

Currency Fluctuations

Currency fluctuations may affect the Company’s capital costs and the costs that the Company incurs at its operations. Gold is sold throughout the world based principally on a United States dollar price, but a portion of the Company’s operating and capital expenses are incurred in Brazilian reals, Argentine pesos, Chilean pesos, Mexican pesos and, to a lesser extent, the Canadian dollar and the Euro. The appreciation of foreign currencies, particularly the Brazilian real and the Chilean peso, against the United States dollar would increase the costs of gold production at such mining operations, which could materially and adversely affect the Company’s earnings and financial condition. The Company has hedged only a portion of its Brazilian real risks and Mexican pesos risks, and none of the other currencies in which it functions, and is therefore exposed to currency fluctuation risks.

Write‑downs and Impairments

Mineral interests are the most significant assets of the Company and represent capitalized expenditures related to the development and construction of mining properties and related property, plant and equipment and the value assigned to exploration potential on acquisition. The costs associated with mining properties are separately allocated to exploration potential, Mineral Reserves and Mineral Resources and include acquired interests in production, development and exploration‑stage properties representing the fair value at the time they were acquired. The values of such mineral properties are primarily driven by the nature and amount of material interests believed to be contained or potentially contained, in properties to which they relate.

The Company reviews and evaluates its mining interests and any associated or allocated goodwill for impairment at least annually or when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the recoverable value of the asset is less than the carrying amount of the asset. An impairment loss is measured and recorded to the net recoverable value of the asset. The recoverable value of the asset is the higher of: (i) value in use (being the net present value of total expected future cash flows); and (ii) fair value less costs to sell.

The Company assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the Company estimates the recoverable amount and considers the reversal of the impairment loss recognized in prior periods for all assets other than goodwill. An impairment loss recognized for goodwill is not reversed in a subsequent period.

Fair value is the value obtained from an active market or binding sale agreement. Where neither exists, fair value is based on the best information available to reflect the amount the Company could receive for the asset in an arm’s length transaction. This is often estimated using discounted cash flow techniques. For value in use, recent cost

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levels are considered, together with expected changes in costs that are compatible with the current condition of the business and which meet the requirements of International Accounting Standards 36 in a discounted cash flow model. Where recoverable amount is assessed using discounted cash flow techniques, the resulting estimates are based on detailed mine and/or production plans. Assumptions underlying fair value estimates are subject to significant risks and uncertainties. Where third-party pricing services are used, the valuation techniques and assumptions used by the pricing services are reviewed by the Company to ensure compliance with the accounting policies and internal control over financial reporting of the Company. Future cash flows are estimated based on expected future production, commodity prices, operating costs and capital costs. There are numerous uncertainties inherent in estimating Mineral Reserves and Mineral Resources. Differences between management’s assumptions and market conditions could have a material effect in the future on the Company’s financial position and results of operation.

The assumptions used in the valuation of work-in process inventories by the Company include estimates of metal contained in the ore stacked on leach pads, assumptions of the amount of metal stacked that is expected to be recovered from the leach pads, estimates of metal contained in ore stock piles, assumptions of the amount of metal that will be crushed for concentrate, estimates of metal-in-circuit, estimated costs of completion to final product to be incurred and an assumption of the gold, silver and copper price expected to be realized when the gold, silver and copper is recovered. If these estimates or assumptions prove to be inaccurate, the Company could be required to write-down the recorded value of its work-in-process inventories to net realizable value, which would reduce the Company’s earnings and working capital. Net realizable value is determined as the difference between costs to complete production into a saleable form and the estimated future precious metal prices based on prevailing and long-term metal prices. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of write-down is reversed up to the lower of the new net realizable value or the original cost.

Investment Risk

Investment risk is the risk that a financial instrument’s value will deviate from the expected returns as a result of changes in market conditions, whether those changes are caused by factors specific to the individual investment or factors affecting all investments traded in the market. Although the factors that affect investment risk are outside the Company’s control, the Company mitigates investment risk by limiting its investment exposure in terms of total funds to be invested and by being selective of high quality investments.

Available for sale financial assets are reviewed quarterly for possible significant or prolonged decline in fair value requiring impairment and more frequently when economic or market concerns warrant such evaluation. The review includes an analysis of the fact and circumstances of the financial assets, the market price of actively traded securities, as well as the severity of loss, the financial position and near-term prospects of the investment, credit risk of the counterparties, the length of time the fair value has been below costs, both positive and negative evidence that the carrying amount is recoverable within a reasonable period of time, management’s intent and ability to hold the financial assets for a period of time sufficient to allow for any anticipated recovery of fair value and management’s market view and outlook. When a decline in the fair value of an available-for-sale investment has been recognized in Other Comprehensive Income (“OCI”) and there is objective evidence that the asset is impaired after management’s review, any cumulative losses that had been recognized in OCI are reclassified to net income in that period as an impairment loss. The reclassification is calculated as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized, if applicable. Impairment losses recognized in net income for an investment are subject to reversal, except for an equity instrument classified as available-for-sale.

Litigation Risks

All industries, including the mining industry, are subject to legal claims, with and without merit. The Company is currently involved in litigation of a non-material nature and may become involved in legal disputes in the future. Defence and settlement costs can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, there can be no assurance that the resolution of any particular legal proceeding will not have a material effect on the Company’s financial position or results of operations.

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In 2004, a former director of Northern Orion Resources Inc. (“Northern Orion”) commenced proceedings in Argentina against Northern Orion claiming damages in the amount of $177.0 million for alleged breaches of agreements entered into with the plaintiff. The plaintiff alleged that the agreements entitled him to a pre-emption right to participate in acquisitions by Northern Orion in Argentina and claimed damages in connection with the acquisition by Northern Orion of its 12.5% equity interest in the Alumbrera Mine. On August 22, 2008, the National Commercial Court No. 13 of the City of Buenos Aires issued a first-instance judgment rejecting the claim. The plaintiff appealed this judgment to the National Commercial Appeals Court. On May 22, 2013, the appellate court overturned the first-instance decision. The appellate court determined that the plaintiff was entitled to make 50% of Northern Orion’s investment in the Alumbrera acquisition, although weighted the chance of the plaintiff’s 50% participation at 15%. The matter was remanded to the first-instance court to determine the value. On June 12, 2013, Northern Orion filed an extraordinary recourse with the appellate court in order to bring the matter before the Supreme Court of Argentina to consider whether the appellate court’s decision was arbitrary. The extraordinary recourse was denied by the appellate court and Northern Orion was notified of this decision on December 20, 2013. Based on this decision, Northern Orion filed an appeal directly with the Supreme Court on February 3, 2014. Pending the decision of the Supreme Court, Northern Orion will make submissions to the first-instance court to address the value. The outcome of this case is uncertain and cannot be reasonably estimated. See “Legal Proceedings and Regulatory Actions”.

In December 2012, the Company received assessments from the Brazilian federal tax authorities disallowing certain deductions relating to debentures for the years 2007 to 2010. The Company believes that these debentures were issued on commercial terms permitted under applicable laws and is challenging these assessments. As such, the Company does not believe it is probable that any amounts will be paid with respect to these assessments with the Brazilian authorities and the amount and timing of any assessments cannot be reasonably estimated. See “Legal Proceedings and Regulatory Actions”.

Use of Derivatives

From time to time the Company uses or may use certain derivative products to manage the risks associated with changes in gold prices, silver prices, copper prices, interest rates, foreign currency exchange rates and energy prices. The use of derivative instruments involves certain inherent risks including, among other things: (i) credit risk — the risk of default on amounts owing to the Company by the counterparties with which the Company has entered into transactions; (ii) market liquidity risk — risk that the Company has entered into a derivative position that cannot be closed out quickly, by either liquidating such derivative instrument or by establishing an offsetting position; and (iii) unrealized mark-to-market risk — the risk that, in respect of certain derivative products, an adverse change in market prices for commodities, currencies or interest rates will result in the Company incurring an unrealized mark-to-market loss in respect of such derivative products.

Acquisitions and Integration

From time to time, the Company examines opportunities to acquire additional mining assets and businesses. Any acquisition that the Company may choose to complete may be of a significant size, may change the scale of the Company’s business and operations, and may expose the Company to new geographic, political, operating, financial and geological risks. The Company’s success in its acquisition activities depends on its ability to identify suitable acquisition candidates, negotiate acceptable terms for any such acquisition, and integrate the acquired operations successfully with those of the Company. Any acquisitions would be accompanied by risks. For example, there may be a significant change in commodity prices after the Company has committed to complete the transaction and established the purchase price or exchange ratio; a material ore body may prove to be below expectations; the Company may have difficulty integrating and assimilating the operations and personnel of any acquired companies, realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise, and maintaining uniform standards, policies and controls across the organization; the integration of the acquired business or assets may disrupt the Company’s ongoing business and its relationships with employees, customers, suppliers and contractors; and the acquired business or assets may have unknown liabilities which may be significant. In the event that the Company chooses to raise debt capital to finance any such acquisition, the Company’s leverage will be increased. If the Company chooses to use equity as consideration for such acquisition, existing shareholders may experience dilution. Alternatively, the Company may choose to finance any such acquisition with its existing resources. There can be no assurance that the Company would be successful in overcoming these risks or any other problems encountered in connection with

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such acquisitions.

Governmental Regulation of the Mining Industry

The mineral exploration activities of the Company are subject to various laws governing prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic substances and other matters. Mining and exploration activities are also subject to various laws and regulations relating to the protection of the environment. Although the Company believes that its exploration activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner that could limit or curtail production or development of the Company’s properties. Amendments to current laws and regulations governing the operations and activities of the Company or more stringent implementation thereof could have a material adverse effect on the Company’s business, financial condition and results of operations. See “– Foreign Operations and Political Risk”.

Labour and Employment Matters

While the Company has good relationswith both its unionized and non-unionized employees, production at its mining operations is dependent upon the efforts of the Company’s employees. In addition, relations between the Company and its employees may be affected by changes in the scheme of labour relations that may be introduced by the relevant governmental authorities in whose jurisdictions the Company carries on business. Changes in such legislation or in the relationship between the Company and its employees may have a material adverse effect on the Company’s business, results of operations and financial condition.

Foreign Subsidiaries

The Company is a holding company that conducts operations through foreign subsidiaries and substantially all of its assets are held in such entities. Accordingly, any limitation on the transfer of cash or other assets between the parent corporation and such entities, or among such entities, could restrict the Company’s ability to fund its operations efficiently. Any such limitations, or the perception that such limitations may exist now or in the future, could have an adverse impact on the Company’s valuation and stock price.

Reliance on Local Advisors and Consultants in Foreign Jurisdictions

The Company holds mining and exploration properties in Brazil, Argentina, Chile and Mexico. The legal and regulatory requirements in these countries with respect to conducting mineral exploration and mining activities, banking system and controls, as well as local business culture and practices are different from those in Canada. The officers and directors of the Company must rely, to a great extent, on the Company’s [local legal counsel and] local consultants retained by the Company in order to keep abreast of material legal, regulatory and governmental developments as they pertain to and affect the Company’s business operations, and to assist the Company with its governmental relations. The Company must rely, to some extent, on those members of management and the Company’s board of directors who have previous experience working and conducting business in these countries in order to enhance its understanding of and appreciation for the local business culture and practices. The Company also relies on the advice of local experts and professionals in connection with current and new regulations that develop in respect of banking, financing and tax matters in these countries. Any developments or changes in such legal, regulatory or governmental requirements or in local business practices are beyond the control of the Company and may adversely affect its business.

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Market Price of Common Shares

The common shares are listed on the Toronto Stock Exchange (the “TSX”) and the New York Stock Exchange (the “NYSE”). The price of the common shares is likely to be significantly affected by short-term changes in gold prices or in the Company’s financial condition or results of operations as reflected in its quarterly earnings reports. Other factors unrelated to the Company’s performance that may have an effect on the price of the common shares include the following: the extent of analytical coverage available to investors concerning the Company’s business may be limited if investment banks with research capabilities do not continue to follow the Company’s securities; the lessening in trading volume and general market interest in the Company’s securities may affect an investor’s ability to trade significant numbers of common shares; and the size of the Company’s public float may limit the ability of some institutions to invest in the Company’s securities.

As a result of any of these factors, the market price of the common shares at any given point in time may not accurately reflect the Company’s long-term value. Securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management’s attention and resources.

Dividend Policy

The Company has a dividend policy providing for a dividend yield that is consistent with the yield of comparable companies’ dividend rates and such policy is reviewed on a periodic basis and assessed in relation to the growth of the operating cash flows of the Company. In 2013, the Company paid quarterly dividends of $0.065 per share.On February 18, 2014, the Company’s board of directors amended the dividend policy to set the quarterly dividend to $0.0375 per share.

Payment of any future dividends will be at the discretion of the Company’s board of directors after taking into account many factors, including the Company’s operating results, financial condition, comparability of the dividend yield to peer gold companies and current and anticipated cash needs.

Dilution to Common Shares

During the life of the Company’s options and other rights granted or assumed by the Company, the holders are given an opportunity to profit from a rise in the market price of the common shares with a resulting dilution in the interest of the other shareholders. The Company’s ability to obtain additional financing during the period such rights that are outstanding may be adversely affected and the existence of the rights may have an adverse effect on the price of the common shares. The holders of options and other rights of the Company may exercise such securities at a time when the Company would, in all likelihood, be able to obtain any needed capital by a new offering of securities on terms more favourable than those provided by the outstanding rights.

The increase in the number of common shares in the market and the possibility of sales of such shares may have a depressive effect on the price of the common shares. In addition, as a result of the issuance of additional common shares, the voting power of the Company’s existing shareholders will be diluted.

Future Sales of Common Shares by Existing Shareholders

Sales of a large number of common shares in the public markets, or the potential for such sales, could decrease the trading price of the common shares and could impair the Company’s ability to raise capital through future sales of common shares. Substantially all of the common shares not held by affiliates of the Company can be resold without material restriction either in the United States, Canada or both.

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Dependence Upon Key Management Personnel and Executives

The Company is dependent upon a number of key management personnel. The loss of the services of one or more of such key management personnel could have a material adverse effect on the Company. The Company’s ability to manage its operating, development, exploration and financing activities will depend in large part on the efforts of these individuals. The Company faces intense competition for qualified personnel, and there can be no assurance that the Company will be able to attract and retain such personnel. The Company has entered into employment agreements with certain of its key executives.

Possible Conflicts of Interest of Directors and Officers of the Company

Certain of the directors and officers of the Company also serve as directors and/or officers of other companies involved in natural resource exploration and development and, consequently, there exists the possibility for such directors and officers to be in a position of conflict. The Company expects that any decision made by any of such directors and officers involving the Company will be made in accordance with their duties and obligations to deal fairly and in good faith with a view to the best interests of the Company and its shareholders, but there can be no assurance in this regard. In addition, each of the directors is required to declare and refrain from voting on any matter in which such directors may have a conflict of interest or which are governed by the procedures set forth in the Canada Business Corporations Act and any other applicable law.

Enforcement of Legal Rights

The Company’s material subsidiaries are organized under the laws of Brazil, Argentina, Chile and Mexico and certain of the Company’s directors, management and personnel are located in foreign jurisdictions. Given that the Company’s material assets and certain of its directors, management and personnel are located outside of Canada, investors may have difficulty in effecting service of process within Canada and collecting from or enforcing against the Company, or its directors and officers, any judgments issued by the Canadian courts or Canadian securities regulatory authorities and predicated on the civil liability provisions of Canadian securities legislation or other laws of Canada. Similarly, in the event a dispute arises in connection with the Company’s foreign operations, the Company may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada.

Disclosure and Internal Controls

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”). Disclosure controls and procedures are designed to ensure that the information required to be disclosed by the Company in reports filed with securities regulatory agencies is recorded, processed, summarized and reported on a timely basis and is accumulated and communicated to the Company’s management, as appropriate, to allow timely decisions regarding required decisions. The Company has invested resources to document and analyze its system of disclosure controls and its internal control over financial reporting. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation.

Technical Information

Unless otherwise indicated, the estimated Mineral Reserves and Mineral Resources for the Company’s various mines and mineral projects set forth herein, with the exception of the Alumbrera Mine (see “JORC Code Definitions”, below), have been calculated in accordance with the CIM Standards. The following definitions are reproduced from the CIM Standards:

The term “Mineral Resource” means a concentration or occurrence of diamonds, natural solid inorganic material or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such grade or quality that it has reasonable prospects for

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economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

The term “Inferred Mineral Resource” means that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

The term “Indicated Mineral Resource” means that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

The term “Measured Mineral Resource” means that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

The term “Mineral Reserve” means the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.

The term “Probable Mineral Reserve” means the economically mineable part of an Indicated Mineral Resource and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

The term “Proven Mineral Reserve” means the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

JORC Code Definitions

The estimated Ore Reserves and Mineral Resources for the Alumbrera Mine have been calculated in accordance with the current (2012) version of the Australasian Code for Reporting of Mineral Resources and Ore Reserves (the “JORC Code”), the Australian worldwide standards. The JORC Code has been accepted for current disclosure rules in Canada under NI 43-101. The following definitions are reproduced from the JORC Code:

The term “Mineral Resource” means a concentration or occurrence of material of intrinsic economic interest in or on the Earth’s crust in such form and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.

The term “Inferred Mineral Resource” means that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques

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from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability.

The term “Indicated Mineral Resource” means that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed.

The term “Measured Mineral Resource” means that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and/or grade continuity.

The term “Ore Reserve” means the economically mineable part of a Measured or Indicated Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves.

The term “Probable Ore Reserve” means the economically mineable part of an Indicated, and in some circumstances Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified.

The term “Proved Ore Reserve” means the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified.

The foregoing definitions of Ore Reserves and Mineral Resources as set forth in the JORC Code have been reconciled to the definitions set forth in the CIM Standards. If the Ore Reserves and Mineral Resources for the Alumbrera Mine were estimated in accordance with the definitions in the CIM Standards, there would be no substantive difference in such Ore Reserves and Mineral Resources.

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Mineral Resources

This section uses the terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource”. United States investors are advised that while such terms are recognized and required by Canadian regulations, the Commission does not recognize them. Inferred Mineral Resources have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not, except in limited circumstances, form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable. See also “Introductory Notes – Cautioning Note to United States Investors Concerning Estimates of Mineral Reserves and Mineral Resources”.

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Cash Costs and All-In Sustaining Costs

The Company discloses “cash costs” because it understands that certain investors use this information to determine the Company’s ability to generate earnings and cash flows for use in investing and other activities. The Company believes that conventional measures of performance prepared in accordance with IFRS do not fully illustrate the ability of its operating mines to generate cash flows. The measures, as determined under IFRS, are not necessarily indicative of operating profit or cash flows from operations. Cash costs include mine site operating costs such as mining, processing, administration, royalties and taxes directly related to production, but are exclusive of amortization, reclamation, capital, development and exploration costs. Cash costs are computed on a co-product and by-product basis.

Cash costs per GEO on a by-product basis is calculated by applying zinc and copper net revenue as a credit to the cost of gold production and as such the by-product GEO cash costs are impacted by realized zinc and copper prices. These costs are then divided by GEO produced. GEO are determined by converting silver production to its gold equivalent using relative gold/silver metal prices at an assumed ratio and adding the converted silver production expressed in gold ounces to the ounces of gold production.

Cash costs on a co-product basis are computed by allocating operating cash costs to metals, mainly gold and copper, based on an estimated or assumed ratio. These costs are then divided by GEO produced and pounds of copper produced to arrive at the cash costs of production per GEO and per pound of copper, respectively. Production of zinc is not considered a core business of the Company; therefore, the net revenue of zinc is always treated as a credit to the costs of gold production.

Cash costs per GEO and per pound of copper are calculated on a weighted average basis.

Effective 2013, the Company adopted an all-in sustaining costs measure, which seeks to represent total sustaining expenditures of producing GEO from current operations, including by-product and co-product cash costs, mine sustaining capital expenditures, corporate general and administrative expense excluding stock-based compensation and exploration and evaluation expense. As such, it does not include capital expenditures attributable to projects or mine expansions, exploration and evaluation costs attributable to growth projects, income tax payments, financing costs and dividend payments. In addition, the Company’s calculation of all-in sustaining costs does not include depletion, depreciation and amortization expense as it does not reflect the impact of expenditures incurred in prior periods. This performance measure has no standard meaning and is intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with generally accepted accounting principles (“GAAP”).

The measures of cash costs and all-in sustaining costs, along with revenue from sales, are considered to be key indicators of a company’s ability to generate operating earnings and cash flow from its mining operations. This data is furnished to provide additional information and is a non-GAAP measure. It should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS and is not necessarily indicative of operating costs, operating profit or cash flows presented under IFRS.

Mineral Projects

Summary of Mineral Reserve and Mineral Resource Estimates

Mineral Reserves (Proven and Probable)

The following table sets forth the Mineral Reserve estimates for the Company’s mineral projects as at December 31, 2013. See “Interests of Experts” for a listing of the qualified persons responsible for such estimates.

	Proven Mineral Reserves			Probable Mineral Reserves			Total Proven & Probable
Gold
	Tonnes	Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained
	(000’s)	(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)

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	Proven Mineral Reserves			Probable Mineral Reserves			Total Proven & Probable
Alumbrera (12.5%)	22,188	0.34	250	625	0.21	4	22,813	0.34	254
Chapada	167,243	0.22	1,157	312,600	0.27	2,675	479,843	0.25	3,832
C1 Santa Luz	16,284	1.64	856	10,402	1.46	489	26,686	1.57	1,345
Cerro Morro	-	-	-	1,954	11.38	715	1,954	11.38	715
El Peñón	1,433	8.58	395	9,035	5.39	1,566	10,468	5.83	1,961
Ernesto/Pau a Pique	182	3.68	21	4,529	3.47	505	4,711	3.47	526
Fazenda Brasileiro	1,790	2.46	142	373	2.13	26	2,163	2.42	168
Gualcamayo	3,792	1.42	173	28,425	1.32	1,202	32,217	1.33	1,375
Jacobina	3,974	2.08	266	19,989	2.94	1,891	23,963	2.80	2,157
Jeronimo (57%)	6,350	3.91	798	2,331	3.79	284	8,681	3.88	1,082
Mercedes	963	4.48	139	4,635	4.74	706	5,598	4.69	845
Minera Florida Ore	1,953	3.93	247	1,729	4.56	253	3,682	4.22	500
Minera Florida Tailings	4,433	0.86	123	-	-	-	4,433	0.86	123
Total Minera Florida	6,386	1.80	370	1,729	4.56	253	8,115	2.39	623
Pilar	-	-	-	10,811	4.03	1,402	10,811	4.03	1,402
Total Gold Mineral Reserves	230,585	0.62	4,567	407,438	0.89	11,718	638,023	0.79	16,285
Agua Rica	384,871	0.25	3,080	524,055	0.21	3,479	908,926	0.22	6,559
Silver
	Tonnes	Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained
	(000’s)	(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)
Cerro Moro	-	-	-	1,954	648.3	40,723	1,954	648.3	40,723
El Peñón	1,433	223.3	10,285	9,035	186.5	54,171	10,468	191.5	64,456
Mercedes	963	57.7	1,786	4,635	44.5	6,633	5,598	46.8	8,419
Minera Florida Ore	1,953	17.6	1,107	1,729	22.8	1,267	3,682	20.1	2,374
Minera Florida Tailings	4,433	12.6	1,790	-	-	-	4,433	12.6	1,790
Total Minera Florida	6,386	14.1	2,897	1,729	22.8	1,267	8,115	16.0	4,164
Total Silver Mineral Reserves	8,782	53.0	14,968	17,353	184.2	102,794	26,135	140.1	117,762
Agua Rica	384,871	3.7	46,176	524,055	3.3	56,070	908,926	3.5	102,246
Copper
	Tonnes	Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained
	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)
Alumbrera (12.5%)	22,188	0.35	171	625	0.26	4	22,813	0.35	175

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	Proven Mineral Reserves			Probable Mineral Reserves			Total Proven & Probable
Chapada	167,243	0.28	1,024	253,700	0.29	1,625	420,943	0.29	2,649
Total Copper Mineral Reserves	189,431	0.29	1,195	254,325	0.29	1,629	443,756	0.29	2,824
Agua Rica	384,871	0.56	4,779	524,055	0.43	5,011	908,926	0.49	9,790
Zinc
	Tonnes	Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained
	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)
Minera Florida	6,386	0.87	122	1,729	1.42	54	8,115	0.98	176
Total Zinc Mineral Reserves	6,386	0.87	122	1,729	1.42	54	8,115	0.98	176
Molybdenum
	Tonnes	Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained
	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)
Alumbrera (12.5%)	22,188	0.012	6.1	625	0.014	0.2	22,813	0.012	6
Total Moly Mineral Reserves	22,188	0.012	6.1	625	0.014	0.2	22,813	0.012	6
Agua Rica	384,871	0.033	279	524,055	0.030	350	908,926	0.031	629

Mineral Resources (Measured, Indicated and Inferred)

The following table set forth the Mineral Resource estimates and for the Company’s mineral projects as at December 31, 2013. See “Interests of Experts” for a listing of the qualified persons responsible for such estimates.

	Measured Mineral Resources			Indicated Mineral Resources			Total Measured & Indicated			Inferred Mineral Resources
Gold
	Tonnes	Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained
	(000’s)	(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)
Amancaya	-	-	-	-	-	-	-	-	-	1,390	7.90	351
Arco Sul	-	-	-	-	-	-	-	-	-	5,000	4.02	646
C1 Santa Luz	3,243	1.00	104	8,436	1.38	374	11,679	1.27	478	13,562	2.49	1,086
Chapada	22,636	0.21	155	233,129	0.26	1,949	255,765	0.26	2,104	155,236	0.18	913
Cerro Moro	-	-	-	1,777	2.14	122	1,777	2.14	122	3,559	1.90	220
El Peñón	923	12.30	365	2,467	6.37	505	3,390	7.98	870	5,704	6.83	1,252
Ernesto/Pau a Pique	-	-	-	4,232	2.38	324	4,232	2.38	324	1,610	3.04	157
Fazenda Brasileiro	-	-	-	2,034	1.77	116	2,034	1.77	116	6,131	3.10	611
Gualcamayo	11,342	1.00	365	83,429	1.01	2,711	94,771	1.01	3,076	30,366	2.08	2,029
Jacobina	14,380	2.26	1,044	19,558	2.50	1,570	33,938	2.40	2,614	15,849	3.11	1,584
Jeronimo (57%)	772	3.77	94	385	3.69	46	1,157	3.74	139	1,118	4.49	161

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	Measured Mineral Resources				Indicated Mineral Resources			Total Measured & Indicated				Inferred Mineral Resources
La Pepa	15,750		0.61	308	133,682	0.57	2,452	149,432	0.57	2,760		37,900	0.50		620
Lavra Velha	-		-	-	-	-	-	-	-	-		3,934	4.29		543
Mercedes	173		4.62	26	3,412	3.02	331	3,585	3.10	357		3,310	3.89		414
Minera Florida	1,905		5.97	366	2,480	4.92	393	4,385	5.38	759		5,008	5.63		907
Pilar	-		-	-	1,894	4.44	270	1,894	4.44	270		12,665	4.12		1,676
Suyai	-		-	-	4,700	15.00	2,286	4,700	15.00	2,286		900	9.90		274
Total Gold Mineral Resources	71,124		1.24	2,827	501,615	0.83	13,449	572,739	0.88	16,275		303,242	1.38		13,444
Agua Rica	27,081		0.14	120	173,917	0.14	776	200,998	0.14	896		642,110	0.12		2,444
Silver
	Tonnes		Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained		Tonnes	Grade		Contained
	(000’s)		(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)	(000’s)	(g/t)	oz. (000’s)		(000’s)	(g/t)		oz. (000’s)
Amancaya	-		-	-	-	-	-	-	-	-		1,390	73.0		3,270
Chapada	-		-	-	82,161	1.4	3,775	82,161	1.4	3,775		27,553	1.1		982
Cerro Moro	-		-	-	1,777	201.0	11,488	1,777	201.1	11,488		3,559	116.0		13,297
El Peñón	923		319.4	9,478	2,467	184.8	14,652	3,390	221.4	24,130		5,704	290.2		53,231
Mercedes	173		49.2	273	3,412	37.2	4,078	3,585	37.7	4,351		3,310	36.2		3,843
Minera Florida	1,905		38.6	2,367	2,480	26.2	2,092	4,385	31.6	4,459		5,008	37.4		6,023
Suyai	-		-	-	4,700	23.0	3,523	4,700	23.0	3,523		900	21.0		575
Total Silver Mineral Resources	3,001		125.6	12,118	96,997	12.7	39,608	99,998	16.1	51,726		47,424	53.3		81,221
Agua Rica	27,081		2.3	2,042	173,917	2.9	16,158	200,998	2.8	18,200		642,110	2.3		48,124
Copper
	Tonnes		Grade	Contained	Tonnes	Grade	Contained	Tonnes	Grade		Contained	Tonnes	Grade		Contained
	(000’s)		(%)	lbs (mm)	(000’s)	(%)	lbs (mm)	(000’s)	(%)		lbs (mm)	(000’s)	(%)		lbs (mm)
Chapada	22,636		0.17	84	150,968	0.24	790	173,604	0.23		874	127,683	0.26		731
Total Copper Mineral Resources	22,636		0.17	84	150,968	0.24	790	173,604	0.23		874	127,683	0.26		731
Agua Rica	27,081		0.45	266	173,917	0.38	1,447	200,998	0.39		1,714	642,110	0.34		4,853
Zinc
	Tonnes	Grade		Contained	Tonnes	Grade	Contained	Tonnes	Grade		Contained	Tonnes	Grade	Contained
	(000’s)	(%)		lbs (mm)	(000’s)	(%)	lbs (mm)	(000’s)	(%)		lbs (mm)	(000’s)	(%)	lbs (mm)
Minera Florida	1,905	1.63		68	2,480	1.74	95	4,385	1.69		164	5,008	1.62	179
Total Zinc Mineral Resources	1,905	1.63		68	2,480	1.74	95	4,385	1.69		164	5,008	1.62	179
Molybdenum
	Tonnes	Grade		Contained	Tonnes	Grade	Contained	Tonnes	Grade	Contained		Tonnes	Grade	Contained

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	Measured Mineral Resources			Indicated Mineral Resources			Total Measured & Indicated			Inferred Mineral Resources
	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)	(000’s)	(%)	lbs (mm)
Agua Rica	27,081	0.049	29	173,917	0.037	142	200,998	0.039	172	642,110	0.034	480
Total Moly Mineral Resources	27,081	0.049	29	173,917	0.037	142	200,998	0.039	172	642,110	0.034	480

Mineral Resources are exclusive of Mineral Reserves.

Mineral Reserve and Mineral Resource Reporting Notes:

1. Metal Prices and Cut-off Grades:

Mine	Mineral Reserves	Mineral Resources
Alumbrera (12.5%)	$1,300 Au, $2.95 Cu, $10.00 Mo and 0.22% CuEq	N/A
Amancaya	N/A	1.0 g/t Aueq OP , 3.4 g/tAueq UG
Arco Sul	N/A	2.5 g/t Au cut-off
Caiamar	N/A	1.5 g/t Au cut-off
Chapada	$950 Au, $2.80 Cu, $4.80 average cut-off, 1.25 Revenue Factor for Main Pit $950 Au, $2.80 Cu, $4.80 average cut-off, 1.00 Revenue Factor for Corpo Sul $900 Au; 0.2 g/t Au cut-off for oxide ore and 0.3 g/t Au cut-off for sulphide ore in Suruca Gold Project	$1500 Au, $3.5 Cu and $3.5 NSR cut-off out of pit for Chapada Mine (Main Pit, CorpoSul and Corpo NE) 0.2 g/t Au cut-off for oxide and 0.3 g/t Au cut-off for sulphide in Suruca Gold Project
C1 Santa Luz	$950 Au for C1 with 0.7 g/t Au cut-off, Antas 2, $950 Au for Antas 3 with 0.5 g/t Au cut-off and $750 Au Mansinha and Mari; 0.50 g/t Au cut-off	0.5 g/t Au cut-off for C1 Ore(Antas 2, Antas 3, Mansinha, Mari, Alvo 36, VG14 and Serra Branca) and 1.5 g/t Au cut-off for C1 Underground high grade ore
Cerro Moro	$950 Au and $18.00 Ag, Open pit cut-off at 3.4 g/t Aueq and Underground cut-off at 6.2 g/t Aueq	1.0 g/t Aueq cut-off
El Peñón	$950 Au, $18.00 Ag, Variable cut-off for Underground and 1.2 g/t Aueq cut-off for Open Pit	3.9 g/t Aueq cut-off
Ernesto/Pau a Pique	$950 Au, 1.5 g/t UG, OP cut-off 1.06 g/t Au for Ernesto and 1.0 g/t Au cut-off for Lavrinha and 0.63 g/t Au  for Satellite s NM	0.5 g/t Au cut-off for Ernesto, 1.0 g/t Au for Lavrinha, 0.63 g/t Au for Satellites NM an1.0 g/t Au for Pau a Pique
Fazenda Brasileiro	$950 Au, 2.14 g/t Au UG and 0.75 g/t Au OP cut-off	0.5 g/t cut-off UG and 0.25g/t Au OP cut-off
Gualcamayo	$950 Au: 1.00 g/t AuCut-off UG: cut-offs for OP, 0.20 g/t Au for QDD Upper and 0.5 g/t Au for AIM	1.00 g/t AuCut-off UG: cut-offs for OP, 0.20 g/t Au for QDD Upper and 0.5 g/t Au for AIM
Jacobina	$950 Au; 1.45 g/t Au cut-off	0.5 g/t Au cut-off UG, 1.5 g/t Au cutoff for Pindobacu
Jeronimo	$900 Au, 2.0 g/t Au cut-off	2.0 g/t Au cut-off
La Pepa	N/A	$780 Au, 0.30 g/tAu cut-off
Lavra Velha	N/A	$1300 Au, $3.5Cu and 0.2g/t Au, 0.1% Cu cut-offs
Mercedes	$950 Au, $18.00 Ag, 2.9 g/t Aueq	2.0 g/t Aueq cut-off for Mercedes and 0.4 g/t Aueq cut-off for Rey de Oro
Minera Florida	$950 Au, $18.00 Ag, $1 lb Zn, 2.80 g/t Aueq cut-off and Florida tailings cut-off N/A	2.22 g/t Aueq cut-off
Pilar	$950 Au; 2.0 g/t Au cut-off	2.0 g/t Au cut-off
Suyai	N/A	5.0 g/t Au cut-off
Agua Rica	$1,000 Au, $2.25 lb Cu, $17.00 g/t Ag, $12.00 lb Mo	0.2% Cu cut-off

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2. All Mineral Reserves and Mineral Resources have been calculated in accordance with the CIM Standards and NI 43-101, other than the estimates for the Alumbrera Mine which have been calculated in accordance with the JORC Code which is accepted under NI 43-101.

3. All Mineral Resources are reported exclusive of Mineral Reserves.

4. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

5. Mineral Reserves and Mineral Resources are reported as of December 31, 2013.

6. For the qualified persons responsible for the Mineral Reserve and Mineral Resource estimates, see the qualified persons chart under the heading “Interests of Experts” in this annual information form.

Material Mineral Properties

Chapada Mine

Unless otherwise stated, the information, tables and figures that follow relating to the Chapada Mine are derived from, and in some instances are extracts from, the technical report entitled “Technical Report on the Chapada Mine, Brazil” dated March 7, 2014 (the “Chapada Report”), prepared by or under the supervision of (the “Chapada Qualified Persons”) Wayne W. Valliant, P.Geo. and Robert L. Michaud, P.Eng., of Roscoe Postle Associates Inc. (“RPA”). The technical information contained in this section of the annual information form, other than the technical information set forth under the heading “– Current Exploration and Development”, has been reviewed and approved by the Chapada Qualified Persons, each of whom is a “qualified person” for the purpose of NI 43-101. See “Interests of Experts”.

Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the Chapada Report, which has been filed with certain Canadian securities regulatory authorities pursuant to NI 43-101 and is available for review on the Company’s SEDAR profile at www.sedar.com.

Property Description and Location

The Chapada Mine is located in northern Goiás State, approximately 320 kilometres north of the state capital of Goiania and 270 kilometres northwest of the national capital of Brasilia. It is situated at latitude 14° 14′ S, longitude 49° 22′ W. Corpo Sul is situated at the southwest extremity of the Chapada Mine. The Suruca deposit is located six kilometres northeast of the Chapada Mine at approximately latitude 14° 11′ S, longitude 49° 20′ W.

The Chapada Mine is divided into 16 claims covering 18,921.37 hectares. The claims are held in the name of Mineração Maracá Indústria e Comércio S/A (“Mineração Maracá”), a 100% owned subsidiary of Yamana. The Chapada Mine and Corpo Sul deposit are located on claim number 808.931/1994 (a mining licence) encompassing 3,000 hectares. The Suruca deposit is located on claim numbers 860.708/2009 and 860.595/2009 (an exploration licence), totaling 845.75 hectares.

Yamana, via Mineração Maracá, holds all of the surface rights in the area of the Chapada Mine, which incorporates all of the proposed locations of buildings, fixed installations, waste dumps, and tailing disposal in the current mine plan. Yamana is of the opinion that it can acquire the right to dispose of waste rock and tailings on additional surface property, if and when required. The land ownership is registered with the Registrar of Real Estate in Mara Rosa, Goiás.

Other than statutory royalties which are paid to the Brazilian government based on commercial copper and gold production, RPA is not aware of any rights, agreements or encumbrances to which the Chapada Mine is subject, which would adversely affect the value of the property or Mineração Maracá’s ownership interest. No current environmental liabilities have been identified within the mine area. Ongoing items such as waste stockpiles, depleted heap leach piles, and tailings storage facilities will be rehabilitated during the mine life or at the time of mine closure. Yamana reports that no environmental permits are required at this stage of permitting for Suruca.

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Accessibility, Climate, Local Resources, Infrastructure and Physiography

Chapada Mine is located in northern Goiás State, approximately 320 kilometres north of the state capital of Goiania and 270 kilometres northwest of the national capital of Brasilia. Access to the Chapada Mine from Brasilia is via BR-153 (Belem/Brasilia) to Campinorte (GO) and then via GO-465 (Campinorte/Santa Terezinha) west to Alto Horizonte. The town of Alto Horizonte lies between the Suruca deposit and the Chapada Mine. Chapada Airport, suitable for small aircraft with an 800 metres long airstrip, is located close to Alto Horizonte, approximately four kilometres northeast of the Mine. Suruca is located six kilometres northeast of the Chapada Mine.

The region has a tropical climate characterized by two well defined seasons; the rainy season from November to March and the dry season from April to October, with an annual average rainfall of 1,500 millimetres. The average annual temperature is approximately 22°C. Mining operations occur throughout the year.

The local economic activity is principally agro-pastoral, but there are some small scale mining activities related to gold in alluvium and quartz veins and for clay used to make bricks. The most important towns in the region are Uruaçu, Campinorte, Porangatu, Mara Rosa and Nova Iguaçu de Goiás. They all have good infrastructure to support exploration activities. The municipality of Alto Horizonte has a population of approximately 3,100 and the nearby towns (within 50 kilometres) as Campinorte has 9,700 Mara Rosa 10,400 and Uruaçu 33,300.

Electrical power is provided by the Brazilian National Grid. The power line (230 kilovolt) is 85 kilometres long and taps into the national grid near Itapaci in Goiás State. The Chapada Mine requires approximately 1,000 cubic metres per hour of water. Rio Dos Bois currently supplies approximately 750 cubic metres per hour, with mine drainage water, rainfall, and industrial drainage areas making up the difference.

The average elevation of the Chapada Mine is approximately 300 metres above sea level. The topography is characterized by low rolling hills, with large contiguous flat areas. The vegetation is referred to as “cerrado”, a tropical savannah eco-region which comprises a diverse variety of low tropical trees, shrubs, and native grasses, most of which have been cleared and serves as cattle grazing land for local landowners.

History

The Chapada Mine was discovered in 1973 by a Canadian company, INCO Ltda. (“INCO”), which followed up with geochemistry, geophysics, trenching, and initial drilling. There are few outcrops in the mine area due to laterite-saprolite cover. Consequently, deposit definition required extensive diamond drill exploration. Development drilling of the deposit occurred in several campaigns from 1976 through 1996 by INCO, Parsons-Eluma Projetos e Consultoria S/C (“Parsons”), a Brazilian copper company, Eluma- Noranda, Santa Elina, and Santa Elina-Echo Bay (“Echo Bay”). Historical ownership and exploration activities are summarized in Table 1.

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Table 1
Date	Owner	Activity
1973	INCO	Chapada discovery.
1975-1976		2,000 metres x 500 metres grid drilling program. Parsons acquires a 50% interest in the Chapada Mine.
1976-1979	INCO & Parsons	200 metres x 100 metres drill grid. A 92 metres deep shaft is completed with 255 metres of cross-cuts for exploration and metallurgical sampling.
1979		Mining concession No. 2394 covering 3,000 hectares is issued to Mineração Alonte by the Departamento Nacional da Producao Mineral.
1980-1981		Soil drilling completed in the plant, tailing ponds, and potential water dam areas.
1981	Parsons	Feasibility study completed.
1994-1995		A 4,500 metres drilling program re-evaluation of a near surface gold deposit.
		Preliminary feasibility study by Watts, Griffis and McOuat.
May 1994	SERCOR	Mineração Santa Elina Industria e Comercio S/A (“SERCOR”) acquires the Chapada Mine through a subsidiary, Mineracao Maracá.
July 1994	SERCOR and Echo Bay	Echo Bay acquires an initial interest in Santa Elina by purchasing 5% of the outstanding shares from SERCOR.
Dec 1994		Santa Elina completes its initial public offering.
Sep 1995		Santa Elina and Echo Bay approve the Chapada project joint venture. Santa Elina issues about 3% of the outstanding shares to Echo Bay. Echo Bay receives the option to acquire 50% interest in the project.
May 1996		Santa Elina is privatized and SERCOR and Echo Bay become equal owners of the company.
Dec 1996		Santa Elina completes an in-fill drilling program
Dec 1997		Independent Mining Consultants, Inc. reviews the Echo Bay model and completes a mine feasibility study.
Jan 1998		Kilborn Holdings Inc., (predecessor company to SNC-Lavalin Group Inc.), completes the Chapada Mine bankable feasibility study.
Apr 2001		Construction licence issued.
May 2000	PINUS	PINUS acquires 100% of Mineração Maracá.
2003	Yamana	The property is purchased by Yamana.
2004		The feasibility study is completed.
2007		Commercial production starts.

In 2008, Yamana started a plant expansion to increase throughput from 16 million tons per annum to 22 million tons per annum.

From 2007 to the end of 2013, the Chapada Mine has produced 129 million tonnes grading 0.36 grams per tonne gold and 0.48% copper.

The Suruca deposit has been explored by various companies since the 1970s, as summarized in Table 2, and was exploited by garimpeiros in the 1980s. Yamana reports that garimpeiros produced approximately 200 kilograms of gold in that period.

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Table 2
Date	Ownership
1980 - 1981	INCO/Eluma
1987 - 1988	Cominco
1993 - 1994	WMC
1996 - 1997	Santa Elina/Echo Bay
2008 to present	Yamana

Geological Setting

The Chapada Mine is located between the Amazonian craton to the northwest and the San Francisco craton to the southeast, within the north-northeast striking metavolcano-sedimentary Mara Rosa Magmatic Arc which is part of a large system of mobile belts that have a complex, multi-phased history of deformation.

The Chapada Mine and Corpo Sul and Suruca deposits are located in the Eastern Belt of the Mara Rosa volcano sedimentary sequence. The Eastern Belt in the vicinity of the Chapada Mine comprises a thick package of amphibolites succeeded by volcanic and volcanoclastic rocks and overlying metasedimentary rocks. The metavolcanic-sedimentary units are intruded by metaplutonic rocks of dioritic to quartz-diorite composition. These intrusions are associated with magmatic fluids responsible for copper-gold and gold mineralization. The volcanics and sediments have been metamorphosed to biotite and amphibolite schist in the Chapada mineralized area.

In the immediate area of the Chapada Mine, the biotite and amphibolite schist units have been folded into a broad anticline with a north-easterly fold axis. The two limbs of the anticlinal structure dip to the northwest and southeast. There is a minor secondary synclinal fold of the major antiform so that the northeast and southwest ends are somewhat higher than the central zone of the structure in the middle of the deposit. This combination of folds gives the deposit a broad “saddle” shape.

The deposit has undergone hydrothermal alteration typical of a copper-gold porphyry system. Alteration styles include biotitization, sericitization, argillitization, and propylitization.

The bedrock schists are overlain by approximately 25 metres of saprolite material with a minor lateritic component near the top of the saprolite zone. Within that laterite component, there is a ferricrete zone at surface.

The Suruca geology is grouped from base to top as: Amphibolite, Intermediate Metavolcanic rocks and Metasediments. There are several intrusions of quartz diorite porphyry that occur preferentially in the intermediate metavolcanic rocks and metasediments. Hydrothermal alteration overprints the lithologies and is characterized by inner and outer halos. The inner halo occurs in the intermediate rocks, metasediments and diorites with strong and pervasive sericitic alteration and the outer halo is characterized by propylitic alteration that occurs mainly in the amphibolites.

Mineralization

The primary copper-gold mineralization at the Chapada Mine is epigenetic. Copper is principally present as chalcopyrite with minor amounts of bornite. Fine grained gold is closely associated with the sulphide mineralization and was likely to be contemporaneous with the copper.

Copper mineralization occurs as finely disseminated crystals, elongated pods, lenses along foliation, crosscutting stringers, and coarse clots in occasional late stage quartz veins or pegmatites. The copper mineralization and grade are somewhat better in the central zone of the deposit along the anticline axis than in the surrounding anticlinal limbs; however, copper mineralization is pervasive over a broad area. Gold mineralization is more uneven spatially and may have been remobilized by post mineral low temperature alteration events.

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The gold at Suruca is related to folded quartz vein/veinlets with sericitic and biotite alteration, rather than high sulphide concentrations. The second generation of quartz veins/veinlets with sulphides (sphalerite + galena + pyrite), carbonates and epidote also host gold which is related to zinc.

Mineralization predominately pre-dates deformation hence the gold is associated with epithermal features and not structurally controlled.

Exploration

Yamana started exploration work in 2007 with diamond drilling mainly to the east of the pit to check for the extension of the mineralization potentially hosted in a synclinal structure.

In early 2008, consultant Richard Sillitoe defined a genetic model of mineralization with a typical porphyry copper-gold system (Cu-Au-Mo association) that underwent intense isoclinal folding and amphibolite facies metamorphism during continental collision at the end of the Neoproterozoic. However, original mineralogy may not have been profoundly changed, due to the stability of minerals like quartz, anhydrite, pyrite, chalcopyrite, magnetite and biotite under amphibolite facies conditions.

Yamana began exploration work at Suruca in 2008 with geological mapping, chip sampling and shallow drilling at Suruca South.

See also “– Current Exploration and Development”.

Drilling

Yamana commenced drilling the Chapada Mine in 2008. To date, Yamana has drilled 344 holes for 73,891 metres (Table 3). Drilling has delineated the main deposit areas at a spacing of 100 metres by 50 metres, with a tighter 50 metres pattern in the central portion of the deposit.

Table 3
Year	No. Drill Holes	Metres
2008	30	5,126
2009	7	2,352
2010	18	4,373
2011	85	19,305
2012	131	28,568
2013	73	14,167
Total	344	73,891

The 2008 and 2009 drilling campaigns were concentrated in the region named “Near Mine” and in the south portion of the area. The 2010 and 2011 campaigns targeted the Near Mine and Corpo Sul areas. In 2013, Yamana drilled in the northeast section of Chapada Corpo Principal with the objective of delineating an Inferred Resource. In Corpo Sul, an infill drilling program was carried out in the southwest portion of the deposit on a 50 metres by 50 metres grid to upgrade Indicated to Measured Resources and on a 100 metres by 100 metres grid to convert Inferred to Indicated Resources.

The majority of holes were drilled at an azimuth of 130^o and an 85^o dip. Drill holes with inclination between 45^o and 85^o were surveyed every three metres downhole using a Deviflex electronic surveying instrument. No significant deviation issues were found.

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To date, Yamana has drilled 186 holes for 37,899.16 metres at Suruca, as summarized in Table 4.

Table 4
Year	No. Drill Holes	Metres
2008	7	439.5
2009	21	6,457.8
2010*	103	20,476.9
2011	55	10,524.96
Total	186	37,899.16
*Includes 11 metallurgical holes for 1,014 metres

At Suruca in 2009, Yamana completed successful drilling to test a magnetic anomaly and the area of the garimpeiro workings. The 2010 drilling program focused on delineation of the Suruca deposit at 400 metres by 200 metres spacing followed by infill drilling at 200 metres by 200 metres spacing. An infill program of 100 metres by 100 metres spacing was completed in the north portion of deposit.

The majority of holes were drilled at an azimuth of 130^o and a 60^o dip; some holes were drilled at an azimuth of 310^o. Drill holes with inclination between 45^o and 85^o were surveyed every three metres downhole using a Reflex Maxibor II or Devicom Deviflex electronic surveying instrument. In sub-vertical holes, a PeeWee or EZ-Shot instrument was used. All holes were surveyed and no significant deviation issues were found.

See also “– Current Exploration and Development”.

Sampling and Analysis

Yamana’s samples are selected down the entire length of the drill hole core, sawn in half with an electric diamond bladed core saw, and sampled prior to logging. Half core samples are selected by a geology technician or trained sampler. The samples are then placed in a numbered plastic bag along with a paper sample tag, and tied closed with a piece of string. Sample weight is approximately 3.5 kilograms. Six to eight samples are placed in a larger plastic bag, loaded onto a truck owned and driven by a locally based transport company, and driven to the ALS Chemex laboratory sample preparation facility in Goiania, State of Goiás.

After sampling, the geologist completes a graphic log and logs the core in detail for lithology, structure, mineralization and alteration. Codes are assigned for the oxidation state, consistency and alteration including alteration halo, sulphides, silicification, biotite, sericite, epidote, amphibolite, garnet, carbonate, rhodochrosite, chlorite, and kyanite content. Angles of structures such as foliation and faults are recorded.

Approximately four samples from each alteration halo per drill hole are selected for density testwork by two different methods after sampling and logging. The first method used is the water displacement method, performed in the logging shed. The second method, which is gravimetric, is done in the laboratory using pulverized samples.

Sample preparation involves crushing and pulverization. Upon receipt of the samples, each sample is weighed and dried at 100°C for eight to 12 hours. The entire sample is then crushed to 90% passing <2 millimetres (10 mesh), split to 0.5 kilograms in a riffle splitter, and pulverised to 95% passing 150# (mesh). The samples are then split again to 50 grams using a rotating splitter/spatula. The crusher and pulveriser are cleaned between each sample. Each fraction retained is returned to Yamana.

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All Yamana samples are analyzed for precious metals by fire assay with atomic absorption spectrometry (“AAS”) or ICP finish and for copper by AAS by ALS Chemex, Lima, Peru and/or SGS Geosol, Belo Horizonte, Brazil.

Yamana conducts an industry-standard quality assurance/quality control (“QA/QC”) program for its drill campaigns, which follows written protocols. Its QA/QC program consisted of the insertion of blanks and CRMs into the sample stream and the running of duplicate field (quarter-core) samples. Later, pulp duplicate samples were re-assayed at a secondary facility.

RPA assessed Yamana’s QA/QC program and found it to be industry-standard with a generally acceptable rate of insertion for CRMs and pulp duplicates. The results of the pulp duplicate assays showed good reproducibility with no discernible grade biases. The insertion of CRMs showed that laboratory results from SGS Geosol and ALS Chemex were acceptable with respect to precision and accuracy. The results from the insertion of blanks are also generally acceptable.

In 1996 Echo Bay became actively involved in the drilling and sampling program for the Chapada Mine. Samples taken by Santa Elina in 1996 were subject to a rigorous QA/QC program. IMC Mining (“IMC”) was contracted to review the historical data. IMC’s review included all historical QA/QC control files and historical data compared with re-assayed data from analytical laboratories in the United States. IMC concluded the historical data was appropriate for estimation of Mineral Resources.

IMC did a review of the Chapada Mine assay database. IMC did not do any independent assaying, but did review considerable existing data. It was IMC’s opinion that the database was of sufficient quality for a feasibility level study.

A total of 18 Suruca diamond drill holes from Mineração Alonte (Santa Elina, 1995-1996) were re-analysed following Yamana’s procedures. The new assay results were compatible with the historical results.

Based on our review, RPA is of the opinion that sampling, sample preparation, and analysis at the Chapada Mine are in keeping with industry standards and the assay results within the database are suitable for use in a Mineral Resource estimate.

Security of Samples

Samples are transported from the drill rig to Yamana’s core storage facilities at the Chapada Mine exploration camp by the drilling contractor, where Yamana geological staff log and sample the core. The samples are transported to the independent sample preparation facility by a locally based transport company, after which the samples are sent for preparation in ALS Chemex in Goiania, Brazil and for analysis in Lima, Peru.

The analytical laboratory stores all pulps and coarse rejects for forty-five days and then transports them back to the Chapada Mine where all samples are stored in the core storage facility for the life of the project.

Based on our review, RPA is of the opinion that sample security procedures at the Chapada Mine are in keeping with industry standards.

Mineral Resources and Mineral Reserves

See “– Mineral Projects – Summary of Mineral Reserve and Mineral Resource Estimates”.

The methodology of estimating Mineral Resources by Yamana includes: (a) statistical analysis and variography of gold and copper values in the assay database; (b) construction of a block model using Datamine Studio 3 software; and (c) grade interpolation using a kriging or inverse distance cubed method. The Mineral Resource estimate is based on open pit mining scenarios and Chapada and Corpo Sul Mineral Resources are constrained by Whittle optimized pits which are based on a copper and gold net smelter royalty.

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Validation of the block models by Yamana included: (a) on screen displays of plans and sections showing composite and block grades; (b) swath plots calculated over “slices” of each zone; (c) comparisons between composite and global block statistics cross validation (the Chapada Mine only); and (d) cross-validation.

RPA finds the estimation methods and classification criteria adopted by Yamana are reasonable and sufficient to support the Mineral Resources reported.

RPA reviewed the reported resources, production schedules, and factors for conversion from Mineral Resources to Mineral Reserves. Based on this review, it is RPA’s opinion that the Measured and Indicated Mineral Resource within the final pit designs at the Chapada Mine can be classified as Proven and Probable Mineral Reserves.

Mining and Milling Operations

The Chapada Mine is a traditional open pit truck/shovel operation that has been in continuous operation since 2007. The Chapada open pit, which is currently being mined, has ultimate design dimensions of approximately 4.5 kilometres along strike, up to 1.2 kilometres wide, and 200 metres deep. Benches are 10 metres high, doubling to 20 metres towards the limit of the pit, except in upper benches, where the benches are 10 metres high in soil. Six operating phases have been designed to support the mine production from initial topography to the final pit geometry. An in-pit primary crusher was installed at the beginning of year 2012, allowing a more flexible operation for ore blending to plant and reducing major truck fleet requirements.

The mine plan includes three open pit mining areas to be developed on the property. Current production is entirely from the Chapada Corpo Principal open pit.

The processing plant is located at the northwest end of the Chapada Corpo Principal pit rim. The tailings storage facility is located to the northwest of the open pit, with the pond as close as 0.5 kilometres to the pit rim and the tailings dam being up to five kilometres to the northwest. Waste rock dumps are located to the south and southeast of the open pit. Limits of the waste rock dumps start just past the ultimate pit rim in order to minimize waste haulage distances.

The existing Chapada Mine treatment plant is designed to treat sulphide ore at a nominal rate of 60,000 tonnes per day (“tpd”). The current process recoveries for copper and gold average 80% and 56% respectively. Run-of-mine (“ROM”) material from the Suruca deposit will be treated and incorporated into the system through two separate processes; the oxide ore will be processed using conventional heap leaching technology, and sulphide ore will be processed in the existing plant after some modifications as follows:

• Phase 1 – Carbon in leach (“CIL”) and gravity concentrator installation to add 10% in average to the gold recovery rate.

• Phase 2 – Installation of a third mill and additional flotation cells to increase 10% in the recovery rate and to feed Suruca sulphide ore.

Sulphide Ore

The first step for sulphide material occurs in the primary grinding circuit in two parallel crushing systems. Both systems perform the primary crushing with a P70 of five inches. The ore processed is then transported by conveyor belt to an intermediate stockpile. A feeder conveyor belt delivers the feed to the grinding circuit.

The grinding circuit is divided into four systems:

• Reclaim Ore – Ore taken from the crushed ore stockpile and delivered to the semi–autogenous grinding (“SAG”) mill.

• Primary Grinding and Pre-Classification – SAG mill grinding and pre-classification using cyclones.

• Pebble Crushing – Transportation and crushing coarse pebbles screened from the SAG mill discharge.

• Secondary Grinding and Classification – Ball mill grinding and classification using cyclones.

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The ore is then brought to the flotation process in pulp form with approximately 35% solids. There are two flotation cell lines, rougher and rougher/scavenger. Each cell line produces two concentrates. The tailings from the rougher/scavenger system are sent to the final tailings storage facility. The last step in the process is thickening and filtration. The thickening process reduces the ore concentrate moisture content to an average of 8%. This is discharged in the concentrate storage shed to be loaded and shipped to customers.

Total production in 2013 was 110,618 GEO contained in concentrate and 130,240,000 pounds of copper.

Oxide Ore

The crushing circuit consists of two MMD sizers in series and associated equipment. Material is pre-screened ahead of the MMD sizer and crusher product then combines with screen undersize and is conveyed to the crushed product stockpile. Crushed product is then fed to an agglomeration drum. Prior to the drum, cement is added in a controlled fashion and a weak cyanide solution (barren pond solution) is added in the agglomeration drum, and mixed to produce agglomerates which are conveyed and stacked.

The agglomerated material is stacked on pads which are approximately 100 metres wide and 620 metres long. A weak cyanide solution from the barren solution pond is then used to leach the gold from the stacked ore. The solution filters through the agglomerated ore with the gold inherent in the ore leached to produce a gold rich solution. The gold rich solution collects at the base of the pad and is collected in the pregnant solution pond.

Pregnant solution flows through four adsorption columns in series and flows by gravity from one adsorption column to the next. The total residence time in the adsorption columns is in the order of 25 minutes. After acid washing, the loaded carbon is washed and sent to the elution column to remove gold from the loaded carbon. The gold removed from the loaded carbon cools in a flash cell and then reports to the two electrowinning cells in parallel. Gold in solution is removed onto stainless steel cathodes. The stainless steel cathodes are rinsed off with a high pressure washer. The cathode sludge is then filtered, dried in an oven, transferred to the barring furnace and the gold is then poured into molds.

Markets

The principal product at the Chapada Mine is a copper concentrate with gold and silver, which is readily marketable on world markets.

Environmental Considerations

The Company has all of the necessary environmental permits to operate at the Chapada Mine including the main operating licence, which was obtained on November 20, 2006. It was renewed on September 29, 2008, and is renewed every few years according to the terms of the regulating body. Further licences will be obtained as required to carry out or expand operations at the Chapada Mine.

The mine life for the Chapada Mine (Chapada Corpo Principal, Corpo Sul and Suruca) is expected to be 17 years. The first version of the plan for mining closure including rehabilitation of the tailings storage facilities, mine sites, waste piles was submitted in 2008 and is revised on a regular basis. An amount of approximately $51 million is estimated for closure and abandonment costs by the end of mine life.

Mine Life

RPA notes that the life-of-mine plan (the “LOM Plan”) presented in the Chapada Report is based on production tonnes and grade and development requirements, as forecasted by Yamana. The plan, which only considers production from Mineral Reserves, spans a total effective mine life of 17 years.

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Current Exploration and Development

The Chapada Mine produced a total of 110,618 GEO contained in concentrate in 2013 compared with 128,171 GEO contained in concentrate in 2012. The 2013 production consisted of 104,096 ounces of gold and 326,087 ounces of silver compared with 119,655 ounces of gold and 425,805 ounces of silver contained in 2012. The Chapada Mine production was 130.2 million pounds of copper in 2013 compared with production of 150.6 million pounds of copper in 2012. Production for 2013 decreased from 2012 as a result of anticipated lower grades and recovery rates.

The focus of the 2013 exploration program at the Chapada Mine was the completion of an infill program at Corpo Sul. The program at the Chapada Mine included 3,545 metres in 51 holes. Closer spaced drilling identified southwest trending high grade gold and copper mineralized zones. Exploration efforts at the Chapada Mine have resulted in increased gold and copper Mineral Reserves for year end 2013 and have developed additional targets that will be tested in 2014.

El Peñón Mine

Unless otherwise stated, the information, tables and figures that follow relating to the El Peñón Mine are derived from, and in some instances are extracts from, the technical report entitled “Technical Report on the El Peñón Mine, Northern Chile” dated December 7, 2010 (the “El Peñón Report”), prepared by or under the supervision of (the “El Peñón Qualified Persons”) Stuart E. Collins, P.E., and Chester M. Moore, P. Eng., of RPA, and Kevin C. Scott, P. Eng., formerly with RPA. The technical information contained in this section of the annual information form, other than the technical information set forth under the heading “– Current Exploration and Development”, has been reviewed and approved by the El Peñón Qualified Persons, each of whom is a “qualified person” for the purpose of NI 43-101. See “Interests of Experts”.

Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the El Peñón Report, which has been filed with certain Canadian securities regulatory authorities pursuant to NI 43-101 and is available for review on the Company’s SEDAR profile at www.sedar.com.

Property Description and Location

The El Peñón Mine is located in the Atacama Desert in northern Chile, approximately 165 kilometres southeast of Antofagasta. Yamana owns 256 individual mining claims comprising an area of 49,302 hectares covering the El Peñón Mine, the Fortuna area and surrounding exploration lands. The Company became the 100% owner of El Peñón when it completed the final step of the acquisition of Meridian Gold Inc. (“Meridian”) on December 31, 2007. The mine operates on a year round basis.

The El Peñón Mine is subject to a 4% royalty payment calculated over annual taxable income, which amounts to approximately $6,000,000. In addition, a 2% net smelter return is payable to Gold Fields Limited as agreed in the purchase of the Nado claims covering the Fortuna area. Approximately $1,000,000 is payable by Minera Meridian Limitada to Gold Fields Limited on a yearly basis.

The El Peñón Mine has been operating since 1999 and has sufficient surface rights for mining and processing operations. As well, the El Peñón Mine has sufficient water, power and labour supplies and sufficient areas for tailings and waste disposal.

At the El Peñón Mine, the Company holds all the necessary environmental licenses and permits to operate the mine.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

Antofagasta is the principle source of supply for the mine. It is a port city with a population of 302,000 and daily air service to Santiago. The mine is accessible by a paved road, with travel time from Antofagasta to the mine being approximately 2.5 hours.

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The climate in the Atacama is very arid, with a mean annual precipitation in most areas of virtually zero. The temperature ranges from near freezing to +29°C. The mine is contained in a desert climate characterized by an extreme dryness, little to no precipitation, and great thermal amplitude (- 0.5°C to +30°C).

Currently, the physical plant site includes administrative offices, open pit and underground mine workings, a mill, laboratories, ore stockpiles, waste dumps, coarse ore storage, tailings storage, workshops, warehouses and the accommodation complex and associated facilities such as cafeterias and recreation facilities. The mine has access to facilities which provide basic infrastructure to it such as electric power, water treatment and supply and sewage treatment. Underground infrastructure includes mine ramps, ventilation raises, maintenance shops and mobile equipment fleet.

The mine is at an elevation of approximately 1,800 metres above sea level. Relief in the area is modest, with widely dispersed hills and peaks separate by very broad open valleys. There is little or no vegetation or wildlife in the area around the mine, and the principal land use is mining.

History

The discovery of El Peñón was the result of successful grassroots exploration carried out by geologists of FMC Gold Company (“FMC Gold”), predecessor to Meridian, through the early 1990s. In July 1998, Meridian made the decision to place the property in production, and construction on a 2,000 tpd mine and mill facility commenced later that same year. Production began in September 1999, ramping up to full capacity by January 2000 and has continued to the present day. Since September 1999, the operation has run continually at design and increased capacity, treating both open pit and underground ore.

As of December 31, 2009, the mine produced approximately 8,409,000 tonnes of ore grading 11.3 grams per tonne of gold and 264 grams per tonne of silver.

Historical Mine Production to December 31, 2009

Year	Tonnes	Au Grade (g/t)	Ag Grade (g/t)
1999	369,290	13.96	215.08
2000	640,045	14.71	215.43
2001	707,199	18.92	300.08
2002	582,478	17.89	270.94
2003	542,616	16.40	247.50
2004	568,170	13.90	222.04
2005	734,372	12.35	236.69
2006	861,224	8.71	230.00
2007	968,159	8.17	291.45
2008	1,044,176	6.91	298.70
2009	1,391,486	5.82	289.22
Mine Total	8,409,215	11.29	263.55

The mineralized veins at El Peñón have received significant amount of underground development. In total, approximately 87,600 metres of underground development has been carried out from 1998 to December 2009.

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Underground Development, 1998-2009

Year	Mine Development (m)
1998	2,901
1999	9,445
2000	4,386
2001	5,262
2002	5,678
2003	5,893
2004	7,493
2005	9,249
2006	8,610
2007	9,547
2008	9,573
2009	9,599
Total	87,635

Geological Setting

The El Peñón Mine is located in the Central Depression of the Atacama Desert. The region is underlain by Late Cretaceous and Early Eocene magmatic arc rocks, of the Paleocene belt. Rocks in the region consist of basaltic to rhyolitic lavas and tuffs, subvolcanic porphyritic intrusions, and granitoid stocks, which extend from southern Peru to central Chile. This belt hosts many epithermal deposits and subvolcanic porphyry systems.

The mineralization at El Peñón is hosted by near-horizontal to gently dipping Eocene to Paleocene basaltic to rhyolitic volcanic rocks. The stratigraphic sequence consists of a lower sequence of volcanic breccia and andesitic to basaltic flows, overlain by rhyolitic to dacitic pyroclastic rocks, dacitic to andesitic flows, and volcanic breccia. Rhyolitic intrusives, domes, and associated flows are intercalated with earlier volcanic units. The distribution of Cretaceous and Eocene volcanic rocks is controlled by graben structures bounded by north-northeast trending faults. These are steeply dipping regional-scale structures with displacements in the order of hundreds of metres. The principal direction for late dikes and many of the highest grade mineralized faults is parallel to the bounding faults. Mineralized faults dip steeply eastward on the east side of the property and westward on the west side, in a fashion implying a horst/graben extensional structure. Most of the mining takes place along north-trending veins. A relatively minor amount of production has taken place along northeast-striking structures.

Exploration

Regional exploration focusing on Early to Mid-Eocene volcanic belts in northern Chile led to the acquisitionof the El Peñón Mine in 1993. Trenching carried out that year, followed by a 13-hole drilling program, discovered significant gold and silver mineralization. The next year, the first hole of a follow-up program intersected 100 metres grading 10.9 grams per tonne of gold and 123.4 grams per tonne of silver in what eventually became the Quebrada Orito deposit.

In 2009, 57,935 metres of exploration drilling and 58,149 metres of infill drilling were completed. This drilling was designed to locate the extensions of known veins and discover new veins in order to replace the Mineral Reserves and Mineral Resources extracted in the mining areas. The 2009 exploration program included Mineral Resource definition and extension drilling in various areas such as Abundancia and Esmeralda, Al Este, Bonanza Norte, and Martillo Flats. New discoveries were made at Martillo Central Sur, and Martillo Flats Hangingwall, and vein extensions were located at Bonanza Norte, Pampa Campamento, and Sorpresa. Mineral Resource infill drilling occurred at Bonanza Norte and Pampa Campamento.

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In 2010, to the end of September, a total of 39,905 metres of exploration and 54,820 metres of infill drilling were completed. The 2010 drilling is designed to locate the extensions of known veins and discover new veins in order to replace the Mineral Reserves and Mineral Resources extracted in the mining areas. The 2010 exploration program included Mineral Resource definition drilling at Al Este, Dorada, Providencia, Sorpresa, Pampa Campamento, and Martillo Central Sur. Extension drilling took place in various areas such as Abundancia and Esmeralda, Al Este Norte, Bonanza Norte, Fortuna, and Martillo Flats.

See also “– Current Exploration and Development”.

Mineralization

The deposits at El Peñón are low to intermediate epithermal gold-silver deposits, hosted in steeply dipping fault-controlled veins. Gold and silver mineralization consists of disseminated electrum, native gold, native silver, silver sulphosalts, and silver halides occurring in a gangue of predominantly quartz, adularia, carbonate, and clay. Electrum is the most common form of precious metals in the deposit and occurs as micron to millimetre-size subrounded and irregular grains. Two phases of electrum are present: a primary phase, which contains approximately 55% to 65% gold, and a secondary phase, which has resulted from supergene processes that have remobilized silver and which typically consist of over 95% gold.

Sulphide minerals are relatively rare, and this may be due to oxidation, or to an initial low overall abundance such as would occur in a low sulphidation environment. Abundant iron and manganese oxyhydroxides are common with only trace occurrences of relict sulphides. In order of abundance, trace amounts of pyrite, galena, sphalerite, chalcocite, and covellite can be present. Gangue minerals comprise fracture and breccia-filling and replacement quartz, adularia, carbonates, and clay minerals. Vein textures often display crustiform textures, although the highest grade gold-silver mineralization is reported to be associated with massive banded quartz-adularia. Gangue minerals occur as open space filling as well as replacements of primary host rock mineral phases.

There are thirteen main vein zones and many subsidiary veins in nine vein systems that have supported, support currently, or are planned to support surface and underground mining operations. The veins strike predominantly north-south and dip steeply to the east and west. North-northeast to northeast-striking fault zones are also host to mineralized zones, however, the relative proportion of the overall deposit is small. The principal mineralized veins are Al Este, Bonanza, Cerro Martillo/Dorada, Dominador, El Valle/Discovery Wash, Fortuna, Martillo Flats, Pampa Campamento, Playa, Providencia, Quebrada Colorada, Quebrada Orito, and Vista Norte.

The deposit comprises several individual tabular, steeply dipping zones or shoots that are amenable to mining by both underground and surface methods. Vein widths range from decimetre-scale to over 20 metres. Individual mineralized shoots measure from less than one kilometre to four kilometres in strike length, and up to 350 metres in the down-dip direction. Gold grades range up to hundreds of grams per tonne but are more typically less than 30 grams per tonne. Silver grades are in the order of hundreds to thousands of grams per tonne.

Drilling

Systematic testing of the gold-bearing zones was started by Meridian in 1993 and continues to the present. Exploration work has continued in order to develop drill targets to replace Mineral Reserves. Drilling is carried out on a nominal 60 metres x 60 metres pattern, with infill holes drilled on a 30 metres x 30 metres pattern. Preliminary Mineral Resource estimates are made using the drill information. Later, the estimates are refined using chip sample assays collected from the underground development. Underground definition drilling is completed on a 30 metres x 30 metres spacing where required and some drilling is carried out on a 15 metres x 15 metres pattern if needed for grade control purposes, and to aid in resolving local structural complexities. Short test holes are also used to locate veins to assist mining and grade control.

Surface drilling is mostly reverse circulation, with at least one diamond drill hole per 30 metres section. Often, holes are collared with reverse circulation equipment, until the hole is almost in the zone, and then changed over to diamond core. Some are cored for the entire length. Core size is HQ (63.5 millimetres core diametre), sometimes

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reduced to NQ (47.6 millimetres diametre). Reverse circulation holes are drilled with 146 millimetres diametre equipment, which produces a hole approximately 152 millimetres in diametre.

See also “– Current Exploration and Development”.

Sampling and Analysis

Samples are taken by surface and underground drilling and by panel sampling of mine headings. Surface drilling typically is carried out to trace the structures and estimate Mineral Resources. Mine sampling comprises both definition diamond drilling as well as sampling of development headings for grade control. The exploration samples consist of reverse circulation cuttings and half-core splits of diamond drill core. The mine samples are drift face panel samples and whole drill core.

Exploration reverse circulation samples are taken at two-metre intervals outside and one-metre intervals inside a mineralized zone. The drillers take two samples from every interval, splitting the cuttings with a riffle-type sampler. Each sample represents 18.75% of the total sample. Samples are placed in plastic bags and transported to the on-site Acme Analytical Laboratories Ltd. (“Acme”) sample preparation facility. One sample is kept for reference and the other is prepared for analysis. Specimens are also collected in chip trays for logging.

Surface drill core is delivered to the logging and sampling facility located near the mill/office complex. Core is logged and marked for sampling by the geologist. Sampling technicians photograph the intact core, split the core samples, place them in plastic bags, and deliver them to the sample preparation facility. All surface samples are assayed by Acme in La Serena.

Mine drill hole samples are collected in the same fashion as exploration holes, except that they are delivered to the mine site laboratory.

Each underground drift face is mapped and sampled by the grade technicians. Samples comprise chips taken from panels measuring approximately one metre high and a maximum of one metre wide. Minimum sample widths are 30 centimetres in the vein and 50 centimetres in the waste. Boundaries to the sampled areas are placed at vein contacts and major structures. The sample sizes are constrained to between five kilograms and nine kilograms. The geological technicians measure the distance and direction from the nearest survey station to the sampled interval. The samples for each face are rendered as linear strings of samples in a fashion similar to drill holes (pseudo-drill holes). The “collar” of the drill hole is the left-hand end of the sample string. The “azimuth” is approximated as the direction parallel to the drift face. Sample lengths are projected to the face onto a linear trace of the pseudo-drill hole to account for irregularities or curvature of the face.

El Peñón used Acme, an ISO 9001:2000 certified laboratory in Santiago, Chile, and Geoanalitica Ltda. (“Geoanalitica”), an ISO/IEC 17025 certified laboratory in Coquimbo, Chile, for all assaying of the surface and underground exploration plus infill drilling. Pulp samples are sent for analysis in sealed batches by truck/air. The El Peñón laboratory handles all production samples from the mine. Certified standards and duplicates, as well as pulp blanks and sterile sample, were used for quality control purposes. Pulp samples were resubmitted to a second outside laboratory (Andes Analytical Assay Ltda. (“Andes”) ISO 9001:2000 in Santiago, Chile).

In 2010, El Peñón began submitting pulp samples to ALS Chemex in La Serena, Chile, as well as Acme and Geoanalitica.

The following procedure was used for El Peñón’s sample preparation and assaying:

• A submittal form was filled out by a geologist or technician and delivered with the samples to the Acme preparation facility.

• Samples were opened and dried at 60ºC as required.

• The entire samples were crushed to better than 85% -10 mesh. Crushers were cleaned with compressed air between every sample and with barren waste every 5^th sample and quartz every 40^th sample. Granulometric checks were done every 20 samples.

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• A 500-gram subsample was taken and the split was pulverized using a chrome-steel ring mill to better than 85% -150 mesh. Granulometric checks were done every 20 samples. Pulverizers were cleaned with compressed air between every sample and with waste every 5^th sample.

• Two 250-gram pulps were separated, one for analysis and one for storage.

Standard fire assay (“FA”) methods using a 50-gram pulp sample were used to determine total gold content. Samples assaying greater than or equal to 5 parts per million of gold using FA with an AAS finish were reassayed (FA) with a gravimetric finish for accuracy. Assays for silver were completed using an aqua regia digestion of a sample followed by AAS. Samples for which the preliminary assay is greater than 100 grams per tonne of silver but less than 5 grams per tonne of gold (i.e., high silver but low gold) are rerun using a four-acid digestion and AA.

In 2009 (to November 9), Acme prepared 38,896 samples and sieve tests indicate that the preparation of the samples was completely acceptable. A total of 1,599 tests (4.1%) for crushing and 1,561 tests (4.0%) for pulverizing were completed. Only one pulverizing test returned a result under 95% passing 150 mesh and it was 94.72%, which is acceptable.

Between January 1 and November 9, 2009, a total of 41,343 samples were shipped to Acme, Geoanalitica, and Andes for analysis. A total of 15 standards at various gold and silver grades were used. During this period, Acme prepared 34,301 pulps from 201 surface drill holes and inserted 739 control samples in the analytical stream with these samples. Results from 127 sterile samples inserted to monitor sample preparation were 100% satisfactory for both gold and silver. Results from 186 sample blanks inserted to monitor contamination during analysis were 97% acceptable for gold and 100% acceptable for silver. The results for the 305 standard samples inserted into the sample stream were 100% acceptable for gold and 97% for silver. The silver failures were reanalyzed as required.

A total of 732 preparation duplicates and 265 analytical duplicates were analyzed for El Peñón. Only seven preparation duplicates and five analytical duplicates required remedial action. Overall correlation was excellent for both gold and silver.

As well, 28,025 production samples (drill core, channel samples, muck samples) were shipped to the El Peñón laboratory in 2009, which uses similar protocols to Acme.

Security of Samples

Sample security is considered adequate since all samples are collected and prepared in secure sites and transported by Yamana personnel and/or selected contractors.

Mineral Resource and Mineral Reserve Estimates

See “– Mineral Projects – Summary of Mineral Reserve and Mineral Resource Estimates”.

The methodology of estimating Mineral Resources includes:

• Statistical analysis and variography of gold and silver values in the assay database as well as on sample composites.

• Construction of a block model using Vulcan software.

• Grade interpolation using kriging method, and inverse distance squared (ID2) method for veins which did not have sufficient data to calculate variograms.

All Mineral Reserves are estimated using modern software programs. Vulcan is the general mine package used in conjunction with Microsoft Excel and AutoCAD.

The economic value of each potential mining outline is calculated using forecast long-term prices per ounce of gold and per ounce of silver, using diluted tonnes and grades, as stated in the “– Mineral Projects – Summary of Mineral Reserve and Mineral Resource Estimates”. Net block values are weighed against forecast costs and metallurgical recoveries for each potential mining outline. These combined economic revenue and cost models are part of the Selective Mining Unit (“SMU”) models.

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The procedure for determining the Mineral Reserve blocks for Proven Mineral Reserves and Probable Mineral Reserves is summarized below:

• The geological interpretation and Mineral Resource estimation is supplied by the geology staff.

• An SMU is determined based on the mining method employed, geomechanical rock properties, dilution expected, and the block values.

• SMU solids are designed in Vulcan and AutoCAD.

• Additional economic criteria are applied which include metal prices, operating costs, and recoveries.

• Blocks are analyzed for inclusion into the LOM Plan.

• If the value of the mining block is positive, then a development cost analysis is applied to the block before final inclusion in the LOM Plan.

Mining Operations

Mining Method and Metallurgical Process

The primary mining method is an underground bench and fill method and all access to the veins is by ramps and crosscuts. Veins are separated by a distance of 100 metres to 500 metres. The application of this method will vary between veins, but it is usually applied to sublevels spaced between 10 metres and 18 metres. Vein dips are steep and the bench drifts are built along the strike of the vein. A top access drift is driven for drilling, and a bottom access drift is driven for ore extraction. Depending on the vein width, the access drift dimensions are generally 3.5 metres wide by 4.0 metres high. Both the drill access drift and the lower ore extraction drift are grade-control sampled every drill, blast, load and haul cycle.

For design and operating, the typical parameters for the SMU are for stope dimensions of one metre to six metres width by six metres to 16 metres height by 15 metres length. Vein widths will dictate how much dilution will be realized during the mining of the stope.

Options to reduce the mining dilution are either to use narrower stope widths or employ a resueing mining method. Resue (split blasting) mining consists of mining the ore first in a drift, and then blasting and loading just enough width to allow for mining equipment access. If narrow stope widths are used to reduce dilution, then smaller equipment is needed to work in the narrower underground openings.

Once the drifts are established and the required ground control support is applied, the production stoping of the ore body commences. Backfilling is performed after the stope is mined out.

El Peñón has employed open pit mining in the past. There are no significant open pits planned for the El Peñón veins, but small tonnages of near-surface, lower-grade material may be mined in the future to provide additional mill feed.

All underground mining drift, cross cut, and stope areas are first approved by El Peñón geotechnical staff before any full scale production commences. Monitoring of the production stopes and development areas is also performed by the geotechnical staff. Typical ground support includes, but is not limited to, split-set bolts, resin bolts, wire mesh and shotcrete.

The El Peñón processing plant has been modified with the potential to increase production capacity to approximately 4,350 tpd of stockpiled and mined ore, or 1.59 million tonnes per year. Yamana has accomplished this by steadily increasing throughput through the addition of new equipment to the process plant. In addition, through the latter part of 2007 and early 2008, the product grind size to feed the cyanide leaching circuit was steadily increased from a P₈₀ of 120 μm to 180 μm, which allowed more tonnage throughput at the expense of a small reduction in recovery.

With the base case scenario of approximately 3,150 tpd, there is an increase in recovery for the LOM Plan. Based on the mine life with current Mineral Reserves (2011 – 2015), the plant would operate at a rate of approximately

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3,150 tpd, or 1.15 million tonnes per year from stockpiled and mined ores. In 2016 the plant production is scheduled to again increase throughput to 3,850 tpd.

Run-of-mine stockpile ore is dumped onto a grizzly and passes through to a 100-tonne live storage bin. From there ore is fed to a 950 millimetres x 1,250 millimetres jaw crusher by an apron feeder. Ore is further crushed in a newly installed secondary cone crusher that produces a crushed product P80 of 30 millimetres.

Crushed ore is stored in a 1,500 tonne capacity bin, from which it is fed to a 4.72 metres x 7.77 metres 2,500 kW SAG mill. A new 4.27 metres x 6.10 metres diameter ball mill was added in series with the SAG mill in 2009 to increase mill capacity. Pebbles from the SAG mill are crushed in a pebble crusher. Cyanide solution and lime are added in the grinding circuit. The grinding mills are in closed circuit with hydrocyclones.

The grinding circuit product, the cyclone overflow at a nominal P80 of 180 μm, is sent to a thickener where the solution is thickened to 50% solids with the underflow reporting to a cyanide leaching circuit. The thickener overflow is sent to the unclarified solution tank. The leaching circuit product is sent to a counter current decantation (“CCD”) circuit.

The precious metals are recovered in a zinc precipitate Merrill-Crowe process. The overflow solution from the first CCD thickener is sent to the mill solution storage tank or alternatively to the unclarified solution tank. Mill solution is recycled to the SAG mill.

Unclarified solution is sent to the clarification circuit where it is filtered ahead of reporting to the pregnant solution tank. Some additional equipment was added to the clarification circuit in 2009. The solution is then de-aerated in a vacuum tower and zinc dust is added ahead of pressure filters. A pre-coat filter aid is added ahead of the filters as well as the clarification filters. Gold and silver are precipitated on the zinc dust which is collected from the pressure filters and calcined in a mercury retort to remove contained mercury. The calcined precipitate is then smelted in a tilting furnace with slag making additives to make doré bars containing approximately 2.1% gold and 97.9% silver.

The thickened solution from the 4^th thickener underflow in the CCD circuit is sent to a surge tank and then the contained water is removed by belt filters. The filtered product at approximately 20% solids is sent to the dry tailings impoundment area.

The mill throughput has steadily increased over the years. The throughput has increased from approximately 2,500 tpd in 2005-2006 to 3,600 tpd in 2009 and eventually to a nominal production rate of 4,350 tpd starting in December 2009 with the mill expansion project. This has allowed gold production to stay reasonably constant despite falling head grades. Starting in 2011, the LOM Plan based on current Mineral Reserves shows El Peñón mill operating at a rate of approximately 3,150 tpd, or 1.15 million tonnes per year, for a period of five years (2011 – 2015). In 2016 the processing rate increases to 1.41 million tonnes per year.

The gold head grade has steadily decreased from over 11 grams per tonne of gold in 2005 to close to 5 grams per tonne of gold in 2010. Gold recovery has been impacted by the falling of the head grade as well as the increase in grind size, trending down from 96% to 91%. Gold production has averaged 226,000 ounces per year over the last four years.

Silver is an important by-product of the El Peñón operation. Silver grades have remained more constant than gold grades as the silver to gold ratio has changed from approximately 20:1 to over 40:1 in the last three years. Silver recovery has typically been 3% to 4% less than gold recovery.

The metallurgical recoveries have been relatively consistent, averaging 91.3% for gold and 86.6% for silver over the last three years with the increase in mill throughput. El Peñón expects that the recoveries will increase to 94% for gold and 92% for silver at the base case mill production rate of 3,150 tpd processed.

The 2009 mill expansion project, which increased the nominal mill capacity to 4,350 tpd, was reported to have cost $8.9 million, including $2.8 million in equipment costs and $4.1 million in construction costs. These mill

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modifications have increased capacity or alternatively allow El Peñón the ability to increase the metal recoveries due to longer grinding times which produce finer particles for leaching, and also allow for longer leach times to increase recovery.

The number of processed tonnes are based on weightometer readings that are located on the SAG mill feed conveyor and at the tailings discharge point. Daily analytical results from samples of plant solutions and tailings discharge are used to calculate plant metallurgical performance. Metal sales and inventory contained in the circuit and refinery are determined at the end of each month and appropriate adjustments are made. From this information, the mill reports the back-calculated head grades of the mill feed.

Mine Life

The El Peñón Mine is targeted to have a mine life of at least 7 years, based on the Mineral Reserves set out in the El Peñón Report.

Markets

The principal commodities produced at El Peñón are gold and silver in the form of doré bars, which are freely traded, at prices that are widely known, so that prospects for sale of any production are virtually assured.

Contracts

El Peñón has a number of contracts in place, which is not uncommon for a typical mining operation located in Chile. The terms of the various contracts are within industry norms.

Environmental Considerations

Continuous monthly and annual environmental monitoring includes, but is not limited to, the following areas:

• The tailings are sampled and tested for cyanide, copper, mercury, lead, iron, zinc, silver, and arsenic.

• A continuous air sampling station was established and periodic testing is performed.

• Emissions from the laboratory and refinery are monitored.

• Water table levels are reported annually.

El Peñón originally received environmental approval in 1998. El Peñón has a number of operating permits in place which are detailed in the El Peñón Report. Dried mill tailings at approximately 15% to 20% moisture are transported to the tailings storage area, for disposal. RPA understands that there are no outstanding liabilities associated with the El Peñón operations and that operations do not present unusual or significant impacts on the environment. El Peñón has a Reclamation and Closure Plan in place. Government regulations require that a full closure plan be submitted when mine life drops to less than five years.

Taxes

As reported in the 2010 El Peñón LOM Plan, the booked tax rate is 35% on revenue after deductions for operating costs, depreciation and amortization. The adjusted tax rate paid on revenue after deductions for operating costs (less royalties), depreciation, and amortization was 17%. No other taxes were shown in the 2010 El Peñón LOM.

Current Exploration and Development

El Peñón produced 467,523 GEO during 2013 compared to 462,496 GEO in 2012. Production for 2013 consisted of 338,231 ounces of gold and 6.5 million ounces of silver, compared with 317,557 ounces of gold and 7.2 million ounces of silver produced in 2012. Production of gold increased mainly as a result of higher feed grade, while production of silver decreased due to lower feed grade and lower recovery rate. These variations in grade and recovery are consistent with the mine plan for 2013 and the result of the combination of ore from different veins and mines.

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During 2013,298 diamond and reverse circulation drill holes, for approximately 93,000 metres, were completed at El Peñón. The majority of the drilling was completed at Dorada West, Providencia NW1, NW2 and NW3, Aleste FW, Esmeralda, Esperanza and Borde Oeste. The drilling completed in 2013 allowed for initial Mineral Resource estimates to be completed at all of the new vein zones.

Dorada West is located immediately to the south and west of Dorada and east of Providencia, approximately halfway between the Providencia and Dorada vein deposits. Drilling has outlined mineralization along a strike length of approximately 900 metres and a dip length of 150 metres. The deposit remains open to the south and down dip.

Providencia NW is a tensional system of three structures located between Dorada West and Providencia veins, and corresponds to structures trending N30°W and subvertical dip less than one metre wide but at high grades. The mineralization has been traced along a minimum strike length of 400 metres and 150 metres in the vertical extension. An infill drilling program will be performed in 2014 to better define the grade and continuity of the high grade areas.

Borde Oeste is a structure located 500 metres to the east of the Aleste vein, of strike N-S and 80° west dip. Drilling has outlined mineralization along a minimum strike length of 800 metres and a dip length of 150 metres, Three ore shoots have been recognized, displaced about 140 metres in the strike. Infill and exploration drilling will be performed in 2014 to better define the grade and continuity of the mineralized zone. The system still remains open.

Mercedes Mine

Unless otherwise stated, the information, tables and figures that follow relating to the Mercedes Mine are derived from, and in some instances are extracts from, the technical report entitled “Technical Report on the Mercedes Gold-Silver Mine, Sonora State, Mexico” dated February 25, 2014 (the “Mercedes Report”), prepared by or under the supervision of (the “Mercedes Qualified Persons”) R. Dennis Bergen, P. Eng., and Chester M. Moore, P. Eng., of RPA. The technical information contained in this section of the annual information form, other than the technical information set forth under the heading “– Current Exploration and Development”, has been reviewed and approved by the Mercedes Qualified Persons, each of whom is a “qualified person” for the purpose of NI 43-101. See “Interests of Experts”.

Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the Mercedes Report, which has been filed with certain Canadian securities regulatory authorities pursuant to NI 43-101 and is available for review on the Company’s SEDAR profile at www.sedar.com.

Property Description and Location

The Mercedes Mine is located in the state of Sonora, northwest Mexico, within the Cucurpe municipality. The Mercedes Mine is located 250 kilometres northeast of Hermosillo, Sonora’s capital city, and 300 kilometres south of Tucson, Arizona.

The Mercedes Mine consists of approximately 64,650 hectares of mineral concessions under lease from the government of Mexico. The area is covered by 39 mineral concessions, all of which have been titled as mining concessions, according to Mexican mining law. The titles are valid for 50 years from the date titled. All of the concessions are owned by Minera Meridian Minerales S. de R.L. de C.V., a subsidiary of Yamana, and remain in good standing with mining law obligations through twice-annual tax payments and required assessment work. The Mercedes Mine is not encumbered by any royalties, since all of the claims under contract were purchased with no future obligations. Other than items normally associated with mine closure, RPA is not aware of any existing environmental liabilities.

Accessibility, Climate, Physiography, Local Resources and Infrastructure

The Mercedes Mine is accessed using Highway 54 via Magdalena de Kino located approximately 180 kilometres from both Tucson, Arizona, and Hermosillo, Mexico. From Magdalena de Kino, access is gained to the property using Highway 15 for 67 kilometres, passing through the village of Cucurpe, to the Rancho Los Pinos entrance. The mine can be reached via an improved gravel road approximately 10 kilometres from the ranch entrance.

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The Mercedes Mine is located in an area of moderate to rugged topography, with numerous arroyos and canyons incised through volcanic stratigraphy. The arroyos and canyons contain intermittent streams that ordinarily flow in response to rainfall events or for extended periods during rainy periods. Elevation in the property area ranges from 950 to 1,400 metres above sea level. Vegetation is typical of the high Sonora desert, including mesquite, desert oak, grasses, and numerous species of cacti, junipers, and cottonwood trees. The climate in the area is typical of the high Sonora desert. The maximum recorded summer temperature is 41.6°C and the lowest recorded temperature is -15°C with freezing temperatures common at night between December and March. Rainfall is sparse outside of the monsoon season (which is variably mid-June to early October). Rain and rare snow occasionally fall between late January and February.

Magdalena de Kino is the closest commercial centre and has a population of about 23,000. It is a well-established community with a variety of services available, including a small airport, lodging, fuel and groceries, limited medical care, schools, and police. Cananea, Sonora, is a major Mexican mining centre located about 170 kilometres from the site.

The Mercedes Mine is currently mining three deposits and has all required infrastructure and permits necessary for a mining complex including:

• Declines and series of ramp-connected levels

• A 1,900 tpd crushing plant and mill

• Tailings storage facility

• Associated administrative building, laboratory, shops, and warehouse

• Sufficient water supply using mine dewatering and purchased water rights

• Power supply provided by a 65 kilometre, 115 kilovolt power line, from the town ofMagdalena de Kino

History

The Mercedes district has been the focus of mining activities since at least the late 1880s. Exploration and development work was conducted in at least two or three distinct periods. The Mercedes, Tucabe, Saucito, Anita, Klondike, Rey de Oro, Reina, and Ponchena veins all were the focus of exploration and development work on a limited to moderate scale during the late 19th century and early 20th century.

The Tucabe vein was mined around the turn of the century. A cyanide mill was constructed on the site and the Tucabe vein was accessed through a series of tunnels and shafts, covering over 600 metres of strike and a vertical range of over 150 metres. The Mercedes vein was discovered in 1936. Anaconda Copper Company optioned the property in 1937 and spent two years exploring underground. The work included sinking a 50 metre shaft and excavating a series of tunnels and internal raises for sampling and reserve estimation. Little historical data is available for past mining activities at the Klondike mine. A cross section in the Anaconda file from the 1930s indicates that the Klondike mine was mined around 1900.

No precise production totals are available from historic mining operations. Given the scale of historic mining observed at Klondike, Rey de Oro, Tucabe or Saucito, and the known high grades in the exploited veins, a reasonable estimate of cumulative past district production is in the order of 150,000 tonnes and approximately 73,000 GEO.

The Mercedes Mine and Klondike mine areas were first examined by Meridian’s predecessor FMC Gold in 1993 as part of a regional exploration program in Mexico and the Mercedes district was re-visited in 1999 as part of a program focusing on high grade low sulphidation vein systems. Meridian geologists completed surface and underground mapping and sampling by September of 2000. Five areas had historic mining activities and were the focus of the first phase of a RC drilling program. Veins or stockwork zones were encountered in all five areas by drilling. Mercedes, Klondike, and Tucabe all had at least one drill intercept assaying greater than 10.0 grams of gold per tonne. Phase 2 RC drilling started in January 2001 focusing on the Klondike and Mercedes zones. This program was successful discovering a narrow, vein-hosted mineralized zone at Mercedes and significant mineralization was also encountered at Klondike. The Meridian exploration program conducted in 2005 resulted in the discovery of the bonanza grade

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Corona de Oro shoot in the Mercedes vein. Meridian expanded drilling in 2006-2007, focusing on the Mercedes, Klondike, and Lupita veins.

Yamana acquired the Mercedes Mine when it completed the purchase of Meridian in September 2007. An aggressive drilling and development program was initiated to assess the potential of the Mercedes Mine and bring it to a feasibility study stage. Drilling from 2009 to 2013 has focused on district exploration outside of the Mercedes-Klondike systems, resulting in the discovery of the Barrancas vein zone, the Diluvio zone at Lupita, and the expansion of the Rey de Oro vein system.

The first gold pour at Mercedes occurred in mid-November 2011 and the mine reached commercial production on February 1, 2012. Total production to the end of 2013 has been 1,190,500 tonnes grading 6.15 grams per tonne gold and 78.23 grams per tonne silver for 235,400 ounces of gold and 2,994,300 ounces of silver.

Geological Setting

The geology of the Mercedes area is dominated by two northwest-trending arches, which have exposed older marine sediments and overlying interbedded volcaniclastic sediments and lithic to quartz crystal lithic tuff units. The arches are cut by numerous northwest-trending high angle structures. Some of these faults have been intruded by at least three stages of dikes and small stocks, ranging in composition from andesite to latite and rhyolite. Marginal to the northwest-trending arches, andesitic flows, and flow breccias (with local coeval andesite dikes) have been deposited and preserved in at least three west-northwest thickening basins. This andesite package, locally over 500 metres thick, and the contact zone with the underlying tuff host all known economic epithermal vein deposits in the district.

Post-mineral plagioclase-biotite latite porphyry dikes fill some of the same northwest-trending structures that host veins in the Mercedes/Barrancas corridor, venting to the surface in flow domes and extensive latite porphyry flows ranging from 10.0 to +190.0 metres thick. Dikes generally crosscut and destroy vein mineralization. The latite and all older units are overlain locally by more than 200 metres of post-mineral conglomerate and volcaniclastic units, as well as local intercalated ash tuff/ignimbrite, highly magnetic andesite flows and overlying bimodal rhyolite and basalt flows.

A total of 15.3 kilometres of gold-silver-bearing epithermal low sulphidation veins have been identified within or marginal to the andesite-filled basins, which constitute the primary exploration target on the Mercedes Mine. Major veins typically trend N30º-70ºW at 60 to 90 degree dips following the major regional structural pattern. Other veins trend variably from east-west to north-south, or even northeast. Veins typically dip at greater than 60 degrees, but locally range as low as 25 degrees. The major exception in the district is the Lupita-Diluvio vein system, which is localized along a N70ºE, 15 to 55 degrees northwest dipping listric fault zone. In contrast to other vein areas, almost all the stockwork, breccia, and vein-hosted gold-silver mineralization is hosted within older lithic tuff and volcaniclastic units below the andesite package.

Exploration

As of the end of 2013, a total of 328,321 metres in 1,201 drill holes have been completed on the Mercedes Mine. Mineralized zones at Mercedes, Klondike, Barrancas, Lupita, and Rey de Oro have been drilled on approximately 30 metre to 60 metre centres, using a combination of diamond drilling and minor reverse circulation drilling.

See also “– Current Exploration and Development”.

Mineralization

A total of 16 principal low sulphidation epithermal vein/stockwork/breccia zones, have been identified on the Mercedes Mine. The majority of the veins are hosted within the andesite package, or locally at the fault contact between andesite and the underlying lithic tuff package. Only the Diluvio Zone at Lupita and the Anita veins contain significant ore grade mineralization hosted completely in the lower tuff package.

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The mineralized zones display a combination of fissure vein, stockwork, and breccia morphologies that change rapidly on strike and dip. The zones range in width from less than 1.0 metre to composite vein/stockwork/breccia zones up to 15.0 metres wide. In the Diluvio zone, gold-silver-bearing vein/stockwork zones local attain thicknesses in excess of 100.0 metres. Length of individual veins varies from 100 metres to over 2.0 kilometres. Property-wide, gold-silver-bearing veins occur over a vertical range greater than 600 metres.

Mineralogical studies identified opaque minerals, including iron oxides, pyrite, gold, electrum, stibnite, and rare pyrargyrite, within a gangue of substantial chalcedony, quartz, and carbonate. In addition to hematite, manganese oxides are an important component in some ore zones, possibly remnant after dissolution of manganese carbonates. Due to the depth of oxidation, sulphides are rarely observed. Metallurgical studies have identified the presence of very small quantities of native gold, native silver, electrum, pyrargyrite, stibnite, galena, sphalerite, and chalcopyrite in heavy mineral concentrates. Copper minerals such as malachite and chrysocolla are most common as fracture fillings in breccias at Klondike, but rare specks are also seen in the Mercedes and Lupita-Diluvio veins.

Drilling

As of the end of 2013, a total of 328,321 metres in 1,201 drill holes have been completed on the Mercedes Mine.

Drill hole collars are marked up by survey prior to drill set-up and surveyed again after completion of the hole. A Reflex survey instrument is used to provide control information on the directional deviation (both azimuth and inclination) at 50 metre intervals in each hole.

Lithologic logging is done on drill core and geotechnical observations are made by company geologists, who collect all down-hole data including assay locations. All information is digitally recorded on paper forms or using logging software. This includes recording:

•Lithologic contacts

•Descriptive geology

•Recording of oxide and sulphide content

•Intensity of various alteration types

•Structural features, such as fracture and fault zones

•Core angles

•Core diameter

•Down hole inclination

•Core recovery record

•Rock quality designation measurements

See also “– Current Exploration and Development”.

Sampling and Analysis

Almost all 2000 to 2013 assaying of exploration core samples was done at the Bondar-Clegg (now ALS Chemex) laboratories (ISO 9001:2000 certified) in Vancouver, British Columbia. Due to extreme sample volumes, some sample preparation in 2011 was done by ALS Chemex at preparation facilities in Chihuahua, Zacatecas and Guadalajara, Mexico. Underground chip and channel samples are prepared and analyzed at the Mercedes Mine laboratory.

The procedures followed by ALS Chemex and the mine laboratory for sample preparation and assaying are detailed in the Mercedes Report.

Yamana uses certified reference materials (standards), blanks, sterile samples, and core duplicate samples with drill hole core sample submissions to monitor the precision, accuracy, and quality of the ALS Chemex laboratory process. The mine geology group uses certified reference materials (standards), blanks, and sterile samples as well as preparation duplicates to monitor the precision, accuracy, and quality of the mine laboratory process. Protocols are in

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place for describing the frequency and type of QA/QC submission, the regularity of analysis of QA/QC results, failure limits, and procedures to be followed in case of failure, or for flagging failures in the QA/QC database.

Between 2008 and 2013, Yamana inserted 2,076 standards, 1,341 blanks, 1,271 steriles, and 1,602 core duplicates into the sample stream. With the exception of some minor problems with the homogeneity of the standards and variances at low grades in the duplicate samples, all results were within acceptable ranges.

During 2013, 10,379 chip samples were dispatched by the mine geology group to the Mercedes laboratory located in the processing plant. A total of 232 standards (207 gold and 25 silver), as well as 83 blanks and sterile samples, were inserted to cover all batches of samples on both day and night shifts. A total of 1,034 preparation duplicates were also submitted for analysis. When a standard analysis exceeds the three standard deviation limit, reanalysis is requested for the standard and two samples on each side of it in the batch. As a result of the re-analyses, the percent failure greater than three standard deviations for gold analyses was 8.96% and for silver was 8.40%.

Security of Samples

All core drilled between 2005 and 2013 was logged directly at the Mercedes camp. Samples were placed in plastic bags and sealed with bag ties. Batches of samples were then placed in grain sacks and sealed with bag ties or duct tape. Grain sacks were stored in a locked warehouse facility on site. Samples were collected on-site approximately once per week by drivers from ALS Chemex, who came from the Hermosillo preparation facility.

Each sample is assigned a unique sample number that allows it to be traced through the sampling and analytical procedures and for validation against the original sample site. The second half of split exploration core is stored on-site as a control sample, available for review and re-sampling if required.

As noted in the Mercedes Report, RPA is of the opinion that Yamana’s sampling, sample preparation, analysis, and security at the Mercedes Mine meet industry standards.

Mineral Resources and Mineral Reserves

See “– Mineral Projects – Summary of Mineral Reserve and Mineral Resource Estimates”.

The methodology of estimating Mineral Resources by Yamana includes: (a) statistical analysis and variography of gold values in the assay database; (b) construction of a block model using Vulcan software; and (c) grade interpolation using a kriging or inverse distance method.

Validation of the block models by Yamana included: (a) on screen displays of plans and sections showing composite and block grades; (b) a nearest neighbour interpolation; and (c) drift analysis calculated over “slices” along the strike of each zone. For these analyses, the kriged mean grades were compared with the original sample mean grades.

Mining and Milling Operations

The Mercedes operation consists of underground mines, three of which are being developed or in production and one is in the planning stage, plus an open pit mine that is in the planning stage. Production is coming from the Mercedes Mine and Klondike mine, the Barrancas mine is being developed, and the Diluvio and Rey de Oro mines are planned for future production.

The underground mines are all designed as ramp access mechanized mines. There are two underground mining methods in use. Where the rock quality is appropriate, the ore is mined by longhole open stoping with cemented paste backfill. This is expected to be applied to 70% of the deposit. For areas with poorer rock conditions, the mining method is mechanized cut and fill stoping.

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The planned production rate is approximately 2,000 to 2,100 tpd. Ore from underground is hauled by dump truck to stockpiles near the portal. Ore from the Barrancas and Klondike mines is hauled to a common stockpile area near the jaw crusher.

The processing facilities at Mercedes are based on conventional milling with Merrill Crowe recovery of precious metals.

ROM stockpiles ahead of the crusher are used to blend different grades of ore material. ROM ore discharges from the crusher dump hopper onto a vibrating grizzly feeder and thence directly to the jaw crusher. The jaw crusher product discharges onto the crusher discharge belt feeder and thence onto a transfer conveyor to the coarse ore storage bin. The coarsely crushed material is then passed through secondary and tertiary cone crushers. The product of the crushers is fed to the fine ore bin ahead of the grinding circuit. A single ball mill measuring 5.03 metres in diameter and 8.84 metres long, powered by a 3,430 kilowatt motor, performs all grinding in closed circuit with hydrocyclones. The grinding circuit reduces the crushed ore from 80 percent passing 12.5 millimetres (1/2 inch) to 80 percent passing 45 micrometres.

The undersized material combines with gravity concentrator tails. Combined slurry is pumped using variable speed horizontal centrifugal slurry pumps to five operating 254 millimetre hydrocyclones. A portion of the hydrocyclone underflow flows by gravity to the gravity concentration circuit. The remainder of the underflow reports back to the ball mill. Hydrocyclone overflow (final grinding circuit product) flows by gravity to the pre-leach thickener deaeration feed box.

Approximately 25% of the hydrocyclone underflow is directed to a 762 millimetre diameter bowl style gravity concentrator. Bowl concentrate is fed by gravity to a magnetic separator and shaking table circuit. Nonmagnetic concentrate material is further upgraded on a shaking table. The table middlings are re-circulated to the table while the table tails are pumped back to the ball mill circuit. The table concentrate is dried in an electric oven prior to smelting. The concentrate is smelted to produce a final doré product.

Flocculant and dilution water are added to a 16.4 metre diameter high rate thickener feed to aid in settling. Underflow from the pre-leach thickener is pumped at approximately 50 percent solids where it is cyanide leached in a series of four agitated leach tanks. The thickener overflow is pumped to the carbon column circuit. Slurry advances by gravity from leach tank to leach tank, exiting the last leach tank and reporting by gravity flow to a series of four high capacity 16.4 metre diameter CCD thickeners for washing and solid liquid separation. CCD thickener underflow is advanced by pumping from thickener to thickener, exiting the last tank and reporting to the cyanide recovery thickener. CCD thickener overflow flows by gravity between CCD thickeners and will be pumped to the pre-leach thickener overflow tank.

The leach tailings are washed in CCD to remove soluble gold and silver prior to disposal. Slurry, at 60% solids, is advanced by pumping from thickener to thickener, exiting the last tank and reporting to the cyanide recovery thickener ahead of detoxification. Barren solution, used as wash water, is introduced into the final CCD thickener.

Gold and silver are recovered from pregnant solution by zinc precipitation of metal ions using zinc dust in a Merrill Crowe process. The process of recovering silver and gold by the Merrill Crowe process includes:

• clarification and filtering of pregnant solution to remove suspended solids

• deaeration of pregnant solution to reduce dissolved oxygen

• precipitating gold and silver metal out by addition of zinc dust

• filtering and drying of precipitate

The zinc precipitate and gravity concentrate are independently batch smelted in one of two retort furnaces. The metal, containing the gold and silver and minor impurities, is poured into bar molds.

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Markets

The principal commodity at Mercedes is freely traded, at prices that are widely known so that prospects for sale of any production are virtually assured. Yamana used a gold price of $950 per ounce for Mineral Reserve estimation.

Environmental Considerations

The Company has all of the necessary environmental permits to operate at Mercedes. The tailings are not considered as acid generating. Rehabilitation of the tailings facility and the remainder of the mining areas on site at the end of the mine life is estimated to cost approximately $18 million.

Mine Life

The 2013 Mercedes LOM Plan shows total production of 1.2 million GEO to the year 2023 based on Mineral Reserves and on the assumption that certain Mineral Resources will be successfully converted to Mineral Reserves. Using Mineral Reserves only for the 2013 Mercedes LOM Plan carries less risk but results in a mine life to 2020.

Current Exploration and Development

Production at Mercedes was approximately 140,000 GEO in 2013, compared with approximately 126,000 GEO produced in 2012. The increase in production resulted from an increase in mine production at similar grades. The Company expects production of approximately 129,000 GEO in 2014.

Based on continuing success in extending known resources, Yamana has continued exploration in and around the current deposits. The exploration program for 2014 consists of 5,200 metres of diamond drilling targeted at ten near mine priority targets. The program has an approved budget of $5.5 million.

Gualcamayo Mine

Unless otherwise stated, the information, tables and figures that follow relating to the Gualcamayo Mine are derived from, and in some instances are extracts from, the technical report entitled “Technical Report for Gualcamayo Project, San Juan, Argentina, Report for NI 43-101 pursuant to National Instrument 43-101 of the Canadian Securities Administrators” dated March 25, 2011 (the “Gualcamayo Report”), prepared by or under the supervision of (the “Gualcamayo Qualified Persons”) Guillermo Bagioli, MAusIMM, Registered Member of Chilean Mining Commission, of Metálica Consultores S.A. (“Metálica”), Marcelo Trujillo, formerly of Metálica, Alvaro Vergara, MAusIMM, of Metálica, Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R of Yamana, Marcos Eduardo Valencia Araya, P.Geo., Regional Resource Estimation Manager, Andes Exploration of Yamana and Renato Petter, P. Eng. The technical information contained in this section of the annual information form, other than the technical information set forth under the heading “– Current Exploration and Development”, has been reviewed and approved by the Gualcamayo Qualified Persons, each of whom is a “qualified person” for the purpose of NI 43-101. See “Interests of Experts”.

Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the Gualcamayo Report, which has been filed with certain Canadian securities regulatory authorities pursuant to NI 43-101 and is available for review on the Company’s SEDAR profile at www.sedar.com.

Property Description and Location

The Gualcamayo Mine is located in northern San Juan Province, Argentina, approximately 270 kilometres north of the provincial capital of San Juan. The main Gualcamayo block consists of one Cateo and 57 Minas and covers 7,128 hectares. A Cateo is an exploration concession which allows the holder the exclusive right to explore the area subject to certain rights of owners of pre-existing mines within the Cateo area. Once an application for a Cateo is

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submitted, all rights to any mineral discovery on the Cateo belong to the applicant. A Mina is a real property interest which allows the holder the right to explore and exploit manifestations of discovery on a permanent basis after completion of an official survey for as long as the right is diligently utilized and property taxes are paid. Fifty-five (55) of the Minas are contiguous and lie wholly within the Cateo. One Mina (Chani) lies partially outside the Cateo and one Mina (Perico) lies wholly outside the Cateo. Six (6) contiguous Minas, collectively known as the Virgen de Lourdes property, in which the Company does not hold an interest and which cover a 50 hectare area, lie within the main Gualcamayo property block.

The Gualcamayo Mine includes three known deposits, Quebrada del Diablo (“QDD”), Amelia Inés and Magdalena. The use of the term “AIM” herein refers to the latter two deposits. The QDD deposit includes the QDD Upper zone which is being developed using open pit mining, and the QDD Lower West (“QDDLW”) zone. Other targets on the property are at an early prospective stage of exploration.

Gold mineralization at Gualcamayo was discovered in 1980 by Mincorp Exploration SA (“Mincorp”), a subsidiary of Anglogold South America Ltd. Mincorp carried out an extensive exploration program of the AIM and Belgrano zones of the property. Minas Argentinas S.A. (“MASA”), a wholly owned subsidiary of Viceroy Resource Corporation, acquired from Mincorp a 60% interest in the property in 1997, and the remaining interest in 2002. In 2003, Viceroy Exploration Ltd. acquired MASA from its predecessor Viceroy Resource Corporation. Yamana subsequently acquired Viceroy Exploration Ltd. (“Viceroy”) in early 2007.

The Gualcamayo Mine is owned 100% by MASA, a wholly-owned subsidiary of Yamana which it acquired through its purchase of Viceroy. Royalties on the property are as follows: (i) a 1% net smelter return royalty on production from the Gualcamayo Mine is payable on certain concessions to Inversiones Mineras Argentinas Inc. (“IMA”), who assigned their rights and obligations to Golden Arrow Resource Corporation by assignment agreement dated July 4, 2004; (ii) a 1% net smelter return royalty capped at $200,000 on production from the Patrimonio, Patrimonio I, Patrimonio III, Patrimonio IV and Leticia mining leasesis payable to the Lirio Family; (iii) a 1.5% net smelter return royalty, capped at $500,000, is payable to the Lirio Family on production from the Rio Piojos Cateo; (iv) a 3% provincial royalty is payable on mine production after deduction of direct mining and associated general and administrative costs and (v) an export tax of 5% of the value of the doré exported. An additional 1.5% of contributions to infrastructure fiduciary funds is calculated upon the gross sales and is payable to the San Juan government. This contribution is included in the minesite overhead line of the cash flow, along with the debit and credit tax (1.2% upon the total transactions in the Argentinean banking system).

Surface rights in Argentina are not conferred with title to either a mining lease or a claim and must be negotiated with the landowner. In 2004, MASA purchased the surface rights to a contiguous land package totaling 26,218 hectares, which partially covers the Gualcamayo Mine and wholly covers access routes to the area of interest from Highway 40, the main access route to the property.

Exploration drilling on the property is subject to the application and acceptance of a water use permit from the Hydrological Department of San Juan, which MASA has received.

At the completion of each phase of exploration, an environmental impact study is required to be submitted to the Environmental Provincial Management Unit (Unidad de Gestion Ambiental Provincial) of the San Juan Department of Mines. Two reports, submitted in 2005 and 2006, cover the Gualcamayo Mine. An application to develop the project (an environmental assessment) for the production phase was submitted to the San Juan authorities in December 2006. Yamana received formal approval of the application in August of 2007. The approval of this assessment permitted mining development to proceed, subject to obtaining sectoral permits for specific project facilities. Sectoral permits have now been obtained for most of the QDD project facilities, and continue to progress well. Planning for the sectoral permitting for the leach pad facility was initiated in December 2006, continuing through 2007 and 2008, with key focus on the longer lead permit processes such as the water use concession, and approvals of design and for construction of the leach pad embankments. The 5^th Update of the Environmental Assessment Report – Exploration Phase has been submitted and it includes information referring to the construction of the Access Ramp to the West Zone Lower QDD deposit.

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In 2009, the update of the Environmental Assessment Report – Mining Phase was done and it included the Environmental Assessment Report – Mining Phase, Lower QDD Access Ramp and the mining project of the underground deposit.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

The project area is easily accessible from the city of San Juan by driving three hours north on paved Highway 40 and then via a 20 kilometre gravel road to the main camp. The site is accessible by driving from the nearby towns of Guandacol, Huaco and Jachal within 40 minutes to 90 minutes.

The general services and infrastructure for the area are good. The main camp (Campamento Gualcamayo) has capacity for approximately 400 persons, and includes offices, kitchen, sleeping quarters, washrooms, storage facilities, waste handling and recycling facility, sewage treatment system, fuel storage, and laydown areas. Electrical power is supplied to the camps by public grids.

The climate is semi-arid with average annual precipitation of 190 millimetres. The rainy season commences in December and ends in late March. The temperature at the site averages 15°C over the year. Extreme temperatures range from -9°C in the winter to 40°C in the summer. Winter daytime temperatures average 15°C with sub-zero temperatures occasionally reached, especially at night. July and August can experience snow accumulations to 15 centimetres above 2000 metres, which usually melts within one to two days. The Gualcamayo river valley intersects the project site to the east of the mining area. The river has a trickle flow during most of the year and is easily passable by light vehicles. During the rainy season, flash floods occasionally occur that can make the river impassable, generally for less than six hours and in extreme cases for up to 12 hours.

The general services and infrastructure for the area are good. The National electric power system is located approximately 129 kilometres from the project site. Drilling contractors, heavy machinery dealerships, repair services and parts are available at both San Juan and Mendoza. Local labour is readily available and staff engineers and geologists are available through the University of San Juan, as well as from consulting firms based in the region. Fuel storage deposits are located in the Campamento Gualcamayo area and fresh water is supplied from a well located approximately 2.5 kilometres south-east of Campamento Gualcamayo and there is more than sufficient water to meet future operations requirements. There is sufficient space for waste rock storage/dumping and leach pad areas.

History

The general area of the Gualcamayo Mine has been sporadically prospected by local miners for at least the last 60 years. These exploration activities were directed towards surface occurrences of skarn hosted lead, zinc, copper, gold and silver mineralization. There is also evidence of minor magnetite production from the skarns.

Mincorp explored the skarn/intrusive related gold mineralization at AIM and Belgrano between 1983 and 1988. At the Amelia Inés deposit, Mincorp carried out 3,414 metres of surface diamond drilling, 1,405 metres of underground development on three levels, and 4,047 metres of underground drilling from 79 holes. They also conducted an Induced Polarization (“I.P.”) survey and 750 metres of surface trenching, sampling and mapping. Based on this work, Mincorp identified three zones of gold mineralization referred to as Betsy, Ana and Diana.

A 92 metre tunnel referred to as “tunnel D” was also developed southeast of Amelia Inés. Although this was designed to provide underground drill stations to explore the Amelia Inés deposit it was never utilized.

At the Magdalena prospect, Mincorp carried out an I.P. survey, 980 metres of surface diamond drilling, 335 metres of underground development on two levels (4 adits), and 795 metres of underground drilling. Mincorp concluded from their exploration program that the mineralized zones were small and irregular. However, later interpretation suggests that the adits and drillholes may have been oriented parallel to the strike of the mineralization, providing little useful information about the size or grade of the zone.

At the General Belgrano prospect, a 350 metre crosscut was driven at the 1850 level (1965 metres elev.) and cut five veins. An additional 195 metres of drifting was performed along these veins. One was a subconcordant structure

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containing pyrite, chalcophyrite, tetrahedrite and sphalerite. Grades reportedly averaged 10.8 grams per tonne of gold and 1,002 grams per tonne of silver over a thickness of 0.3 metres for a length of 55.6 metres. Mincorp concluded that the Belgrano veins are generally narrow and dislocated by faulting which made exploration difficult and work was suspended.

MASA formed a joint venture in 1997 with Mincorp to earn a 60% in the Gualcamayo Mine. The objective of the exploration program initiated by MASA was to explore and evaluate the potential for epithermal sediment hosted gold mineralization peripheral to the skarn hosted mineralization explored by Mincorp.

In late 1997 and 1998, regional prospecting and rock geochemical sampling by Bill Rowell revealed the presence of gold bearing carbonate breccias in Quebrada del Diablo, approximately 1.2 kilometres southeast of Amelia Inés. The mineralized zone as defined by surface sampling extended 400 metres along the Quebrada and up to 800 metres to the east along steep cliff exposures. The original discovery was confirmed by a saw-cut channel sampling and a follow-up program of continuous rock chip sampling along a newly constructed road into the Quebrada.

Between December 1997 and December 2000, MASA completed four drill programs for a total of 11,230 metres in 58 drill holes. The drilling included 6,043 metres of diamond drilling and 5,187 metres of reverse circulation drilling that focused primarily on the QDD area.

Geological mapping and surface sampling during 1999 and 2000 helped in further defining the trend of gold mineralization which currently extends for more than 2.5 kilometres from QDD through the AIM areas.

In 2004 MASA completed further definition and fill-in drilling at QDD totalling 7,167.5 metres in 26 reverse circulation holes. reverse circulation (“RC”) drilling was also conducted at Amelia Inés (947 metres in 5 holes), Magdalena (1,844 metres in 8 holes) and three other peripheral target areas (1,964 metres in 8 holes).

GeoSim Services Inc. (Simpson, 2004) completed an updated Mineral Resource estimate on the QDD and AIM deposits in December 2004.

In late 2004, Major Drilling brought in a skid-mounted UG JKS Boyles B20 core rig capable of drilling angle holes from -90° to +45° in order to test previously inaccessible portions of the QDD and AIM deposits as well as other exploration targets. Four core holes were completed before the end of 2004 amounting to 712 metres.

In January 2005, AMEC Americas Limited completed a preliminary economic assessment of the QDD deposit in accordance with NI 43-101. The study used a gold price of $400 per ounce and concluded that the QDD project had the potential to be economically viable and should proceed to the next phases of feasibility study. Core and RC drilling was continued throughout 2005 and 2006 on both QDD and surrounding targets. Between January and August 2006, results were received from 114 core holds and 69 RC holes representing an additional 38,452 metres.

GeoSim Services Inc. (“GeoSim”) completed an updated Mineral Resource estimate in September 2006.

Exploration drilling continued through the remainder of 2006 and during 2007 concentrating mainly on the outlying satellite deposits, AIM. However, exploration continued to explore the deep western extension of the QDD deposit, and in mid 2007, an exploration decline was started to provide better access.

In August, 2007 Wardrop Engineering completed a feasibility study on the QDD deposit. The study involved developing feasibility level design of all aspects of the project, including mine design, mineral processing, heap leach facilities, gold recovery, and economic evaluation. The financial evaluation concluded that the Gualcamayo Mine is a positive project at current gold prices and with the current NI 43-101 Mineral Resource.

In the same report, an updated Mineral Resource estimate was reported for the AIM deposits and used as the basis for a separate scoping study. The scoping study on the AIM deposits was completed to a ±30% level of accuracy and concluded that the addition of the AIM deposits to the QDD deposit would significantly improve the overall project economics.

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In September, 2007 and interim Mineral Resource update for the AIM deposits was carried out using assay data received as of July 12, 2007. This included an additional 25 core and 6 RC drill holes.

A positive construction decision for the QDD deposit was announced by Yamana in August 2007 following the results of a positive feasibility study and the formal approval for its Gualcamayo Environmental Assessment report. Mining is ongoing at the QDD deposit with commercial production declared mid-2009.

Total drilling on the QDD Upper and Lower deposits to the end of 2007 included 190 core holes and 134 RC holes totalling 79,784 metres.

In March 2008, GeoSim completed a new database update with three deposits QDD Upper, AIM and underground deposit QDDLW.

In January 2009, Yamana announced the results of an updated pre-feasibility study relating to the QDDLW deposit in which two alternative approaches to mining were considered. See “– Mining Operations – QDD Lower West (QDDLW)”.

In late 2008, construction was substantially complete with the first gold pour in early 2009. Production ramped up in July 2009 when commercial production was declared.

Geological Setting

In terms of regional geology, the Gualcamayo Mine is located along the eastern margin of the Precordillera of west central Argentina. The Precordillera is a narrow N-S trending belt of tectonically deformed clastic and carbonate rocks of lower to mid Paleozoic age, overlain by Carboniferous and Permian marine and continental sediments, Triassic volcanics and continental redbeds and Tertiary continental redbeds.

In terms of local and property geology, the Gualcamayo Mine is located primarily within a package of lower Paleozoic stratigraphy characterized by thick carbonate sequences of upper-Cambrian Los Sapitos and Ordovician San Juan Formations, which are overlain by marine clastics of Upper Ordovician Trapiche Formation. The entire stratigraphic section exceeds 1,000 metres in thickness. The immediate project area is intruded by a quartz diorite stock, dated at 16-5.6 MA that produced relatively thin skarn halos and a metasomatic areole that extends hundreds of metres outboard into the surrounding carbonates.

Underground mapping at QDDLW has revealed the structural and lithological factors controlling the emplacement of the mineralization. The initial assumption of the important role played by the tension gash geometry has been confirmed.

Exploration

Since 1983, the Gualcamayo Mine has had significant exploration programs conducted by Mincorp and MASA. The stage of exploration has advanced through several drill programs sufficient to complete a Mineral Resource estimate. Past exploration programs have been assessed in previous technical reports in 2003, 2004 and 2008.

Since the acquisition of the Gualcamayo Mine by Yamana in 2006, MASA has carried out exploration work including core drilling; reverse circulation drilling; rock geochem sampling; geologic mapping; airborne geophysics; a petrographic study; and electron microprobe study through 2008.

An aggressive regional exploration program is presently underway assessing the numerous gold anomalies that extend a further 12 kilometres west and 8 kilometres north of Gualcamayo. Anomalies are associated with similar trans-tensional wrench structures, Tertiary age intrusives and Lower Paleozoic carbonates recognized at Gualcamayo.

Total drilling completed in October 2008 was of 6,157 metres, including 2,956 metres of core holes and 3,201 metres of RC holes. A total of 2,708 metres of RC drilling were drilled at the Las Vacas project, and 493 metres in

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Cerro Diablo. The diamond drilling includes 816 metres drilled in the Quebrada Perdida regional project, and 2,140 metres of near mine exploration drilling at Gualcamayo (1,608 metres of underground holes and 532 of surface drilling).

A new Mineral Resource update of the QDDLW Mineral Resource was performed during October 2008. The final report was presented early November 2008. It considered data from the recently finished infill drilling aimed to carry about 240,000 ounces of Inferred Mineral Resources to the Measured and Indicated Mineral Resources categories.

Preliminary results from this new Mineral Resource update show a global ounces increase amount of 294,000 oz over a total of 905,000 oz at 2.86 grams per tonne of gold. The added Measured and Indicated Mineral Resources were 392,000 oz, over a total of 769,000 oz at 2.9 grams per tonne of gold.

The infill drilling confirmed and expanded the initial Mineral Resource estimation (January 2008) by introducing higher grade and volume data from QDDLW. At the same time, partial exploration data confirmed the westward extension of the Mineral Resource.

See also “– Current Exploration and Development”.

Mineralization

Four distinct mineralization types occur at the Gualcamayo Mine and three of these are of present economic interest. They are: (1) sediment-hosted distal-disseminated gold (QDD); (2) sulphide-bearing skarn deposits containing copper, zinc and molybdenum with late stage gold-arsenic mineralization (AIM); and (3) porphyry style molybdenum mineralization.

QDD

Gold mineralization at QDD occurs in carbonate sediments within conformable and discordant carbonate breccias and fractured limestone. The gold mineralization is related to a hydrothermal event overprinting the proximal skarns and extending into the surrounding marbles and limestones. The QDD canyon itself lies along a fault/dyke system, which is believed to be a reactivated Ordovician rift structure that acted as the primary conduit for hydrothermal fluids migrating away from the intrusive contacts.

The mineralizing fluids were dispersed into a semi conformable, receptive limestone aquifer travelling up dip following the hydraulic gradient, more than 600 metres away from the QDD feeder structure. The permeability was provided by several deformation and alteration factors forming large conformable collapse breccias and includes: (a) early meteoric karsting of the Upper San Juan Formation and in particular the cliffy, bioturbated limestone member; (b) hydrothermal dolomitization of the pre-existing diagenetic dolomite member of the upper San Juan Formation that initiated collapse and breccia development of the over lying karsted limestone; and (c) E-W faulting, tectonic brecciation along fold hinges, stylolite formation during the ongoing contractional, and transpressive deformation during the Andean orogeny. These three factors produced a very permeable stratigraphic window (conformable breccia) within the Upper San Juan Formation that later focused mineralizing sulphurous fluids through the earlier hydrothermal collapse breccias.

During gold deposition, hydrothermal karsting and breccia development was also superimposed on the earlier collapse breccias dissolving carbonate and flushing it up gradient where it was deposited as network of calcite stock work veins, lining fractures and voids, overlying the collapse breccias. Descending, supergene fluids were also focused along the developing hydrothermal karst system forming karst sediment supported breccias and graded karst sediment up to a metre thick along the bottom of caverns. Alteration of the host rocks is minimal and sulphide content is low. Gold, arsenopyrite, realgar, orpiment, sulphide, pyrite, and calcite are deposited along fractures and as matrix fillings. Higher gold values are spatially related to the intrusive breccia. The mineralized structures are strongly oxidized throughout the depth of drilling, except for minor unoxidized intervals in which the primary mineralization is preserved.

AIM

At AIM, late stage gold-arsenic mineralization overprints skarn zones and extends into the surrounding marbles of the San Juan Formation. Skarn hosted mineralization comprised of chalcopyrite, sphalerite, galena, pyrrhotite and

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pyrite was deposited as a retrograde event preceding the introduction of the gold-arsenic mineralization. Gold mineralization is intimately associated with fine grained marcasite that lines late fractures and forms the chief component to marble and skarn breccias matrices Brecciation and higher grade gold mineralization are localized along the W to NW trending marble–skarn contact and cross cutting E-W tensional structures. The rheological contrast between the brittle skarn and ductile marble is believed to have accommodated much of the movement during later wrench fault tectonics, forming localized E-W trending, tensional zones (i.e breccia zones) that extend tens of metres outboard into the marble and skarn from the contact.

QDDLW

At QDDLW, the predominant gangue mineral is calcite, followed by quartz, pyrite, iron oxides, feldspars and a small amount of realgar. The gold mineralization in the QDDLW area tends to transitionally occur and be contained in west to north-west trending subhorizontal tension gashes roughly located along the coarbonate/instrusive contract.

Drilling

Mincorp carried out core drilling at the AIM deposits between 1983 and 1988. They drilled a total of 127 holes totalling 1,475 metres from surface and underground workings. All subsequent drilling on the deposits has been carried out by MASA between 2000 and 2007. This included both core and reverse circulation drilling. Since November, 2004, Major Perforaciones S.A. has been contracted to carry out exploration diamond drilling utilizing a skid-mounted UG JKS Boyles B-20 core rig capable of drilling angle holes –90° to +45°.

From 2006 through 2007, EcoMinera Drilling of San Juan was used as the principal reverse circulation drill contractor, using a truck mounted Schramm drill rig. Down hole equipment consisted of a center sampling hammer, with a nominal 5 ¼ inch bit diameter and nominal 4 ½ inch drill rods. Seventeen RC holes (7,397 metres) were completed on the QDD deposit during this period. An additional 24 RC holes (2,760 metres) were drilled at AIM. Thirteen RC holes (5,450 metres) were completed on other targets.

Prior to May 2007, the exploration drilling programs were conducted under the direct supervision of Consulting Senior Geologists, Rick Diment of Whitehorse, Yukon and Consulting Geologist Jeff Dean of Reno, Nevada. On May 1, 2007, Walter Soechting was appointed MASA Exploration Manager and took over supervision of the ongoing programs. During the RC drilling a MASA rig geologist was on-site at all times while the drill was operating. The rig geologist was responsible for contractor supervision and hole logging. Both geological and geotechnical drill logs were completed for each hole. The geotechnical logs included drilling performance, drilling and sampling problems and rod changes that may affect sample quality. Changes in sample return rate, rate of depth penetration, loss of air pressure, etc. were also recorded to assist in defining major structures, voids, etc. The geologic logs followed standard MASA procedures established in earlier programs and included complete descriptions of geology, lithology, alteration and mineralization. This information was recorded in digital format and was incorporated into the digital drill database.

The drilling programs at QDD were successful in further delineating the extent and grade of gold mineralization in the QDDLW Zone. The mineralized widths reflected in the technical report are not true thicknesses but simply the length of the interval. The mineralized zones are highly irregular in shape and true thickness was not used as a factor in Mineral Resource estimation.

In terms of core drilling, between September 2006 and the end of 2007, a total of 42 core holes (15,190 metres) were completed at QDD while 67 (10,469 metres) were drilled at AIM. Eleven core holes (1,661 metres) were completed on other targets. Since the initial discovery of the QDDLW zone in June of 2006 and the end of 2008, MASA completed a total of 79 core holes totalling 26,881 metres.

Total drilling completed in October 2008 was of 6,157 metres, including 2,956 metres of core holes and 3,201 metres of RC holes. A total of 2,708 metres of RC drilling were drilled at the Las Vacas project, and 493 metres in Cerro Diablo. The diamond drilling includes 816 metres drilled at the Quebrada Perdida regional target, and 2,140 metres of near-mine exploration drilling at Gualcamayo (1,608 metres of underground holes and 532 of surface drilling).

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Preliminary results from a Mineral Resource update performed on new infill data from QDDLW Mineral Resource is summarized below.

Outstanding drill exploration and drill intercepts from October 2008 relate to drill holes 08QD-560 (exploration hole aiming to the westward expansion of the QDDLW zone; 156.8 metres @ 2.74 grams per tonne of gold) drilled from UG2; 08QD-561 (7,7 metres @ 1.2 grams per tonne, 5.6 metres @ 1.4 grams per tonne and 11.1 @ 1.5 grams per tonne of gold) and 08QD-563 (27.9 @ 0.9 grams per tonne of gold) drilled from UG1; as well as RC hole 08QDR-564 (16 metres @ 4.3 grams per tonne, 18 metres @ 1.6, and 14 metres @ 1 grams per tonne of gold) drilled at Cerro Diablo. Two RC holes were drilled in this area in order to test the continuity of a deep seated, out of Mineral Resource intercept (hole 06QD-377, 80 metres @ 2 grams per tonne of gold).

See also “– Current Exploration and Development”.

Sampling and Analysis

Reverse Circulation Drilling

The RC holes were drilled with a 5 ¼ bit and the drill material was collected on 2 metre intervals using a dry cyclone system; 100% of the sample from the cyclone was collected using pre-labeled plastic bags. The total sample was weighed, and then two 50% splits were collected using a Gilson splitter with a large hopper to allow the total sample to be split at the same time. One of the two 50% splits was split in half again to produce two 25% splits (12-15 kilograms). The two 25% split samples were bagged in heavy-duty plastic bags with one split labeled by hole number and interval and the other labeled the same but with the addition of an “R” following the sample number. The “Original” split was sent to the primary lab and the other “Reject” split was stored on site. All samples were sealed with tamper-resistant plastic ties. Small (washed and unwashed) representative samples were taken from the 50% duplicate split samples and placed in plastic chip trays for detailed logging purposes.

In 2007, the 25% split was split in half again to obtain two, 12.5% splits (7-10 kilograms). One split was delivered to the lab and the other labelled with an “R” was stored at site.

Sample recoveries were calculated by weighing the cuttings from the entire sampled interval. The recoveries for the 2 metre intervals averaged 63 kilograms with an interquartile range from 58 to 70 kilograms. Chip trays were filled at the drill site and preserved for logging using the same protocol as previous drill programs.

Two rig duplicates were prepared for every 20th sample. One was submitted blind to the primary lab and the second to the check lab. A duplicate course lab reject was also prepared for every 20th sample and sent to the check lab. In addition, one blank was submitted per hole after a suspected mineralized interval.

Blind standards were introduced in 2005. The standards were derived from reverse circulation rig duplicate material from previously drilled holes at Gualcamayo which were prepared by Alex Stewart (Assayers) Argentina S.A. (“Alex Stewart”) in Mendoza and subjected to a “round robin” analysis by several labs to derive the statistics. The primary lab used was Alex Stewart and the check lab was ALS-Chemex in La Serena, Chile. In 2008 a set of 5 standards was purchased from Rocklabs Ltd. Standards are routinely submitted as blind pulps in the sample stream to the primary lab every 20th sample.

Since 2005, down hole surveys have been taken periodically using a single-shot instrument at approximately 50 metre intervals.

Core Drilling

Between January and September 2008, 49 diamond drill holes were completed on the QDDLW zone totalling 14,768 metres. HQ core size was used in order to achieve the best recovery and sample size. Some holes were reduced to NQ to achieve target depths. Core recovery was generally good averaging over 84% (median = 88%). The core was placed in standard wooden core boxes and transported to camp for logging and sampling. Most core holes were sampled at two metre intervals or at a change in geology. All core was photographed prior to logging and sampling.

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Geological and geotechnical logs were prepared for all holes. Upon completion of logging, the sample intervals were split on site with a conventional hydraulic splitter. Samples for assay were enclosed in plastic sample bags with a tamper-resistant seal.

In December 2004 the introduction of blind standards was started. The first set of site standards were derived from RC rig duplicate material from previously drilled holes at Gualcamayo which were prepared by Alex Stewart (Assayers) Argentina S.A. in Mendoza and subjected to a “round robin” analysis by several labs to derive the statistics. The standards were submitted as blind pulps in the sample stream to the primary lab every 20^th sample. Three standard values were used: low (620 & 500 ppb gold), medium (1280 & 1110 ppb gold), & high (2260 & 2760 ppb gold). A second batch of standards was developed in 2006 when all of the first set had been consumed. In 2008 a set of 5 standards was purchased from Rocklabs Ltd.

The primary lab used up to January 2008 was Alex Stewart (Assayers), Argentina S.A. and the check lab, ALS-Chemex in La Serena, Chile. In January 2008 the primary lab was changed to ACME Analytical Laboratories in Santiago, Chile. The check lab was changed to ALS Chemex (Santiago).

Down hole surveys were taken using a single-shot instrument at 10 metres below surface and at approximately 50 metre thereafter. Changes in azimuth and inclination were less than 5 degrees per 100 metres. Inclinations showed a marked tendency to steepen, particularly those drilled at flat or positive angles. The average rate was around 1° per 100 metres. Azimuths showed no particular bias to the right or left.

Continuous saw-cut channel samples were collected along the underground exploration decline and crosscut in late 2007 and early 2008. Sample widths ranged from 1.1 to 3.1 metres and averaged just under 2 metres. Tarps were laid out along the channel line to ensure all material, including fines, were collected. All samples were bagged and sealed with tamper-resistant seals for shipping. Channel samples were collected into the exploration tunnel, which is implaced into the mineralized zone, so there are not any factors that could materially impact the accuracy and reliability of the results, or sample quality.

Security of Samples

All drill samples are transported from the drill sites to camp via truck and are stored at the camp site in an enclosed, secure warehouse. These tasks were performed and controlled by Yamana employees. They are then either shipped directly to the ALS-Chemex or Alex Stewart preparation facility in Mendoza via a commercial truck arranged through the lab. Samples are packaged in large, durable woven plastic sacks with tamper-resistant plastic ties. A list of samples and sacks were prepared for each shipment and verified at the laboratory as part of the chain of custody. Both labs are certified by the ISO 9001.

All samples are prepared and analyzed for gold and 39 element ICP suite using standard fire assay/AA finish sample prep and assay procedures. Lab sample preparation procedures include: dry samples; coarse crush (70% passing 2 millimetres); split 250 gm for pulp; and fine pulverize split to 85% passing 75 microns.

All preliminary analytical data is emailed from the laboratory to the MASA San Juan office. Final assays certificates are e-mailed in PDF format.

Following database compilation of the drill results, an assay report of all 2006-2008 holes was manually checked against the original hard copy assay certificate by MASA personnel in the San Juan office. Comparison of check assays against originals and blank monitoring occurs immediately after assays are received from the commercial labs. Industry standard confidence levels for check vs. original and blank assay variability are secured before Mineral Resource/Mineral Reserve estimates or news releases containing drill hole assay data are released to the public.

Additional validation checks were performed when the data was imported to Surpac software for modeling. This included detection of overlapping intervals and any inconsistencies between survey and sample depths. Visual checks were also used to check for errors in downhole surveys.

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Mineral Reserves and Mineral Resources

See “– Mineral Projects – Summary of Mineral Reserve and Mineral Resource Estimates”.

The Mineral Resources are influenced by the various factors including metallurgy recoveries, the mining methods (selectivity, recovery and dilution) and the infrastructure. The challenge of mining is to optimize these factors. Yamana has achieved high standard of metallurgical recovery, maintaining ranges over 80%, and continues to perform tests designed to raise these values, especially in the ore from the AIM deposit. All Mineral Resource models have been completed by Ronald G. Simpson of GeoSim, an external consultant to the Company. For the optimization of Mineral Reserves the software Whittle was used and later the pits were designed in MineSight software. For the planning, dynamic spreadsheets were used. In regards to the selectivity of the mining methods, two alternative approaches to mining the QDDLW deposit were considered, while both mining methods are feasible to be applied at QDDLW deposit, the Company has elected to proceed with front caving mining as it is expected to provide significantly improved returns, allow for the expansion of Mineral Resources and better address geotechnical constraints. The infrastructure that Gualcamayo currently has is standard and has been design with very high safety factors. The negative impact that these factors will have on the current Mineral Resources in Gualcamayo is very low.

Mining Operations

Mining Method and Metallurgical Process

A number of testwork programs have been developed to determine the metallurgical character in the QDD, AIM and QDDLW deposits and to optimize the process flowsheets for each.

The QDD open pit and plant flowsheet designs are based on the results of comprehensive crushing and metallurgical testwork performed by Research Development Inc. (“Rdi”), University of San Juan (“UNSJ”), and other laboratories.

The crushing circuit designed during the detailed engineering phase for the Gualcamayo Mine includes primary, secondary and tertiary crushing. The tonnage and feed grades used were from the updated mining model based on 2006 geological exploration data. The recovery rate of 80% is based on the Rdi/UNSJ testwork.

The process plant for Gualcamayo typically operates at a throughput of approximately 1,100 tonnes per hour (7,600,000 tonnes per year based on 80% availability) however the equipment in the circuit has been designed for a maximum throughput of 1,250 tonnes per hour to allow for campaigning of AIM and QDDLW ore through the process plant during the mine life.

QDD Upper:

The QDD deposit is located in an area of rugged topography. Natural slopes in most of the mining areas are greater than 40°, and in some areas exceed 80°. The highest elevation of the mine is 2,670 metres and the lowest elevation 1,940 metres.

The blocks in the block model are 10 metres high x 10 metres wide x 10 metres long. At bench scale, the shape and form of mineralization is unknown. Each block is modelled as either ore or waste. The block size matches the bench height of 10 metres. Internal dilution is included in the block model. External dilution occurring due to geometrical and interburden factors was calculated.

The production schedule was developed based on final pit design. To maximize the net present value of the project, mining of high-grade ore and deferral of waste is scheduled in the first years of operation. The production schedule is based on a production rate of 7.6 million tonnes per year for the QDD open pit and is based on the mine plan developed for the feasibility report. This indicates a Mineral Reserve of approximately 1.4 million ounces of recoverable gold over a 10-year mine life.

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QDD Lower West (QDDLW):

The feasibility study was upgraded with basic engineering by Metálica during 2010. For the desired production rate for the project (5,000 tpd or 1.8 Mtpy), the only method seen as potentially applicable is Sublevel Stopping (“SLS”); any other method, would mean significantly lower production. The information available today indicates the technical viability of its application between elevations 1,800 and 1,900 metres above sea level.

A significant risk identified for the SLS method, and consequently large scale production at QDDLW, is the application of mass blasting. The production plan indicates that the last three years of ore deposit mining will be conducted entirely by mass blasting.

Metálica has previous experience with mass blasting in Chilean mining operations, specifically in the El Soldado and Santos Mines. Although Metálica anticipates positive results for mass blasting methods planned at QDDLW, mass blasting remains one of the most challenging aspects of recovering the QDDLW Mineral Reserves.

The QDDLW ore body is approximately 150 metres below the open pit operations. There is also a risk that underground mining could cause a subsidence crater within the pit.

The following table shows the Mineral Reserves estimated for QDDLW as of the date of the Gualcamayo Report:

Consolidated Mineral Reserves	Au Cut-Off g/t	Proven			Probable			Proven&Probable
		Tonnes	Grade Au	Contained	Tonnes	Grade Au	Contained	Tonnes	Grade Au	Contained
		t	g/t	Oz	t	g/t	Oz	t	g/t	oz
QDD Lower	1.00	1,214,708	2.63	102,687	9,542,354	2.12	651,255	10,757,062	2.18	753,948

QDD Lower UG feasibility study project was updated to include a geometallurgic model, new mine access location, and new geological model using 2009-2010 infill drilling.

In the base case with the current Mineral Reserves, production is forecast at 492,400 ounces of gold over 7.5 years at an average cash cost of $372/oz, generating an after tax net present value, at a 5% discount rate, of $63.1 million and an internal rate of return of 20%.

Among the economic risks of the project are the control of capital expenditures, and the accomplishment of deadlines for implementing the project.

More important technical risks include potential problems due to the complexity of the lay out and mining method. The project will require a high level of technical management. Decrease of metallurgical recovery in depth may be an important issue for the mine deepening.

AIM:

The feasibility study for AIM was prepared by Metálica under supervision of MASA (Yamana’s wholly owned Argentina subsidiary).

The gold-bearing mineralized zones for the AIM deposit is primarily sulphide-bearing skarn, breccia and marble containing minor copper, zinc and molybdenum with late stage gold-arsenic mineralization.

The skarn contains minor chalcopyrite, sphalerite, galena, pyrrhotite, and pyrite that preceded the introduction of the gold-arsenic mineralization. The gold mineralization extends beyond the skarn into the surrounding marbles.

Historical metallurgical testwork performed prior to May 2007 is described in the 2007 technical report on the Gualcamayo Mine by Wardrop Engineering.

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To support the metallurgical test of AIM, Yamana retained an external consultant to compile the results of metallurgical studies conducted to this point. The key conclusions of this study is that the ore:

• contains 12% free gold;

• is 84% associated with sulphides; and

• 4% of the gold is occluded in waste rock.

The complex mineralogy and fine particle grain size of the gold will adversely affect the cyanidation extraction of the gold from this material.

For Mineral Reserve estimation purposes it is assumed that recovery is 45% with cyanide consumption of 1.5 kilograms per tonne and 8 kilograms of lime consumption per tonne.

In the case of mixed ores, it is assumed that gold recovery is 65%, with cyanide consumption of 750 grams per tonne and 2 kilograms of lime consumption per tonne.

For oxidized ore alone, it is assumed that gold recovery is 80%, with cyanide consumption of 500 grams per tonne and 1.5 kilograms of lime consumption per tonne.

The definition of the final pit optimization and the mining sequence for the AIM bodies was calculated by Metálica using Whittle Four-X, based on the technical and economical parameters that will be described in the following sections. It is necessary to highlight that, for the determination of the final pit, only the Measured and Indicated Mineral Resources have been used, treating the Inferred Mineral Resources as waste.

Table below shows the total diluted Proven and Probable Mineral Reserves of AIM deposits as of the date of the Gualcamayo Report. See also “– Current Exploration and Development”.

AIM Mineral Reserves

Pit	Au Cut-Off g/t	Proven			Probable			Proven&Probable
		Tonnes	Grade Au	Contained	Tonnes	Grade Au	Contained	Tonnes	Grade Au	Contained
		t	g/t	oz	t	g/t	oz	t	g/t	oz
Amelia Inés	0.18	200,550	2.02	13,023	1,710,450	2.08	114,227	1,911,000	2.07	127,251
Magdalena	0.18	218,400	1.68	11,812	2,734,200	1.70	148,972	2,952,600	1.69	160,783
Total	0.18	418,950	1.84	24,835	4,444,650	1.84	263,199	4,863,600	1.84	288,034

Markets

The final product of the Gualcamayo Mine is gold doré in the form of bullion, suitable for direct melting and sampling. Gualcamayo’s bullion contains approximately 80-90% of gold, the balance being base metals. 100% of the bullion production is exported from Argentina, shipped by ground transportation and air freight for final refining overseas. The doré will be shipped in the form of bars weighing 15-30 kilograms from San Juan, by airfreight departing from Mendoza International Airport.

Sales Contracts

The exportation of the material from QDD upper commenced in the second quarter 2009. Yamana sells all materials at market rates. Yamana continues to review settlement options with respect to selling the material to a refiner or crediting the outcome of the refining process to a metal account in order to sell materials to third parties, such as bullion dealers.

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Environmental Considerations

A conceptual closure plan was developed for the Gualcamayo Mine, and was submitted as part of the Environmental Impact Assessment document. This plan considers both temporary (for example, in the case of depressed gold prices), and definitive closure scenarios.

Once operations cease, closure activities, including demolition and dismantling, remediation, and leach pad chemical and physical stabilization are expected to be completed within two years. Environmental and geotechnical monitoring would continue on a reduced schedule for an additional four years until final closure.

In the Environmental Impact Assessment, the company has committed to refining and updating the closure plan throughout the project life, and to submitting a final closure plan to the mining authority two years prior to the anticipated definitive closure date.

Taxes

There is an export retention tax of 5% payable on the value of doré exported. In addition, an income tax rate of 35% is applicable in the case of companies residing in the country, upon their net taxable income. Net taxable income is calculated based on the net accounting profit, less tax special deductions, such as those for exploration and development expenses and accelerated depreciation of infrastructure in the first three year. Due to these special deductions, MASA conservatively estimates that there is no tax payable in the first three years of operation.

Capital cost estimates were not included in the Block Model. Personal asset tax (equity tax) was considered upon the net assets of the company, and is calculated to be 0.5% of the net accounting equity. Value added tax (generally a 21% upon the net price of goods and services purchased) is payable at the moment of the purchase or importation, generating a tax credit that can be recovered when the exportation commences. Value added tax was not modelled but the potential effect needs to be considered as there might be a negative impact (due to immobilization finance costs during construction phase) in the internal rate of return calculation.

Mine Life

Based on the information set out below under the heading, “– Current Exploration and Development”, the estimated mine life at the Gualcamayo Mine, as based on Proven Mineral Reserves and Probable Mineral Reserves, will extend to 2020.

Current Exploration and Development

In 2013, the Gualcamayo Mine produced 120,337 ounces of gold compared with 147,310 ounces produced in 2012.  Lower production was the result of lower recovery, partly offset by improved feed grade.  2013 was a transition year for the Gualcamayo Mine as the mine’s operations transitioned from the depleted QDD Main Phase II to the new Phase III. This transition resulted in a decline of ore processed as compared to 2012.  Production commenced in the transition to Phase III and ramp up continued through year end.

Gold Mineral Reserves were 1.4 million gold ounces contained in 32.2 million tonnes at an average grade of 1.33 grams per tonne.

In 2013, Mineral Reserves at the Gualcamayo Mine decreased by 690,000 ounces due to depletion, revision of planned mining techniques, and associated higher mining costs. Measured Mineral Resources and Indicated Mineral Resources of gold were 94.8 million tonnes containing 3.1 million ounces at 1.01 grams per tonne and Inferred Mineral Resources of gold were 30.4 million tonnes containing 2.0 million ounces at 2.08 grams per tonne. During 2013, the construction of the infrastructure of underground deposit was completed with more than 11,000 metres of tunnel advance in the QDD Lower West body. Engineering of exploitation was redesigned for optimization of the methodology.

In 2013, exploration focused on defining and expanding the Rodado breccia, a new zone southwest of QDDLW discovered in 2011. This contributed to the 163% increase in measured mineral resources and indicated mineral resources

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and 268% increase in inferred mineral resources year-over-year. A significant amount of the resource at Gualcamayo is within the Rodado breccia and QDDLW, and given the current size of the sulphide portion of these two zones the Company is undertaking a study for recovery of gold from sulphide ore. A large portion of the reduction of reserves was from the reclassification of underground ore, which is also being included for evaluation as part of the sulphide study.

• Gold mineral reserves of 32.2 million tonnes at 1.33 grams per tonne containing 1.4 million gold ounces.

• Gold mineral resources of 94.8 million tonnes at 1.01 grams per tonne containing 3.1million gold ounces.

• Inferred gold mineral resources of 30.4 million tonnes at 2.08 grams per tonne containing 2.0 million gold ounces.

Underground development of QDDLW was largely completed in the third quarter of 2013 and commenced to contribute ore in the fourth quarter. 

The metallurgy of ore from AIM and QDDLW requires longer leaching cycles and will result in lower recoveries.  Investments targeting the improvement of recoveries are planned for 2014.  These investments include improvements to the plant including the addition of filters and an increase in the capacity of carbon columns.

The Company continues to have exploration success growing the sulphide resource at QDDLW. As the sulphide portion of the orebody grows, the Company is continuing to progress with a conceptual study of the options for processing these newly discovered ounces.

Jacobina Mining Complex

Unless otherwise stated, the information, tables and figures that follow relating to the JMC are derived from, and in some instances are extracts from, the technical report entitled “Technical Report on the Jacobina Mine Complex, Bahia State, Brazil” dated February 28, 2014 (the “Jacobina Report”), prepared by or under the supervision of (the “Jacobina Qualified Persons”) Normand Lecuyer, P.Eng., and Chester M. Moore, P.Eng., of RPA. The technical information contained in this section of the annual information form, other than the technical information set forth under the heading “– Current Exploration and Development”, has been reviewed and approved by the Jacobina Qualified Persons, each of whom is a “qualified person” for the purpose of NI 43-101. See “Interests of Experts”.

Portions of the following information are based on assumptions, qualifications and procedures which are not fully described herein. Reference should be made to the full text of the Jacobina Report, which has been filed with certain Canadian securities regulatory authorities pursuant to NI 43-101 and is available for review on the Company’s SEDAR profile at www.sedar.com.

Property Description and Location

The Jacobina property is located in the state of Bahia in northeastern Brazil approximately 340 kilometres northwest of the city of Salvador. Salvador, the state capital of Bahia, has a population of 2.9 million.

The JMC forms a contiguous elongated rectangle extending 155 kilometres in a north-south direction, and varying from 5.0 to 25 kilometres in width. This shape of the claim package is a reflection of the underlying geology with the gold-mineralized host rocks trending along the north-south axis of the property. The property is comprised of 5,996 hectares of mining concessions, a mining claim covering 650 hectares, and 113,546 hectares of exploration permits and claims. The exploration concessions are renewable on a three year basis and have annual fees ranging from $1.00 to $1.55 per hectare.

A significant portion of three of the Jacobina mine concessions are located within the boundary of Parque Sete Passagens or the park buffer zone. Mining is not permitted within the park but the JMC has valid mining concessions issued by the Departamento Nacional de Produção Mineral (“DNPM”) and the JMC is currently negotiating for access into the park with state government and park officials.

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On April 5, 2006, Yamana acquired the JMC and exploration projects in the Bahia gold belt through its acquisition of all of the outstanding shares of Desert Sun Mining Corp. (“DSM”). The project is owned through Yamana’s wholly-owned subsidiary, Jacobina Mineração e Comércio Ltda. Jacobina does not pay royalties.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

Access to the property from Salvador is via paved secondary highway to the town of Jacobina approximately 330 kilometres north-northwest. Well-maintained paved roads from the town provide access to the JMC as well as the Pindobaçu deposit.

The town of Jacobina is a regional agricultural centre. It provides all the accommodation, shopping and social amenities necessary for the mine’s labour force. Telephone and high speed internet services are available in the town of Jacobina.

The JMC is located in a region of sub-tropical, semi-arid climate with generally flat to low rolling hills at an elevation of approximately 500 metres. The immediate area around Jacobina consists of steep-sided ridges rising to 1,200 metres produced by the resistive quartzites, metaconglomerates, and schists of the Paleoproterozoic Jacobina group. Precipitation at Jacobina is somewhat higher than the regional average, likely due to the mountain range which hosts the deposits. Average annual precipitation is 84 centimetres with the May to October period being somewhat drier than the rest of the year. Temperatures vary little throughout the year. July is the coldest month with average daytime highs of 26ºC and nightly lows of 17ºC. February is the warmest month with average daily highs of 32ºC and nightly lows of 20ºC.

The JMC has all the necessary environmental licences to operate the project. The JMC has many active programs to cover all aspects of the environment in and around the mine complex, including an Environmental Control and Monitoring Plan, a Water Balance and Use program, a Recovery Plan for Degraded Areas, and a Solid Residue Management Program. The JMC also carries out several environmental initiatives such as environmental education, environmental emergency brigade, management of all legal requirements, and maintenance of certifications such as ISO 14001 and ICMC. At the time of the RPA site visit, the JMC and associated companies were involved in 18 environmental infractions with the federal and municipal governments. The infractions generally involved tailings spills or leaks, dust and noise complaints from nearby residents, and compliance with environmental standards in the operations. The JMC is actively working to resolve these issues.

History

The Serra do Jacobina Mountains have been mined for gold since the late 17^th century. Numerous old workings (garimpos) from artisanal miners (garimpeiros) can be seen along a 15 kilometres strike length, following the ridges of the mountain chain.

The modern history of the Jacobina mining camp began in the early 1970s with extensive geological studies and exploration carried out by Anglo American Corporation. The feasibility study recommended that a mine be developed at Itapicurú (now covered by the Morro do Vento area) with an initial plant capacity of 20,000 tonnes per month. Development of the Itapicurú mine to access the Main Reef commenced in October 1980 and the processing plant was commissioned in November 1982. The first full year of operation was 1983.

From 1984 to 1987, exploration focused on evaluating the mineralized conglomerates of the João Belo Norte Hill, located about two kilometres south of the Itapicurú mine. This work outlined sufficient Mineral Reserves to warrant an open pit operation, development of which commenced in August 1989. Concurrently, the processing plant capacity was increased. Underground development at João Belo commenced in 1990, as open pit Mineral Reserves were limited.

William Resources Inc. (“William Resources”) acquired 100% of the Jacobina gold mine and assumed management effective August 1, 1996. William Resources operated the João Belo and Itapicurú mines from August 1996 until December 1998 when the mines were closed due to depressed gold prices and the strong Brazilian currency. From 1983 to 1998, the JMC processed 7.96 million tonnes of ore at a recovered grade of 2.62 grams of gold per tonne

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to produce approximately 670,000 ounces of gold. The bulk of historic production came from the Itapicurú (Morro do Vento and Morro do Vento extension) and João Belo areas.

In September 2003, DSM completed the required exploration expenditures to earn a 51% interest in the JMC and then exercised its option to acquire the remaining 49% interest of the company which owned the mineral rights, mines, and a 4,000 tpd plant located on the Jacobina property. DSM had initiated exploration in the JMC area in the fall of 2002 and this program was substantially expanded in September 2003. The original property holdings which extended approximately 62 kilometres along strike were expanded considerably so that the current property covers a strike length of 155 kilometres.

Reactivation of the João Belo mine started in April 2004 and ore extraction began in July 2004. The cost of the capital project, including development of the João Belo mine, refurbishment of the mill facilities and the purchase of all machinery, equipment, and vehicles, was approximately $37 million. DSM poured the first gold bar at the João Belo mine in March 2005 and declared commercial production effective July 1, 2005.

DSM started work in August 2005 on the 720 Level access portal for Morro do Vento and slashing the access adit. In November 2005, DSM reported that total ore mined in the third quarter ended September 30, 2005, was 340,913 tonnes and ore milled was 300,505 tonnes at an average grade of 2.03 grams per tonne gold. Gold production was 18,683 ounces at an average cash cost of $292 per ounce. The average recovery rate at the mill was 95.4%.

Yamana acquired Jacobina when it completed the purchase of DSM in April 2006.

In 2008, Yamana completed a plant expansion to increase throughput to over 6,000 tpd. Further expansion allows Yamana to process ore at a rate of 6,500 tpd at the current time.

In the 31 year period from 1983 to the end of 2013, Jacobina has produced 22,699,417 tonnes grading 2.14 grams per tonne gold resulting in a total of 1,515,756 ounces of gold produced.

Geological Setting

In terms of regional geology, the Precambrian terrains of the northeastern part of the São Francisco Craton, in the state of Bahia, show evidence of a prolonged terrain accretion history. The three major Archean crustal units, the Gavião, Serrinha and Jequié blocks, underwent several episodes of tectonism that culminated in a continental-continental collision during the Paleoproterozoic, when the consolidation of the craton took place along a main orogenic belt named the Salvador-Curaçá mobile belt. A prominent zone of crustal weakness within this portion of the craton is the Contendas-Jacobina lineament, a 500 kilometre long and approximately north-trending suture zone, located close to the eastern margin of the Gavião block. A re-activation of the Contendas-Jacobina lineament during the Paleoproterozoic, prior to, and during the continental collision, gave rise to a continental margin rift-type basin where the siliciclastic sediments of the Jacobina rift were deposited.

In terms of property geology, the Bahia Gold belt occupies most of the Jacobina range, where quartzites, metaconglomerates and schists of the Paleoproterozoic Jacobina group constitute a series of north-south, elongated, mountain ranges that rise up to 1,200 metres above sea-level. The deep and longitudinal valleys, bordering the mountains, correspond to deeply weathered ultramafic sills and dikes. The east-west oriented valleys represent weathered mafic to intermediate dikes. Archean tonalitic, trondhjemitic and granodioritic gneiss-dominated basement and related remnants of supracrustal rocks, grouped as the Mairi complex, are found on both flat to slightly hilly areas east of the Jacobina range. At its eastern border and also in a flat landscape, there are the fine-grained biotite gneisses of the Archean Saúde complex. The transition between the hilly and the scarped domains of the eastern border corresponds to the exposures of the Archean Mundo Novo Greenstone Belt (“MNGB”). The Pindobaçu geology is composed by two main tectonic domains: the MNGB, which is the host envelope; and the Jacobina group. The Archean MNGB is composed, from east to west, by an association of metabasalts, graphite-rich schist with hydrothermal pyrite, banded iron formation, meta-chert and meta-greywacke intercalated with conglomerates. The Jacobina group is represented by the Serra da Paciência formation. This formation is characterized, from east to west, by fine to very coarse, grey to green quartzite; laminated fuchsite-sericite-rich quartzite, pyrite-hematite-fuchsite silicified quartzite with tourmaline; and association between sericite meta-conglomerate and recrystallized fuchsite quartzite.

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Exploration

Previous regional exploration initiatives included geological mapping and an airborne geophysical survey. Most surface and underground exploration at Jacobina is carried out using diamond drilling. To the end of December 2013, the JMC reports some 519,750 metres of surface and underground drilling has been completed in the immediate JMC area. This total consists of 3,958 underground drill holes (277,568 metres) and 746 surface drill holes (242,183 metres). Drilling at Canavieiras and Morro do Vento in 2013 returned several significant intersections which extend the mineralization and increase the resources in those areas.

See also “– Current Exploration and Development”.

Mineralization

The Jacobina group hosts four different major types of gold deposits: (i) conglomerate-hosted; (ii) quartzite, andalusite schist and metaconglomerate-hosted; (iii) ultramafic-hosted; and (iv) mafic/intermediate dike hosted. The characteristics of each of these principal types of gold deposits are described as follows:

Conglomerate-hosted Gold Deposits:

These deposits comprise sheared and micro-fractured, gold-bearing, recrystallized, silicified, and pyritic metaconglomerates with a greenish, fuchsite matrix, of the Serra do Córrego formation. These rocks often show overprints of hematite coatings along shear-plane, joint, and fracture surfaces, which post-date gold-mineralized fabrics. The best examples of this group are found within the 40 kilometres long Jacobina gold district (Canavieiras, Itapicurú Morro do Vento and Morro do Vento Extension, and João Belo mines, Serra Branca and other minor occurrences), which extends from Campo Limpo, in the south, to Santa Cruz do Coqueiro, in the north.

Quartzite, Andalusite Schist and Metaconglomerate-hosted Gold Deposits:

This group encompasses gold-bearing quartz veins and veinlets, which fill tension gashes and open fractures, related to semi-concordant shear zones hosted by quartzites and andalusite-graphite-quartz schist, and local metaconglomerates of the Rio do Ouro and Serra da Paciência formations (e.g., Goela da Ema, Biquinha, Cercadinho and Guardanapo gold workings). The main hydrothermal alterations associated with these are: silicification, sericitization, chloritization, and pyritization, with minor chalcopyrite and tourmaline. The gold-bearing quartz vein and veinlets deposited along shallow-angle, west-dipping shear zones, hosted by Rio do Ouro quartzites, are also included in this group, but it is emphasized that according to their specific positioning (situated in the west block of the Maravilhas fault and positioned at nearly 90 degrees to the bedding of the quartzites), they are thought to represent vertical shear zones developed before tilting of the Jacobina group. The best examples of this group are: Coxo, Jaqueira, Maravilha and Lajedo gold workings. The main related hydrothermal alterations for this group are: silicification, sericitization, chloritization, pyritization (locally with chalcopyrite), and local tourmalinization.

Ultramafic-hosted Gold Deposits:

These deposits comprise narrow, up to four metres thick, shear zones developed in north-south oriented ultramafic sills and dikes, close to their footwall and hangingwall contacts with the hosting quartzites and metaconglomerates of the Serra do Córrego, Rio do Ouro, and Serra da Paciência formations. The mineralized shear zones are characterized by the development of gold-bearing quartz veins and/or stockworks. The main hydrothermal alteration types are: silicification, fuchsitization, pyritization, and sericitization, with local tourmalinization. A number of examples of this group are known at the mine sites and surrounding areas (Canavieiras, Itapicurú, Serra do Córrego, Morro do Vento and João Belo), and at the Serra da Paciência (Mina Velha, Várzea Comprida, Ciquenta e Um, Cabeça de Nego and Milagres gold workings), in the north.

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Mafic/Intermediate Dike-hosted Gold Deposits:

This type is the last developed, and least important, group of gold mineralization within the Jacobina area. It consists of gold-bearing quartz veins in tension gashes, with local pyrite remobilization, close to the contacts between late-tectonic gabbroic and dioritic dikes and metaconglomerates and quartzites of the Serra do Córrego and Rio do Ouro formations. The dikes are emplaced along east-west and northwest-southeast-oriented fractures and faults. Pyrite is concentrated along the contact zone with hosting metasediments, where a hornfels texture is developed in the gabbroic or dioritic rocks.

Drilling

The procedures currently used during the diamond drilling programs are as follows:

• The collar locations of all drill holes are marked by the JMC survey crews prior to drilling and the collars are surveyed after the completion of the drilling.

• A Reflex Gyro survey instrument is used to provide control information on the directional deviation (both azimuth and inclination) at three metre intervals in each hole.

• Lithologic logging is done on drill core and geotechnical observations are made by company geologists, depicting all down-hole data including assay values. All information is digitally recorded on paper forms or using Gemcom Logger software. This includes recording:

• Lithologic contacts

• Descriptive geology

• Recording of heavy mineral and sulphide content

• Intensity of various alteration types

• Structural features, such as fracture and fault zones

• Core angles

• Core diameter

• Down hole inclination

• Core recovery record

• Rock quality designation measurements

See also “– Current Exploration and Development”.

Sampling and Analysis

Sample preparation and assays are carried out at the JMC laboratory. The mine laboratory analyzes samples from channel samples and production and exploration drilling. The laboratory also handles samples for process control in the plant as well as for environmental monitoring.

The procedures followed by the mine laboratory for sample preparation and assaying are detailed in the Jacobina Report.

Yamana and the JMC use certified reference materials (standards), blanks, core duplicate samples and coarse crush duplicates with drill hole core sample submissions, to monitor the precision, accuracy and quality of the laboratory process. Protocols are in place for describing the frequency and type of QA/QC submission, the regularity of analysis of QA/QC results, failure limits, procedures to be followed in case of failure, or for flagging failures in the QA/QC database.

Yamana inserts one standard for every 30 samples submitted to the JMC laboratory and mine geology inserts one standard for every 60 samples submitted to the JMC laboratory. Standards of low, medium, and high gold grades are supplied in pre-packaged bags purchased from Geostats Sample and Assay Monitoring Service (“Geostats”) in Australia. The JMC mine geology submitted 1,104 standard samples between October 2012 and October 2013. The overall failure rate of 11% essentially meets the target of 10% standard failures, which are greater than plus or minus two standard deviations.

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Blank samples are composed of siliceous material, which is known to contain gold grades that are less than the detection limit of the analytical method in use. Yamana and the JMC procedures require submission of three blank samples for every 100 samples submitted to the laboratory. The JMC mine geology submitted 1,793 blank samples between October 2012 and October 2013. There were only 18 samples (1.0% of total) which returned results greater than five times the detection limit (five times 0.005 parts per million gold).

Yamana procedure requires a submission of one coarse crush duplicate for every 20 samples. Between October 2012 and October 2013, 2,517 coarse crush duplicate samples from drill core were analyzed for gold. The average grade of all the original samples was essentially identical to the coarse crush duplicate samples (0.642 versus 0.649 grams per tonne gold).

Selected pulp samples are sent by the JMC laboratory on a monthly basis to SGS Geosol Lab Ltda in Goiânia and Acme Analytical Laboratories Limited (“Acme Analytical”) in Belo Horizonte for re-analysis. Mean differences for checked samples between January and October 2013 returned an averaged mean difference of -2.40% with SGS and -1.93% with Acme Analytical for this period.

As noted in the Jacobina Report, RPA is of the opinion that the sample preparation and assay procedures used for the channel and drill core samples are in keeping with industry standards.

Security of Samples

Samples are handled only by personnel authorized by the JMC. All drill core from surface and underground drill holes are delivered directly to drill logging and sampling areas within the secured and guarded mine property by authorized mine or exploration personnel. The mineralized core intervals are logged and sampled and the samples are delivered directly to the mine laboratory. Channel samples from the underground workings are also delivered directly to the mine laboratory.

Each sample is assigned a unique sample number that allows it to be traced through the sampling and analytical procedures and for validation against the original sample site. The second half of split exploration core is stored on-site as a control sample, available for review and re-sampling if required.

Based on RPA’s review and discussions with Jacobina personnel, RPA is of the opinion that sample security procedures at the JMC are in keeping with industry standards.

Mineral Resources and Mineral Reserves

See “– Mineral Projects – Summary of Mineral Reserve and Mineral Resource Estimates”.

The methodology of estimating Mineral Resources by the JMC and Yamana staff includes: (a) statistical analysis and variography of gold values in the assay database; (b) construction of a block model using Vulcan software; and (c) grade interpolation using a kriging or inverse distance method. A small amount of the Mineral Resource estimates in the older parts of the mines or in outlying areas have been estimated in the past using a longitudinal section polygonal methodology and have not yet been converted to block model estimates.

Validation of the block models by Yamana included: (a) on screen displays of plans and sections showing composite and block grades; and (b) drift analysis calculated over “slices” along the strike of each zone. For these analyses, the kriged mean grades were compared with the original sample mean grades.

Mining and Milling Operations

The mining methods used at the JMC are the sub-level longhole stoping and the cut and fill methods. For the longhole stopes, production drill holes vary in size from 87.5 to 112.5 millimetres and are drilled using four types of fan drills. For the most part, drill holes are kept within a length of 20 metres which helps control deviation. The cut and fill method is predominantly used on the Canavieiras Sul portion of the Canavieiras mine. After cross-cutting to the ore zone, an initial cut is driven on the zone and through to a ventilation raise. Cut outs on the ore are driven on 30

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metre centres, where production drilling will take place later in the process. As development progresses, ground control in the form of rock bolts and cable bolts is installed on a systematic pattern. Once the initial cut is completed, the second cut is driven overhead using breasting holes that break downwards onto the backfilled primary cut. Mucking of the stopes is carried out using load-haul-dump units with a capacity of 11 to 17 tonnes which load mine trucks with 25 to 40 tonne capacity.

The metallurgical process at the JMC involves the following activities: grinding of the ROM material into a pulp, leaching the pulp in a conventional cyanide leaching process and then gold extraction of the enriched solution in a carbon-in-pulp (“CIP”) circuit.

The run-of-mine material is trucked to the crushing facilities located adjacent to the processing plant. The broken ore is passed through a grizzly (80% less than 180 millimetres) and fed to the jaw crusher with a capacity of 800 tonnes per hour. The coarsely crushed material is then passed through secondary and tertiary cone crushers with a capacity of approximately 600 tonnes per hour. The secondary crusher reduces the size of the feed to 80% less than 100 millimetres and the tertiary crusher further reduces the feed to 80% less than 25 millimetres. The product of the crushers is fed to two storage silos and then into two ball mills where the material is ground to 80% less than 13 millimetres. The No. 1 mill has dimensions of 3.66 by 6.71 metres and is powered by a 1,342 kilowatt motor and the No. 2 mill has dimensions of 4.57 by 9.14 metres is powered by a 2,500 kilowatt motor.

Part of the material from the grinding circuit is pumped to the thickener followed by the leach tanks. The leaching circuit consists of seven CIL tanks with a total capacity of 5,350 cubic metres. The pulp is next sent to the CIP circuit which is made up of six 180 cubic metres mechanically agitated CIP tanks. Part of the pulp stream containing the coarse gold is processed through Knelson concentrators and an Acacia reactor. It is estimated that 50% of the gold in the plant is handled by the concentrator/reactor combination.

The enriched carbon from the CIP circuit is removed and the gold is placed into solution. The pregnant solution from the CIP circuit and from the Acacia reactor is circulated through electrolytic cells and a doré bar is produced at the induction furnace. The doré bars have a nominal composition of 97% gold and 3% silver. The doré bars are transported by air to Sao Paulo for refining.

Total production in 2013 was 73,695 ounces of gold.

Markets

The principal commodity at Jacobina is freely traded, at prices that are widely known so that prospects for sale of any production are virtually assured. Yamana used a gold price of $950 per ounce for Mineral Reserve estimation.

Environmental Considerations

The Company has all of the necessary environmental permits to operate the JMC. The environmental liabilities include rehabilitation of the old João Belo open pit mine, the old stockpile areas and the tailings facility. Rehabilitation costs are included on an annual basis in the life of mine plan and total approximately $21 million by the time of mine closure.

The JMC and associated companies are involved in 18 environmental infractions with the federal and municipal governments. These minor infractions generally involved small tailings spills or leaks, dust and noise complaints from nearby residents, and compliance with environmental standards in the operations. The JMC is actively working to resolve these issues.

Mine Life

RPA notes that the LOM Plan presented in the Jacobina Report is based on production tonnes and grade and development requirements, as forecasted by Yamana. RPA has included additional allowances for equipment replacement and technical studies. The LOM Plan, which only considers production from Mineral Reserves as set out in the Jacobina Report, spans a total effective mine life of 11 years.

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Current Exploration and Development

Gold production at Jacobina was 73,695 ounces in 2013, compared with 116,863 ounces produced in 2012. The decrease in gold production resulted from a decrease in feed grade and lower tonnage processed due to delays in mine development and the availability of mining areas. An increase in development rates in 2014 and 2015 is expected to improve the tonnage mined and average ore grade processed.

Due to the depressed gold prices, no exploration diamond drilling was completed in 2013 and none is planned for 2014. Exploration activities consisted of updating of geological and resource models using new data from mine underground infill and extension programs.

Other Producing Mines

Minera Florida Mine

The Minera Florida Mine (also known as the Alhué Mine) is located within the coastal range in the metropolitan region of central Chile, approximately 75 kilometres Southwest of Santiago, near Melipilla City. The property consists of 166 mineral licences, covering a total area of approximately 15,600 hectares. Thirty-six mineral licences cover the mine property including the mine, mill, and other infrastructure. The property is partly owned and partly leased by Yamana, and the Pedro Valencia mine is also located within the property boundaries. Mining licences in and around the Pedro Valencia mine area are contained within a rectangular block (2.5 kilometres x 1.5 kilometres) comprising 33 licences. The property also includes some 133 mineral concessions in a large area around the mining licences.

The access to the property is by paved road. The total distance from Santiago is approximately 175 kilometres. Electric power is available from the Chilean grid and mining services and suppliers are available locally and in the region.

The area of the Alhué Mine is underlain by upper cretaceous volcanic and intrusive rocks. The volcanic rocks comprise porphyritic andesite, brecciated andesite, lithic and crystal tuff, and brecciated tuff. The bulk of these rocks are also affected by a sequence of hydrothermal alteration. The intrusive rocks comprise mainly granodiorites and monzodiorites.

Gold mineralization in the Alhué Mine area occurs as native gold and electrum associated with sulphide minerals, such as pyrite, chalcopyrite, sphalerite and galena, as well as magnetite. Mineralization is commonly associated with hydrothermal alteration including quartz, adularia, epidote, chlorite, and actinolite. Quartz occurs in four types; as grey siliceous zones, green quartz, translucent quartz, and white quartz. Some veins exhibit metal zoning, with a zinc-rich silver-rich zone in the upper part of the vein, a gold-rich zone in the central part, and a zinc-rich zone in the lower part of the vein.

In general, mineralized structures include an inner quartz vein (core) consisting of material exhibiting quartz flooding or massive quartz, surrounded by stockwork of quartz veinlets and/or hydrothermal breccia, both of which are mineralized. Gold mineralization in the Alhué Mine area has been identified in four types of rocks, in places adjacent to each other, as follows: (1) silicified crystal tuff; (2) lithic to crystal tuff; (3) brecciated tuff; and (4) porphyritic andesite.

There are at least nineteen mineralized veins discovered and partially developed in the Alhué Mine area. These veins range from 0.8 metres to 30 metres in thickness, and the average grade ranges from 1.5 grams per tonne of gold to 12 grams per tonne of gold, 6 grams per tonne of silver to 100 grams per tonne of silver, and 0.1% Zn to 1.81% Zn. Many of the mineralized veins at the Alhué Mine area do not have a surface expression, but are associated with structures identified by underground diamond drilling.

The Alhué Mine currently operates at a rate of approximately 2,200 tpd (830,000 tonnes per year). The underground workings are developed by adits driven from surface. An internal ramp system provides access to the stopes. Sublevel drill drifts are driven in narrow veins and mining has been advanced from the top down, with sill pillars left at regular intervals. Underground mining operations are mechanized, utilizing: articulated haul trucks;

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electronic hydraulic development and production jumbos; load-haul dumpers; and a number of ground support and service vehicles. Ore is hauled using 25-tonne trucks from the mine to a transfer point and 50-tonne trucks haul the ore from the transfer point to the process plant. Waste is transported by 25-tonne trucks.

Minera Florida’s mine life is contemplated to be approximately 4.5 years of production.

Minera Florida produced a total of 118,590 GEO in 2013, compared with 105,679 GEO in 2012. Increased production was mainly due to the new production from the tailings retreatment project coming on line during the year.

Fazenda Brasileiro Mine

The Fazenda Brasileiro Mine includes a producing gold mine and approximately 197,000 hectares of adjacent exploration properties. It is located in northeast Brazil in the eastern portion of Bahia state, 180 kilometres NNW of the state capital city of Salvador. The property, all of which is within the Rio Itapicuru Greenstone Belt (“RIGB”), can be roughly divided into two parts. One part covers the east-west trending Weber Belt, which hosts the mine, operating open pits and areas of immediate exploration potential. The other part covers large portions of the north-south trending portion of the RIGB and several exploration permits southwest of the mining area. The Weber Belt area is comprised of 15 contiguous tenements at various stages of the Brazilian tenure process, totalling approximately 12,000 hectares. The remaining area is comprised of 148 blocks, many of which are contiguous and all at various stages of the tenure process, totalling approximately 184,500 hectares in area.

The Fazenda Brasileiro Mine began production in 1984 as an open pit, heap leach operation. In 1988, production began from underground operations with processing in the newly constructed CIP plant and has been continuous since such time.

Mine exploration is primarily concentrating on the F, G, E-east and E-deep ore bodies. Fan diamond drilling on 25 by 10 metre grids from footwall drifts has been conducted as part of the stope definition process. This zone hosts the bulk of the Proven Mineral Reserves and Probable Mineral Reserves and nearly all of the present underground production comes from it. This is routine drilling designed to upgrade Indicated Mineral Resources to the Measured Mineral Resources category.

Since August 2003, Yamana has conducted an exploration and infill drilling programme at the Fazenda Brasileiro Mine designed to upgrade the current Probable Mineral Reserves to Proven Mineral Reserves and replace mined Mineral Reserves and a deeper drilling programme designed to extend the mine’s underground Mineral Resources at depth and to the east. Drilling has been focused on underground ore bodies adjacent to the mine, underground ore bodies at or near the level of existing mine workings and ore bodies beneath the existing mine workings.

Two new mineralization zones, CLX2 and Lagoa do Gato were discovered in 2009. The CLX2 zone is identified as having significant potential for high grade sources of ore for the mill. Both infill and extension drilling confirm the continuity of mineralization in both areas. The Company continues to develop the high grade Mineral Reserves at CLX2 with a focus on increasing Mineral Reserves and Mineral Resources.

Production at Fazenda Brasileiro was 70,079 ounces of gold in 2013, compared to 67,130 ounces of gold in 2012. The increased production was mainly due to higher gold grade and increased tonnage processed. There was no drilling or exploration completed at Fazenda Brasileiro in 2013. The Company continues to evaluate the possible extension of mine life. The mine continues to further outline exploration potential through existing data analysis and reinterpretation and Mineral Resource additions are expected in 2014. Significant potential still resides in the Weber Belt downdip structure, as shown in seismic studies and also in the CLX2 and Canto parallel structures; however a significant amount of drilling will be necessary for resource delineation in those zones.

Alumbrera Mine

The Alumbrera Mine is an open-pit copper/gold/molybdenum mine located near Belen, province of Catamarca, in north-western Argentina. It comprises a mining lease of 600 hectares, owned by Yacimientos Mineros de Agua de Dionisio (“YMAD”). Minera Alumbrera entered into a joint venture agreement with YMAD in April 1994, subsequently

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amended. The joint venture agreement defines the working relationship between the parties, including the appointment of Minera Alumbrera as the operator, royalty obligations, and requires that ownership of certain facilities and infrastructure revert to YMAD after completion of operations. Immediate mine infrastructure and other mine facilities cover an additional permitted surface area of 5,200 hectares. GlencoreXstrata holds a 50% interest in, and is the operator of, the Alumbrera Mine. Goldcorp holds a 37.5% interest and Yamana holds a 12.5% interest.

The Alumbrera Mine consists of the following five facilities, with support offices located in the filter plant (near Tucumán), Catamarca City, the port (near Rosario) and Buenos Aires:

1. an open-pit mine, processing facilities and central administration offices at Alumbrera, Catamarca;

2. a 316 kilometres concentrate slurry pipeline through Catamarca and Tucumán Provinces;

3. a 202 kilometres, 220 kilovolt power line from the project’s substation at El Bracho, Tucumán;

4. a filter plant and rail loading facilities at Cruz del Norte, Tucumán; and

5. a port, handling facilities and train maintenance facilities at San Martín near Rosario, Santa Fé.

The Alumbrera Mine processes ore through conventional crushing, grinding, sulphide flotation and gravity gold circuits. Concentrate slurry from the processing facilities is pumped 316 kilometres to a filter plant at Cruz del Norte. Concentrates from the filter plant are shipped 830 kilometres by rail from Cruz del Norte, Tucumán to Puerto Alumbrera. The port is located in San Martín, Rosario in the Province of Santa Fé.

The mining rights to the Alumbrera Mine held by Minera Alumbrera are limited to a 2,000 metres by 3,000 metres rectangle (600 hectares in size) approximately centred on the open-pit mine. This area, referred to as the contract area, is slightly larger than the ultimate pit rim dimensions. No exploration is conducted by Minera Alumbrera outside the contract area. Because of the very limited area of mineral rights involved and the dominance of the area by the open-pit mine, further exploration work will be limited. The operating life of the Alumbrera Mine is currently expected to extend until 2019.

Yamana’s attributable interest in Mineral Reserves at the Alumbrera Mine is 22,812,500 tonnes with 0.34 grams per tonne of gold grade, 0.35% copper grade and 124 grams per tonne for molybdenum, totaling 165,000 ounces of gold, 141 million pounds of copper and 1.4 million pounds of molybdenum.

Attributable production from Alumbrera was 39,517 ounces of gold and 30.2 million pounds of copper for 2013, compared to attributable production of 46,077 ounces of gold and 37.4 million pounds of copper for 2012.

See also “– Additional Projects – Agua Rica Project”.

Additional Projects

Pilar Project

The Pilar Project comprises 59,000 hectares of exploration concessions held by Yamana in the northwest portion of Goiás State in Brazil. The area covers part of Pilar and Guarinos belts which are classical Archean greenstone belts terrains with many gold occurrences (several anomalies never checked with geological mapping or drilling). Gold was first discovered and mined in the region in 1740 by the Portuguese empire. After that, artisanal mining has been continuously present in the area.

Pilar and Guarinos belts have similar volcano-sedimentary sequences to that of Crixas Greenstone Belt, where the three million ounce Serra Grande mine is located, about 20 kilometres west of Guarinos. The most explored areas are located in the southern portion of the Pilar Greenstone Belt, called Jordino-Ogó-Três Buracos (“JOT”), a continuous gold anomalous northwest trend, extending for almost 8 kilometres. Although the garimpos occurrences were less intense in the Guarinos Belt, the gold occurrences are also constant in the whole belt.

Past exploration work was conducted by several companies (including Mineradora Montita, BHP (Marex) and INCO/CNM) and consisted of stream and soil sampling programs, geophysical surveys with interpretation and re-

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processing of data, induced polarization and some restricted ground geophysics, excavations including trenching and channel sampling, geological mapping, and restricted drilling campaigns totalling approximately 5,000 metres.

In July 2006, Yamana commenced the exploration works in the Pilar and Guarinos Greenstone belts. In 2007 Yamana focused drilling on the Três Buracos and Jordino targets. The Três Buracos target has excellent potential as an open pit, heap leach target. Yamana’s drilling programme is targeted at outlining the JOT mineralization, testing continuation along the definition of high-grade ore shoots. The Três Buracos and Jordino targets are just two of several significant targets in the area which demonstrate the potential for entirely new high-grade gold discoveries.

The 2009 drill program focused on infill drill testing of the Jordino target. A total of 220 diamond drill holes were completed in the 37,868 metre infill program. The drilling resulted in a 50x50 metre drill pattern over the entire Jordino Mineral Resource that confirmed the continuity and grade of the mineralization. In addition to the drilling, an access tunnel was commenced in the third quarter of 2009. The tunnel will allow for underground bulk sampling and mapping to confirm the results of the Mineral Resource models based on surface drilling and will aid in the determination of Mineral Reserves.

The Company undertook an aggressive exploration program concurrently with mine development which began in 2010. The objectives of the 2010 exploration program at Pilar were threefold:

1. to infill drill the areas containing Mineral Reserves to support mine development;

2. to infill drill areas containing Mineral Resources in order to upgrade to Mineral Reserves; and

3. to extend the known areas of mineralization.

On August 4, 2010 Yamana made a formal decision for the construction of the Pilar Project based on positive feasibility study results. During 2010, the focus of exploration was on extending the main Jordino mineralization down dip and to that end, 38,500 metres of diamond drilling was completed. The deepest hole to date to intersect the Jordino deposit, JD-364, intersected 0.50 metres of 6.2 grams per tonne gold (grams per tonne of gold) at a depth of 840 metres indicating that mineralization remains open.

In 2011, 159 diamond drill holes were completed totaling 48,027 metres. The drilling was successful in extending the main Jordino deposit down dip to in excess of 1 kilometre in dip length and also along strike to the north for about 2 kilometres towards Ogo and Tres Buracos. All of the drilling was completed on 100 metres centers and increased the Inferred Mineral Resource base substantially. Mineralization remains open in all directions. At Maria Lazarus, located 10 kilometres west of Pilar and 26 kilometres south of Caiamar (as described below), initial results from the drilling indicate similar grades and widths to Jordino along a stike length of 800 metres and a dip length of at least 200 metres.

Construction was completed in June 2013 and doré was poured in July 2013, initiating a production ramp up through the end of the year. Non-commercial production by end of 2013 totaled 15,374 ounces of gold. Commercial production is expected to be declared during 2014. Underground development at Pilar reached a total length of 16,000 metres in 2013.

Yamana acquired an extensive exploration concession and project called Caiamar in July 2009 which is located approximately 38 kilometres from Yamana’s Pilar Project and just east of the Crixas Greenstone Belt. Caiamar is located in the northern portion of a regional Shear Zone in the Guarinos Greenstone Belt and mineralization consists of arserno-pyrite rich quartz breccias hosted in metagraywacke layers.

A total of approximately 14,000 metres of drilling was been completed in 2009 at Caiamar. The drilling confirmed the occurrence of mineralized shoots along an area of 2.5 kilometres length and 700 metres wide. In 2010 an additional 19,000 metres of drilling was completed in 61 drill holes to further delineate and define mineralization. In 2012, underground development at Caiamar progressed more than 1,000 metres.

Caiamar ore transport to Pilar plant initiated in August 2013 and the construction was completed by year end. Underground development at Caiamar continued to progress and reached a total length of more than4,436metres.

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During 2012, diamond drilling was focused on Mineral Resource definition at the Maria Lazarus deposit located 10 kilometres west of Jordino. During 2013, a total of 20 diamond drill holes were completed, totaling 7,046 metres, on the down dip portion to increase confidence in the deeper parts of the deposit. Preliminary studies were conducted in 2013 and an application for the environmental license was submitted in October 2013.

C1 Santa Luz Project

Located in the state of Bahia, Brazil, approximately 140 kilometres north of its Fazenda Brasileiro Mine and 160 kilometres east of the JMC, C1 Santa Luz is planned as a conventional open pit mine with throughput of 2.5 million tonnes per year or 6,800 tpd. Processing will be done through a conventional CIL flotation circuit. C1 Santa Luz Project comprises seven concessions granted by DNPM, with total area of 5004.5 hectares.

The C1 Santa Luz Project gold deposits lie within the RIGB, a deformed and metamorphosed greenstone-granite terrain of paleoproterozoic age. The gold deposits are structurally controlled and closely associated with small porphyritic dacite intrusions and extensive zones of breccia hosted in carbonaceous meta-sedimentary rocks, with associated hydrothermal alteration centred on the intrusions. The project contains a number of deposits, including, Antas 1, Antas 2, Antas 3, Mansinha and Mari. The largest known deposit, Antas 1, occurs in a continuous mineralised zone associated with a sill-like body of dacite-quartz breccia and carbonaceous-quartz breccia, striking northeast and dipping 35º to 55º northwest. Most of the gold mineralization (approximately 80%) occurs in the quartz-breccia.

Exploration potential is excellent with several under-explored satellite targets occurring within a 30 kilometre radius of C1 Santa Luz. Further, significant potential exists to extend the known ore bodies, particularly Antas 2, Antas 3 and Mansinha.

Based on the positive results of Yamana’s 2005 scoping study on the project, a feasibility study was commenced in 2006 aimed at assessing the development of the project as a standalone mine, which study was completed in 2007. As recommended in the feasibility study, an infill drill programme in addition to exploration aimed at delineating new satellite ore bodies is ongoing and the Company is targeting to add at least 400,000 new Mineral Reserve ounces to the current Mineral Reserve base prior to the start of production. At a minimum, this would add an additional three years of mine life. Approximately half of the Mineral Resources are along strike and represent excellent potential to increase mine life by an additional three years. The additional three years is expected to reduce life of mine cash costs.

In 2008, Yamana drilled approximately 20,908 metres in 147 diamond drill holes of infill and exploration drilling. Yamana made a construction decision for C1 Santa Luz in July 2009 based on an economic update to the previous feasibility study which showed improved economics and a longer mine life. The updated Proven and Probable Mineral Reserves amount 23.8 million tonnes grading 1.55 grams per tonne of gold containing 1.2 million ounces.

A substantial amount of studies were conducted to complete the Environmental Impact Study (“EIS”) for C1 Santa Luz. The EIS was submitted for assessment by the CRA (Environmental Agency of Bahia State) and an application for the necessary environmental license was submitted in December 2007. All permits needed for construction were granted.

Construction was completed in the second quarter of 2013 and commissioning start up commenced mid-year. Water has been supplied by groundwater wells and catchment from the river for continuous operation ramp up throughout the year. Gold production in 2013 totalled 12,997 ounces. Commercial production is expected to commence during 2014.

Sixty drill holes were completed during 2012, eighteen on the down dip extension of the C1 deposit and the remainder at the near surface satellite deposits.Additional drilling in 2013 focused on increasing the confidence of the C1 down dip extensions through infill drilling and the addition of new Mineral Resources at other satellite deposits.

Ernesto/Pau-a-Pique Project

The Ernesto/Pau-a-Pique Project is located in southwest Mato Grosso state, near Pontes e Lacerda in Brazil. The Pau-a-Pique deposit is approximately 62 kilometres by a well maintained unpaved road south of the Ernesto deposit.

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A federal paved road accesses the plant site at Ernesto, which processes ore from both deposits. Pau-a-Pique is planned as an underground mine and Ernesto is planned to be mined both open-pit and as a near surface underground mine. The deposits are hosted by meta-sedimentary rocks of Proterozoic age and at the contact with underlying granitic basement rocks. The gold mineralization is hosted by quartz veins in the metasedimentary rocks (arenites and conglomerates) or associated with shear zones at the contact of the metasediments with the underlying granite basement. At Ernesto, gold-rich quartz veins and veinlets occur within a thick, low-angle structure at the base of the meta-sedimentary sequence and within sulphidic horizons in overlying altered meta-arenite units.

In January 2010, Yamana made a formal decision for the construction of the Ernesto/Pau-a-Pique Project based on positive feasibility study results and an expected upgrade in Mineral Resources as a result of deeper drilling of the mineral body. Current Proven and Probable Mineral Reserves are 4.7 million tonnes at 3.47 grams per tonne containing 526,000 ounces of gold. The Company continues efforts to upgrade Mineral Resource ounces to the Measured and Indicated category and expand Mineral Resources at Ernesto as results demonstrate the deposit is open down dip. Permitting was granted in 2010.

Construction was completed by the end of 2012 and followed by the start up of commissioning. Production ramped up throughout 2013, with commercial production anticipated to commence during 2014. Underground development at Pau-a-Pique reached a total length of more than 10,600 metres. Production in 2013 was 27,571 gold ounces.

Cerro Moro Project

The Cerro Moro Project is an advanced stage, high grade vein system located in the Santa Cruz province of Argentina. At the end of 2013, Cerro Moro hosted Probable Mineral Reserves of approximately 1.53 million GEO, Indicated Mineral Resources of 352,000 GEO and Inferred Mineral Resources of 486,000 GEO. The Cerro Moro Project covers 177 square kilometres and is located approximately 70 kilometres southwest of the coastal port city of Puerto Deseado.

The Cerro Moro silver-gold low sulfidation deposit is located within the Deseado Massif, a tectonic block comprised of Upper Precambrian metamorphic rock, Jurassic to Cretaceous aerial and sub-aerial volcanic rock and capped by Tertiary marine sediments which is located in the central-portion of the Santa Cruz Province, covering an area of approximately 60,000 square kilometres.

Estellar Resources completed a comprehensive preliminary economic assessment of the project before Yamana acquired Extorre and the project in 2012. In February 2013, after a brief pre-feasibility analysis to determine the optimum direction for the project, Yamana commissioned an update to the feasibility study. The updated study is scheduled for completion in 2014. The updated study is being managed in-house and carried out by a combination of Australian and Argentinean consultants, to ensure a thorough and conservative approach using best practices.

A production-ready exploration decline was commenced in parallel with the updated feasibility study. The decline is being developed to access the high grade Escondida Far West ore body. In 2014, a crosscut will be driven from the decline to intersect the vein structure and provide physical access for geotechnical, geological and metallurgical verification of the ore body. A similar approach was used at the Mercedes Mine, and it is anticipated that using this approach at Cerro Moro will provide better information on the ore body allowing for better preparation and planning.

Exploration continued at Cerro Moro throughout the year at a somewhat reduced pace allowing the project to focus on the feasibility study and exploratory decline. In 2013, a total of 118 diamond drill holes were completed, totalling 25,084 metres to better define certain areas for mining and to develop and explore targets in the La Negrita and Escondida Blocks. The initial exploration drill holes testing the down dip extension of mineral intercepts from previous drill campaigns encountered new structurally hosted mineral zones now referred to as the Margarita vein and structure. Exploration drilling followed this structure for 600 metres along strike and has cut both high and low grade mineral intercepts at depth. Exploration drilling also tested mineral continuity at the Carlita, Patricia and Gabriela targets and completed infill work on the Escondida Central structure.

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Suyai Project

The Suyai Project is an advanced stage exploration gold project comprising 141,000 hectares of land located in the Cordon de Esquel in southern Argentina. The various properties comprising the Suyai Project are classified as either “permits”, “claims” or “mines” and are either owned outright by Suyai del Sur S.A. (“Suyai del Sur”) or through option contracts between Suyai del Sur and the direct owners.

On July 3, 2002, Meridian completed an unconditional share purchase offer for Brancote Holdings PLC, owner of the Suyai Project. Permitting for the project and a feasibility study began in the third quarter of 2002. In March 2003, with the feasibility study substantially complete, the project was put on hold after local opposition to the mine led to a non-binding referendum wherein a majority of Esquel’s citizens voted against the mine. The Company continues to monitor mining developments in the province of Chubut.

Studies relating to the Suyai Project were initiated in 2012 for the purposes of evaluating Suyai as a high grade, low cost underground mine with off-site processing, tailings and waste facilities. The Company plans to present the conclusions to local officials and community leaders. The Company is continuing with its community relations plan in the town of Esquel.

Agua Rica Project

Yamana currently owns 100% of the Agua Rica Project, a large porphyry-style copper-gold-molybdenum-silver deposit located in the northwestern province of Catamarca in Argentina. There is evidence to suggest that the ore body also contains significant amounts of rhenium which could be an important source of by-product credits.

In March 2011, the Company announced an arrangement with GlencoreXstrata and Goldcorp that would facilitate the ultimate integration of Agua Rica into Alumbrera. In September 2011, GlencoreXstrata, Goldcorp and the Company reached a definitive agreement in respect of the arrangement, pursuant to which Minera Alumbrera holds an exclusive four-year option to acquire Yamana’s interest in the Agua Rica Project for cumulative payments made by GlencoreXstrata and Goldcorp of $110 million, of which $50 million has been received by the Company. During the option period, Minera Alumbrera will manage the Agua Rica Project and fund a feasibility study and all development costs. Minera Alumbrera can elect to exercise the option at any time during the four-year period. Upon approval to proceed, Yamana would receive $150 million and a further $50 million on commencement of commercial production. The Company would also retain the right to a deferred payment related to 65% of the payable gold production from Agua Rica to a maximum of 2.3 million ounces. See also “General Development of the Business – History – Agua Rica – Integration Into Alumbrera.”

During the third quarter of 2013, the Company, GlencoreXstrata and Goldcorp agreed to an extension period of twelve months in which certain optimizations for a feasibility study would be undertaken with respect to the development of Agua Rica. An option payment payable by GlencoreXstrata and Goldcorp in 2013 was deferred to 2014 as part of this agreement, and the cap on the number of ounces of payable gold on which the deferred consideration related to was removed.

ITEM 5

DIVIDENDS

The Company has a dividend policy providing for a dividend yield that is consistent with the yield of comparable companies’ dividend rates and such policy is reviewed on a periodic basis and assessed in relation to the growth of the operating cash flows of the Company. In May 2011, the Company’s board of directors amended the Company’s dividend policy to increase quarterly dividend paid per share to $0.045 commencing in the third quarter of 2011, which policy was further amended for November 2011 to increase quarterly dividends paid per share to $0.05 commencing in the fourth quarter of 2011. In February 2012, the Company’s board of directors amended the Company’s dividend policy to increase quarterly dividends paid per share to $0.055 commencing in the first quarter of 2012, which policy was further amended in June 2012 to increase quarterly dividend paid per share to $0.065 commencing in the third quarter of 2012. In 2013, the Company paid quarterly dividends of $0.065 per share. On February 18, 2014, the Company’s board of directors amended the dividend policy to set the quarterly dividend to $0.0375 per share.

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Payment of any future dividends will be at the discretion of the Company’s board of directors after taking into account many factors, including the Company’s operating results, financial condition, comparability of the dividend yield to peer gold companies and current and anticipated cash needs.

ITEM 6

DESCRIPTION OF CAPITAL STRUCTURE

Authorized Capital

The Company is authorized to issue an unlimited number of common shares and 8,000,000first preference shares, Series 1 (the “Preference Shares”) of which there were 753,391,214 common shares and no Preference Shares issued and outstanding as of March27, 2014.

Common Shares

Holders of common shares are entitled to receive notice of any meetings of shareholders of the Company, to attend and to cast one vote per common share at all such meetings. Holders of common shares do not have cumulative voting rights with respect to the election of directors and, accordingly, holders of a majority of the common shares entitled to vote in any election of directors may elect all directors standing for election. Holders of common shares are entitled to receive on a pro-rata basis such dividends, if any, as and when declared by the Company’s board of directors at its discretion from funds legally available therefor and upon the liquidation, dissolution or winding up of the Company are entitled to receive on a pro-rata basis the net assets of the Company after payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to or on a pro-rata basis with the holders of common shares with respect to dividends or liquidation. The common shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions.

Preference Shares

Upon a consolidation, merger, or amalgamation of the Company with or into any other corporation, holders of Preference Shares who have not exercised their right of conversion at the date of the consolidation, merger, or amalgamation are entitled to receive upon the exercise of their conversion right, after the effective date of the consolidation, merger, or amalgamation, the aggregate number of shares or securities or property of the Company resulting from the consolidation, merger, or amalgamation, the holder would have been entitled to receive if they had at the effective date of the consolidation, been the registered holder of such number of common shares. Holders of Preference Shares are also entitled to receive, in the event of liquidation, dissolution or winding up of the Company, an amount equal to $0.125 in respect of each of Preference Share held and all unpaid cumulative dividends before any distribution of the assets of the Company among holders of the common shares or any other class of shares.

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ITEM 7

MARKET FOR SECURITIES

Price Range and Trading Volume

The common shares are listed and posted for trading on the TSX under the symbol “YRI” and the NYSE under the symbol “AUY”. In 2013, the common shares were delisted from the London Stock Exchange (“LSE”). The following table sets forth information relating to the monthly trading of the common shares on the TSX for the fiscal year ended December 31, 2013.

Period	High (Cdn.$)	Low (Cdn.$)	Volume
January 2013	18.10	15.99	58,763,493
February 2013	16.98	14.61	51,951,468
March 2013	16.02	14.00	81,163,818
April 2013	15.70	11.32	119,891,476
May 2013	12.59	10.70	71,163,949
June 2013	12.43	8.96	60,869,066
July 2013	11.79	9.44	61,824,696
August 2013	13.16	9.28	68,874,836
September 2013	12.30	10.35	52,219,320
October 2013	10.89	9.33	57,726,069
November 2013	10.25	9.06	47,362,772
December 2013	9.70	8.86	39,571,191

ITEM 8

DIRECTORS AND OFFICERS

The following table sets forth the name, province or state and country of residence, position held with the Company and period(s) during which each director of the Company has served as a director, the principal occupation of each director and executive officer of the Company. All directors of the Company hold office until the next annual meeting of shareholders of the Company or until their successors are elected or appointed.

Name and Residence	Position with the Company and Period(s) Served as a Director	Principal Occupation
Peter Marrone Ontario, Canada	Chairman, Chief Executive Officer and a Director (director since July 31, 2003)	Chairman and Chief Executive Officer of the Company
Patrick J. Mars(1)(2)(4) Ontario, Canada	Currently Lead Director and a Director since August 16, 2001	Company Director
John Begeman(1)(3) South Dakota, United States	Director since May 2, 2007	Company Director
Alexander Davidson(2)(3) Ontario, Canada	Director since August 31, 2009	Company Director

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Name and Residence	Position with the Company and Period(s) Served as a Director	Principal Occupation
Richard Graff(1) Colorado, United States	Director since October 16, 2007	Company Director
Nigel Lees(2) Ontario, Canada	Director since June 16, 2005	President and Chief Executive Officer of Sage Gold Inc.
Juvenal Mesquita Filho(4) São Paulo, Brazil	Director since July 31, 2003	Company Director
Carl Renzoni(1)(4) Ontario, Canada	Director since October 16, 2007	Company Director
Antenor F. Silva, Jr. Rio de Janeiro, Brazil	Director since July 31, 2003	Vice Chairman of MBAC Fertilizer Corp.
Dino Titaro(2)(3)(4) Ontario, Canada	Director since August 5, 2005	Company Director
Charles Main Ontario, Canada	Executive Vice President, Finance and Chief Financial Officer	Executive Vice President, Finance and Chief Financial Officer of the Company
Ludovico Costa São Paulo, Brazil	President and Chief Operating Officer	President and Chief Operating Officer of the Company
Darcy Marud Nevada, United States	Executive Vice President, Enterprise Strategy	Executive Vice President, Enterprise Strategy of the Company
Richard C. Campbell Ontario, Canada	Senior Vice President, Human Resources	Senior Vice President, Human Resources of the Company
Greg McKnight Ontario, Canada	Senior Vice President, Business Development	Senior Vice President, Business Development of the Company
Sofia Tsakos Ontario, Canada	Senior Vice President, General Counsel and Corporate Secretary	Senior Vice President, General Counsel and Corporate Secretary of the Company
William Wulftange Nevada, United States	Senior Vice President, Exploration	Senior Vice President, Explorationof the Company
Evandro Cintra São Paulo, Brazil	Vice President, Operational Planning and Support	Vice President, Operational Planning and Support of the Company
Lisa Doddridge Ontario, Canada	Vice President, Investor Relations and Corporate Communications	Vice President, Investor Relations and Corporate Communications of the Company
Gerardo Fernandez Santiago, Chile	Vice President, Country Manager, Chile and Mexico	Vice President, Country Manager, Chile and Mexico of the Company

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Name and Residence	Position with the Company and Period(s) Served as a Director	Principal Occupation
Jason LeBlanc Ontario, Canada	Vice President, Finance and Treasurer	Vice President, Finance and Treasurer of the Company
Ana Lucia Martins São Paulo, Brazil	Vice President, Safety, Health, Environment and Community Relations	Vice President, Safety, Health, Environment and Community Relations of the Company
Trevor Mulroney Perth, Western Australia	Vice President, Operations, Argentina	Vice President, Operations, Argentina
Nelson Munhoz São Paulo, Brazil	Vice President, Co-Country Manager, Brazil - Operations	Vice President, Co-Country Manager, Brazil - Operations of the Company
Patrick Portmann Ontario, Canada	Vice President, Corporate Development	Vice President, Corporate Development of the Company
Arão Portugal São Paulo, Brazil	Vice President, Co-Country Manager, Brazil - Administration	Vice President, Co-Country Manager, Brazil - Administration of the Company
David Radu Ontario, Canada	Vice President, Information Technology	Vice President, Information Technology of the Company
Betty Soares Ontario, Canada	Vice President, Controller and Chief Accounting Officer	Vice President, Controller and Chief Accounting Officer of the Company
Ricardo Solovera Santiago, Chile	Vice President, Operations, Chile and Mexico	Vice President, Operations, Chile and Mexico of the Company
Hernan Vera San Juan, Argentina	Vice President, Country Manager, Argentina	Vice President, Country Manager, Argentina of the Company

1. Member of the Audit Committee.

2. Member of the Compensation Committee.

3. Member of the Sustainability Committee.

4. Member of the Corporate Governance and Nominating Committee.

The principal occupations, businesses or employments of each of the Company’s directors and executive officers within the past five years are disclosed in the brief biographies set out below.

Peter Marrone – Chairman and Chief Executive Officer.Mr. Marrone founded Yamana in July 2003, and serves as its Chairman and Chief Executive Officer. Mr. Marrone has more than 25 years of leadership experience in mining, business and capital markets. Mr. Marrone has been on the boards of a number of public companies and has advised companies with a strong South American presence. Prior to Yamana, Mr. Marrone was the head of investment banking at a major Canadian investment bank and before that, practised law in Toronto with a strong focus on corporate law, securities law and international transactions. Mr. Marrone currently sits on the Board of Governors of the York University Secretariat.

Patrick J. Mars – Lead Director.Mr. Mars is a company director specializing in mine finance and analysis. He was a director of Yamana Resources, a predecessor to Yamana, beginning in August 2001. He benefits from over 30 years of experience in the investment industry and has had extensive involvement in mining research, financing and

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advisory work. For the majority of his career he was with Alfred Bunting & Co./Bunting Warburg, a Canadian investment dealer and stockbroker where he was President and Chief Executive Officer from 1981 to 1994. During this time he served three-year terms both as a Governor of the TSX and Director of the Investment Dealers Association. From 1999 to 2001, he was Chairman and a Director of First Marathon Securities (UK)/NBC Financial (UK) Limited. Presently, Mr. Mars is a director of Aura Minerals Inc. (“Aura Minerals”) (Chairman), Carpathian Gold Inc. (“Carpathian Gold”) and Sage Gold Inc. (“Sage Gold”) (Chairman) as well as being President of P.J. Mars Investments Limited, a private company. He is also a director of the Renascent Foundation, a charitable organization.

John Begeman – Director. Mr. Begeman is a Professional Mining Engineer with over 35 years of mining experience. He currently sits on the board of directors of Premier Gold Mines Limited (“Premier”) and acts as its lead director and chairman of its audit committee. He previously served as the President and Chief Executive Officer of Avion Gold Corporation, as the Chief Operating Officer of Zinifex Canada Inc. and as Vice President, Western Operations of Goldcorp. In his capacity for Goldcorp, he was responsible for its surface gold operations in South Dakota and the Industrial Minerals Division in Saskatchewan. Prior to his employment at Goldcorp, Mr. Begeman held various engineering and management positions with Morrison Knudsen Company in the contract mining operations group throughout the Western United States. Mr. Begeman holds a Bachelor of Science in Mining Engineering, a Master of Science in Engineering Management and a Master of Business Administration.

Alexander J. Davidson – Director. Mr. Davidson was Barrick’s Executive Vice President, Exploration and Corporate Development with responsibility for international exploration programs and corporate development activities. Mr. Davidson joined Barrick in October 1993 as Vice President, Exploration with responsibility for the company’s expanding exploration program. He initiated Barrick’s expansion out of North America and into Latin America and beyond. Prior to joining Barrick, Mr. Davidson was Vice President, Exploration for Metall Mining Corporation. Mr. Davidson has over 25 years of experience in designing, implementing and managing gold and base metal exploration and acquisition programs throughout the world. In April 2005, Mr. Davidson was presented the 2005 A.O. Dufresne Award by the CIM to recognize exceptional achievement and distinguished contributions to mining exploration in Canada. In 2003, Mr. Davidson was named the Prospector of the Year by the Prospectors and Developers Association of Canada in recognition for his team’s discovery of the Lagunas Norte Project in the Alto Chicama District, Peru. He received his Bachelor of Science and his Master of Science in Economic Geology from McGill University.

Richard Graff – Director.Mr. Graff is a retired partner from PricewaterhouseCoopers LLP where he served as the audit leader in the United States for the mining industry. Since his retirement, Mr. Graff has been a consultant to the mining industry and was a member of a Financial Accounting Standards Board task force for establishing accounting and financial reporting guidance in the mining industry. He represents a consortium of international mining companies and has provided recommendations to the International Accounting Standards Board on mining industry issues and to regulators on industry disclosure requirements of securities legislation. He received his undergraduate degree in Economics from Boston College and his post-graduate degree in Accounting from Northeastern University. He serves as Chairman of the board, chairman of the audit committee and a member of the compensation and corporate governance and nominating committee of Alacer Gold Corp. (“Alacer”). He also serves as chairman of the audit committee and a member of the corporate governance committee of the board of directors of Dynamic Materials Corporation (“Dynamic”).

Nigel Lees – Director. Mr. Lees has over 25 years of experience in the investment banking industry. He has served as a member of the Listings Committee of the TSX as well as on the audit committees of boards of several publicly listed companies. He is the founder and director of TVX Gold Inc. (“TVX Gold”), which merged with Kinross Gold Corporation (“Kinross”) in 2003. He is currently the President of C.N. Lees Investments Limited, a private investment and consulting company, and President and Chief Executive Officer of Sage Gold, a public precious metals exploration and development company.

Juvenal Mesquita Filho – Director. Mr. Mesquita has over 30 years of experience in the mining industry. He previously served as President of Mineração Santa Elina S/A, in Brazil from 1999 to 2004, as well as a director of Santa Elina Mines Corporation from 1996 to 2006.

Carl Renzoni – Director. Mr. Renzoni retired from BMO Nesbitt Burns in 2001, where he was employed since 1969 and most recently served as a Managing Director. He brings over 30 years of experience in the securities

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business specializing in the mining industry. Mr. Renzoni holds an Honors Bachelor of Science (Geology) degree from Queen’s University. Mr. Renzoni is currently a director of Copper Mountain Mining Corp. and he previously served on the boards of International Molybdenum Ltd., Peru Copper Inc. and Meridian. Mr. Renzoni also served on the Audit Committee of Meridian.

Antenor F. Silva – Director. Mr. Silva has approximately 45 years of experience in the mining and chemical industries, and has provided technical consultation and training in development, construction, start-up, operation, strategic planning and productivity for various mining and industrial companies. During this time, Mr. Silva has been instrumental in researching and developing metallurgical processes and engineering for mill plants in mining projects in Brazil, South and Central America and implementing metallurgical processes which contributed to the development of mines in Tunisia and Togo, Africa. Mr. Silva has gained significant experience in senior management at various engineering, mining, and chemical companies. Prior to joining Yamana, Mr. Silva acted as Chief Operating Officer of Yamana and before that, Santa Elina Mines Corporation. Mr. Silva has also served as a director on the boards of engineering, mining and aluminum extrusion companies. Mr. Silva holds a Bachelor of Science degree in Mining and Metallurgical Engineering from the Universidade do Estado de São Paulo in São Paulo, Brazil. Mr. Silva is currently the Vice Chairman of MBAC Fertilizer Corp.

Dino Titaro – Director. Mr. Titaro was the President and Chief Executive Officer of Carpathian Gold Inc. from 2003 to January 2014, a public mineral exploration company listed on the TSX, and is currently a director of the Company. From 1986 to 2003, Mr. Titaro was President and Chief Executive Officer of A.C.A. Howe International Limited, a geological and mining consulting firm. From 1980 to 1986, Mr. Titaro was employed by Getty Mines Limited, in various supervisory roles as a geologist, working on base and precious metal projects as well as uranium, principally in resource definition stages. Mr. Titaro holds a Master of Science degree in Geology from the University of Western Ontario. He is also a qualified person as defined by NI 43-101 and is a registered P.Geo in Ontario and Saskatchewan. Mr. Titaro currently sits on the board of directors of Mincor Inc., a private mineral resource company, and has been a director and officer of several publicly traded companies in the mining, industrial and health care technology fields.

Charles B. Main – Executive Vice President, Finance and Chief Financial Officer. Mr. Main joined Yamana as Vice President, Finance and Chief Financial Officer in August 2003, with over 25 years of experience in the finance and mining industries. Prior to joining Yamana, Mr. Main held the principal positions of Director of Corporate Development of Newmont Capital Corporation and Vice President of Normandy Mining Limited, Vice President, Finance of TVX Gold, and was with PriceWaterhouseCoopers for 10 years. Mr. Main is a Chartered Accountant and a member of the Ontario and Canadian Institutes of Chartered Accountants. Mr. Main holds a Bachelor of Commerce degree from McGill University.

Ludovico Costa – President and Chief Operating Officer.Mr. Costa has many years of management experience in the mining industry and is currently President and Chief Operating Officer of Yamana. Prior to assuming these positions, he was Senior Vice President, Operations of Yamana since October 2007. He was previously Vice President, Operations from May 2007, and was Director of Operations from March 2006. Prior to this, Mr. Costa was in the strategic planning division of Companhia Vale do Rio Doce, a public mining company listed on the NYSE, the São Paulo Stock Exchange and on the Madrid Stock Exchange, from November 2003 to March 2006. From November 2000 until November 2003, Mr. Costa was Safety Advisor at Rio Tinto plc, a public mining company listed on the LSE and the NYSE. Mr. Costa completed an international secondment of three years to England, as well completing courses at Harvard Business School in the United States and McGill University in Canada.

Darcy Marud – Executive Vice President, Enterprise Strategy.Darcy Marud joined Yamana as Senior Vice President, Exploration in October 2007 and was appointed to the position of Executive Vice President, Enterprise Strategy in January 2014. Prior to that, he held the position of Vice-President of Exploration for Meridian from 2004 and the position of exploration manager for South America from 1997. Mr. Marud has a combined 27 years of experience as a gold exploration geologist in the Americas with companies such as Homestake Mineral Development Company, FMC Gold and Meridian.

Richard C. Campbell – Senior Vice President, Human Resources.Mr. Campbell joined Yamana as Senior Vice President, Human Resources in May 2011. Prior to joining Yamana, Mr. Campbell enjoyed progressively senior

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roles during his 21 years at TD Bank Financial Group. During his tenure at TD, Mr. Campbell worked in executive roles in the business as well as Human Resources, encompassing retail, wealth management, and wholesale/corporate banking. From April 1998 to February 2002, Richard completed international secondments in Hong Kong and London, UK with TD Waterhouse. In his role as SVP Human Resources, TD Canada Trust, Richard led a multi-functional team of HR professionals to develop, implement and execute all aspects of HR services supporting a 36,000 employee workforce across Canada. More recently, Richard’s experience as SVP Human Resources with the Ontario Lottery Group has provided him with valuable and practical executive experience in the public service sector. Mr. Campbell holds an Honours Bachelor of Arts in Geography and Economics, and a Master of Arts in Economic Geography from Wilfrid Laurier University.

Greg McKnight – Senior Vice President, Business Development.Mr. McKnight joined Yamana as Vice President, Business Development in February 2004. Mr. McKnight has over 20 years of mining focussed investment banking and corporate experience. Prior to joining Yamana, Mr. McKnight was a director in the investment banking division of Canaccord Capital Corporation (“Canaccord”), a position he held since December 2001. Prior to his tenure at Canaccord, he held various mining related positions including senior roles within other Canadian investment banks and being the President of a publicly traded Canadian junior mining company. During the year prior to joining Yamana, Mr. McKnight was instrumental in his capacity as an investment banker in structuring the reverse takeover transaction and raising the equity for Yamana that enabled the Company to re-capitalize and re-position itself as a gold production company. Mr. McKnight holds a Bachelor of Commerce degree from the University of Toronto and a Master of Business Administration from the Ivey School of Business at the University of Western Ontario.

Sofia Tsakos – Senior Vice President, General Counsel and Corporate Secretary.Ms. Tsakos joined Yamana as Vice President, Corporate Counsel in December 2007, was appointed Corporate Secretary in November 2009 and Senior Vice President, General Counsel in June 2010. Prior to joining Yamana, Ms. Tsakos was a partner practicing securities law at Cassels Brock & Blackwell LLP. From 2001 to 2006, Ms. Tsakos was an associate at Goodman and Carr LLP. Ms. Tsakos holds an Honours Bachelor of Arts degree from the University of Toronto in Economics and Political Science, a Master in Business Administration with a focus in Finance from the University of Windsor and a Bachelor of Law also from the University of Windsor.

William Wulftange – Senior Vice President, Exploration.Mr. Wulftange first joined Yamana through the acquisition of Meridian and has spent over 30 years with Yamana and its predecessor companies. Following a one year appointment as Vice President, Exploration at Andean Resources Limited, Mr. Wulftange rejoined Yamana in January 2011 as Director, Exploration and Business Development. Mr. Wulftange was appointed Vice President, Resources & Reserves and Technical Compliance in July 2013 and assumed the position of Senior Vice President, Exploration in January 2014. Mr. Wulftange has held a number of positions with Yamana and its predecessor companies including Director, Technical Compliance, Chief Geologist and various business development positions. Mr. Wulftange has over 20 years of combined experience in exploration technical compliance and business development with mining companies in the Americas. Mr. Wulftange has a Bachelor of Geology from the University of Colorado and is a founding Registered Member of the Society of Mining Engineers and a Fellow of the Society of Economic Geologists.

Evandro Cintra – Vice President, Operational Planning and Support.Mr. Cintra has over 30 years of exploration and project development experience in the gold mining industry and is currently Vice President, Operational Planning and Support of Yamana. Prior to assuming this position in January 2014, he was Senior Vice President, Technical Services since October 2007 and before that, Exploration Director and Vice President, Exploration of Yamana from 2003 to October of 2007. From 1986 to 2003 he worked for Mineração Santa Elina and Echo Bay Mines in exploration, operation and ore reserves management. Mr. Cintra holds a Doctor of Philosophy in Geology and a title of Professional Geoscientist in accordance with the Association of Professional Geoscientists of Ontario.

Lisa Doddridge – Vice President, Investor Relations and Corporate Communications.Ms. Doddridge has been with the Company since November 2010. Prior to assuming the role of Vice President, Corporate Communications and Investor Relations, Ms. Doddridge held various senior investor relations positions within the precious metals industry. Ms Doddridge holds an Honours Bachelor of Commerce degree from the University of Guelph.

Gerardo Fernandez – Vice President, Country Manager, Chile and Mexico. Mr. Fernandez has been with the Company since 2000, having worked in several positions in mine operations, mine planning and project development.

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Most recently, Mr. Fernandez played a pivotal role in leading Mercedes into production as its Project Manager/General Manager. Mr. Fernandez holds a Master of Business Administration from Morrison University in Reno, Nevada and degrees in Civil Mining Engineering and Engineering from the University of Chile.

Jason LeBlanc – Vice President, Finance and Treasurer.Mr. LeBlanc has over 14 years research-based and financial experience in the mining industry and is currently Vice President, Finance and Treasurer of Yamana. He has been with Yamana since January 2006. Previously, he was a mining analyst covering the base metal and bulk commodities industries with Dominion Bond Rating Service. Mr. LeBlanc has a Master of Finance Degree from the University of Toronto, a Bachelor of Commerce degree from the University of Windsor and also holds a Chartered Financial Analyst designation.

Ana Lucia Martins - Vice President, Safety, Health, Environment and Communities Relations.Ms. Martins has 20 years of environmental management experience in the gold mining industry and is currently Vice President, SHEC Relation of Yamana. Prior to assuming this position, she was SHEC Director of Yamana from 2006 to July of 2007 and Environmental Manager of Yamana from to 2003 to 2005. From 1994 to 2003 worked for   Mineração Santa Elina and Echo Bay Mines in environmental management, licensing, environmental impact studies, due diligences, reclamation projects, feasibility studies and acid rock drainage tests. Ms. Martins completed an Agricultural Engineering degree in Universidade de São Paulo, Brazil, with expertise in environment. During her professional life gained experience visiting mines in Brazil, Canada, USA, Argentina, Chile and Honduras.

Trevor Mulroney – Vice President, Operations, Argentina.Mr. Mulroney has over 28 years of operational and corporate experience across a wide range of commodities and jurisdictions in the mining industry. Before joining Yamana, Mr. Mulroney was President and Chief Executive Officer at Extorre and from October 2011 until April 2012, Mr. Mulroney was Extorre’s Chief Operating Officer. In 2009 and 2010, Mr. Mulroney was a consulting engineer with Mirabela Nickel Ltd. working on the development of the Santa Rosa underground and open pit nickel project in Brazil. In 2007 and 2008, Mr. Mulroney was General Manager Development for Perilya Ltd.’s lead, zinc and copper projects. Mr. Mulroney holds a Higher National Diploma in Mining Engineering from Witwatersrand University in Johannesburg, South Africa and has completed the Management Development Programme at the University of South Africa, School of Business Leadership, in Pretoria, South Africa.

Nelson Munhoz – Vice President, Co-Country Manager, Brazil - Operations.Mr. Munhoz joined Yamana in February 2008 as Vice President, Operations, Brazil, with over 30 years experience in the mining industry. He assumed the position of Vice President, Co-Country Manager, Brazil – Operations in January 2014. Mr. Munhoz previously worked with Rio Tinto Brasil since 1987 where he assumed several positions. He was Project Manager for Corumbá Iron Mine Expansion from January 2005 to January 2008. He worked as Metallurgical Manager and subsequently as General Manager for Serra da Fortaleza Nickel Mine from 1996 to 2004. He also had the position of Metallurgical Manager in Rio Paracatu Mineração from 1987 to 1996. Mr. Munhoz holds a Bachelor of Mining Engineer from São Paulo University and a Master of Business Administration from Fundação Getúlio Vargas.

Patrick Portmann–Vice President, Corporate Development.Mr. Portmann was named Vice President of Corporate Development for Yamana in November 2010. Prior to that, his role at Yamana was as Director, Business Development. He has been with the Company since its acquisition of Meridian. During his tenure at Meridian he occupied several managerial roles in both finance and business development for Meridian’s operations in Chile and in the United States. Mr. Portmann has over 20 years of experience in finance and manufacturing, including the last 7 in the mining industry, and holds a Master of International Management from the Thunderbird School of Global Management.

Arão Portugal – Vice President,Co-Country Manager, Brazil-Administration.Mr. Portugal has many years of management experience in the mining industry and is currently Vice President, Co-Country Manager, Brazil-Administration. Prior to assuming this position in January 2014, he was Vice President Country Manager, Brazil since October 2007 and held various other positions since 2003. Prior to Yamana, Mr. Portugal spent over 25 years working for Companhia Vale do Rio Doce (Vale), where he gained invaluable experience as a Head of Maintenance Department, a Raw Material and Logistic Division Manager, Administrator, Senior Analyst, Institutional Manager and a Supply Chain General Manager. He joined Mineração Fazenda Brasileiro and Yamana Desenvolvimento Mineral S.A., subsidiaries of Yamana, in August of 2003 as General Manager and Director prior to assuming his current position.

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Mr. Portugal completed a Business Administration degree and Post Graduate studies in International Business in Vitória, Espirito Santo, Brazil and a Master Certification in MBA Supply Chain Management in São Paulo, Brazil.

David Radu – Vice President, Information Technology.Mr. Radu has over 30 years of experience in information technology and 19 years in the mining industry. Mr. Radu joined Yamana from Meridian in 2007 as Director of Information Technology and shortly thereafter was promoted to Chief Information Officer of the Company. In January 2012, Mr. Radu became Vice President, Information Technology of Yamana. Mr. Radu holds a bachelor degree in Business Administration from California Polytechnic University in Pomona, California.

Betty Soares – Vice President, Controller and Chief Accounting Officer.Ms. Soares has been with the Company since January 2004 and is currently Vice President, Corporate Controller and Chief Accounting Officer. In this position, Ms. Soares is responsible for all aspects of accounting operations including financial planning/budgeting and analysis and the enforcement of the Company’s accounting policies and procedures. Prior to joining Yamana, she worked in audit, financial reporting and tax at BDO Dunwoody and Collins Barrow LLP (formerly DMCT LLP). Ms. Soares is a Chartered Accountant and a member of the Ontario and Canadian Institute of Chartered Accountants and holds an Honours Bachelors degree in Business Administration from Wilfrid Laurier University.

Ricardo Solovera – Vice President, Operations, Chile and Mexico. Mr. Solovera has over 30 years of mining experience. He has worked in general management, operational management, as a mine superintendent and project director. He spent over 20 years with Antofagasta Minerals before joining Yamana in 2007 as a mining and engineer manager, and later assuming the role of General Manager of El Peñón in 2008. In 2011, Mr. Solovera was named Vice President and General Manager of Kinross’ Fruta Del Norte project, before returning to the Company in 2012 in his current role. Mr. Solovera is a mining engineer, holds a Master of Business Administration from Universidad Católica del Norte and a degree in Industrial Engineering from Universidad de Antofagasta.

Hernan Vera – Vice President, Country Manager, Argentina. Mr. Vera has more than 28 years of experience in the mining industry, having experience working in Argentina, the United States and in the African Region. He joined Yamana in October of 2007 and is currently Vice President, Country Manager, Argentina. His experiences include holding the position of Director and General Manager of Barrick Veladero Gold Company. He has also worked as Mining Project Corporate Manager in Anglogold Ashanti East and West Africa Region and previously as the Cerro Vanguardia gold mine (AngloGold Ashanti) General Manager. Mr. Vera has completed a Master of Business Administration at the Catholic University of Buenos Aires.

Based on the disclosure available on the System for Electronic Disclosure by Insiders (SEDI), as of March27, 2014, the directors and executive officers of the Company, as a group, beneficially owned, directly or indirectly, or exercised control or direction over approximately 4,125,274common shares, representing approximately 0.55%of the total number of common shares outstanding.

Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions

No director or executive officer of the Company is, as at the date hereof, or has been, within the 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company (including Yamana) that:

(a) was subject to a cease trade or similar order, or an order that denied the company access to any exemption under securities legislation, that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer, or

(b) was subject to a cease trade or similar order, or an order that denied the company access to any exemption under securities legislation, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as a director, chief executive officer or chief financial officer,

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that was in effect for a period of more than 30 consecutive days, other than Mr. Dino Titaro and Mr. Juvenal Mesquita Filho. Mr. Titaro resigned as a director of Cogient Corp. effective July 31, 2006. On August 22, 2006, a cease trade order was issued and a receiver was appointed by the court on December 8, 2006. On February 7, 2007, all of the assets of Cogient Corp. vested in the Trustee Corporation, as trustee for the debenture holders under a trust indenture dated December 24, 2002. In addition, Mr. Titaro resigned as director of Royal Coal Corp. (“Royal Coal”) on May 9, 2012. On May 17, 2012, Royal Coal announced that it received notice from the TSX Venture Exchange that trading in Royal Coal’s securities was suspended as a result of a cease trade order by the Ontario Securities Commission for the failure to file financial statements. This cease trader order remains in effect. Mr. Mesquita was a director of Cascadero Copper Corporation (“Cascadero”) until June 2013. On April 13, 2012, a cease trade order was imposed by the British Columbia Securities Commission on the securities of Cascadero for the failure to file financial statements. Cascadero subsequently filed the required documents, and the cease trade order was revoked.

No director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially control of the Company,

(a) is as of the date hereof, or has been within the 10 years before the date hereof, a director or executive officer of any company (including Yamana) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to the bankruptcy or insolvency, or became subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

No director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:

(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Conflicts of Interest

To the best of the Company’s knowledge, and other than as disclosed herein, there are no known existing or potential conflicts of interest between the Company and any directors or officers of the Company, except that certain of the directors and officers serve as directors, officers, promoters and members of management of other public or private companies and therefore it is possible that a conflict may arise between their duties as a director or officer of the Company and their duties as a director, officer, promoter or member of management of such other companies.

The directors and officers of the Company are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest and the Company will rely upon such laws in respect of any directors’ and officers’ conflicts of interest or in respect of any breaches of duty by any of its directors or officers. All such conflicts will be disclosed by such directors or officers in accordance with the CanadaBusiness Corporations Act and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.

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ITEM 9

PROMOTER

No person or company has within the two most recently completed financial years, or is during the current financial year, been a promoter of Yamana or a subsidiary thereof.

ITEM 10

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

Other than as set forth below, the Company was not during fiscal 2013, and is not currently, a party to, nor was/is any of its property the subject of, any legal proceedings, or any known to be contemplated, which involve a material claim for damages within the meaning of applicable securities legislation.

In 2004, a former director of Northern Orion commenced proceedings in Argentina against Northern Orion claiming damages in the amount of $177.0 million for alleged breaches of agreements entered into with the plaintiff. The plaintiff alleged that the agreements entitled him to a pre-emption right to participate in acquisitions by Northern Orion in Argentina and claimed damages in connection with the acquisition by Northern Orion of its 12.5% equity interest in the Alumbrera Mine. On August 22, 2008, the National Commercial Court No. 13 of the City of Buenos Aires issued a first-instance judgment rejecting the claim. The plaintiff appealed this judgment to the National Commercial Appeals Court. On May 22, 2013, the appellate court overturned the first-instance decision. The appellate court determined that the plaintiff was entitled to make 50% of Northern Orion’s investment in the Alumbrera acquisition, although weighted the chance of the plaintiff’s 50% participation at 15%. The matter was remanded to the first-instance court to determine the value. On June 12, 2013, Northern Orion filed an extraordinary recourse with the appellate court in order to bring the matter before the Supreme Court of Argentina to consider whether the appellate court’s decision was arbitrary. The extraordinary recourse was denied by the appellate court and Northern Orion was notified of this decision on December 20, 2013. Based on this decision, Northern Orion filed an appeal directly with the Supreme Court on February 3, 2014. Pending the decision of the Supreme Court, Northern Orion will make submissions to the first-instance court to address the value. The outcome of this case is uncertain and cannot be reasonably estimated.

In December 2012, the Company received assessments from the Brazilian federal tax authorities disallowing certain deductions relating to debentures for the years 2007 to 2010. The Company believes that these debentures were issued on commercial terms permitted under applicable laws and is challenging these assessments. As such, the Company does not believe it is probable that any amounts will be paid with respect to these assessments with the Brazilian authorities and the amount and timing of any assessments cannot be reasonably estimated.

There have been no penalties or sanctions imposed against the Company by a court relating to securities legislation or by a securities regulatory authority during fiscal 2013, or any other time that would likely be considered important to a reasonable investor making an investment decision in the Company, and the Company has not entered into any settlement agreements with a court relating to securities legislation or with a securities regulatory authority during fiscal 2013.

ITEM 11

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as described elsewhere herein, none of the directors, executive officers or persons or companies who beneficially own, or control or direct, directly or indirectly, more than 10 percent of any class of outstanding voting securities of the Company, nor any associate or affiliate of the foregoing persons, has or has had any material interest, direct or indirect, in any transaction within the past three financial years or during the current financial year, that has materially affected or is reasonably expected to have material affect on the Company.

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ITEM 12

TRANSFER AGENTS AND REGISTRAR

The transfer agent and registrar for the common shares of the Company is CST Trust Company, at its principal offices in Toronto, Ontario, and the co-transfer agent for the common shares in the United States is American Stock Transfer & Trust Company, LLC at its principal offices in Brooklyn, New York. 

ITEM 13

MATERIAL CONTRACTS

The only material contracts entered into by the Company, other than in the ordinary course of business, within the most recently completed financial year, or prior thereto and are still in effect, are described below. Copies of these material contracts are available under the Company’s SEDAR profile at www.sedar.com.

The Company entered into an amended and restated credit agreement dated February 29, 2012 (the “Credit Agreement”) pursuant to which a group of financial institutions granted the Company a $750 million revolving term credit facility maturing February 28, 2017 (the “Credit Facility”). Credit under the Credit Facility is available by way of Base Rate Canada Loans or LIBOR Loans at the customary reference rates plus an applicable margin that ranges from 0.50% to 1.75% per annum, in the case of Base Rate Canada Loans and 1.50% to 2.75% per annum, in the case of LIBOR Loans, depending on the ratio (the “Leverage Ratio”) of the Company’s total debt to its earnings before interest, taxes, depreciation and amortization. The Credit Facility is payable in full on its maturity date. If the Company sells certain assets or ownership interests in certain material operating subsidiaries the net proceeds thereof must be used to prepay outstanding obligations under the Credit Facility. The Credit Facility is guaranteed by certain material subsidiaries (the “Guarantors”). The Credit Agreement contains covenants that restrict, among other things and subject to certain specified exceptions, the ability of the Company and certain of its subsidiaries to (i) incur additional indebtedness; (ii) grant security interests and other encumbrances on its property; (iii) enter into corporate or capital reorganizations; (iv) carry on any business, other than mining and related activities; (v) sell or otherwise dispose of any material property; (vi) pay or declare dividends or make other distributions or payments in respect of its shares; (vii) make acquisitions or investments, other than in the ordinary course of business; and (viii) enter into transactions with affiliates. The Company is also required to maintain certain financial ratios as well as a minimum tangible net worth. The Credit Agreement contains certain events of default. The Company was granted the right, upon obtaining additional commitments, to increase the Credit Facility by an aggregate amount of up to $250 million.

The Company entered into a first amending agreement to the Credit Agreement dated February 28, 2013 (the “First Amendment”) pursuant to which the maturity date of the Credit Facility was extended to February 28, 2018. In addition, the First Amendment decreased the per annum standby fee rates in respect of the standby fees payable by the Company to the lenders pursuant to the Credit Agreement.

The Company entered into a note purchase agreement dated December 18, 2009 (the “Note Purchase Agreement”) pursuant to which it issued and sold senior unsecured notes in an aggregate principal amount of $270,000,000 of which $15,000,000 are 5.53% Series A Senior Notes due December 21, 2014 (the “2009 Series A Notes”), $73,500,000 are 6.45% Series B Senior Notes due December 21, 2016 (the “2009 Series B Notes”) and $181,500,000 are 6.97% Series C Senior Notes due December 21, 2019 (together with the 2009 Series A Notes and the 2009 Series B Notes, the “Notes”). The Company may prepay the Notes at any time provided it pays a make whole payment to the holders. The Notes are also guaranteed by the Guarantors. The covenants, including the financial covenants, and events of default under the Note Purchase Agreement and the Notes are similar to the covenants and events of default under the Credit Agreement.

The Company entered into a note purchase agreement dated March 23, 2012 (the “Second Note Purchase Agreement”) pursuant to which it issued and sold senior unsecured notes in an aggregate principal amount of $500,000,000 of which $75,000,000 are 3.89% Series A Senior Notes due March 23, 2018 (the “2012 Series A Notes”), $85,000,000 are 4.36% Series B Senior Notes due March 23, 2020 (the “2012 Series B Notes”), $200,000,000 are 4.76% Series C Senior Notes due March 23, 2022 (the “2012 Series C Notes”) and $140,000,000 are 4.91% Series D Senior Notes due March 23, 2024 (together with the 2012 Series A Notes, the 2012 Series B Notes and the 2012 Series

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C Notes, the “Second Notes”). The Company may prepay the Second Notes at any time provided it pays a make whole payment to the holders. The Second Notes are also guaranteed by the Guarantors. The covenants, including the financial covenants, and events of default under the Second Note Purchase Agreement and the Second Notes are similar to the covenants and events of default under the Credit Agreement and the Note Purchase Agreement.

The Company entered into a note purchase agreement dated June 10, 2013 (the “Third Note Purchase Agreement”) pursuant to which it issued and sold senior unsecured notes in an aggregate principal amount of $300,000,000 of which $35,000,000 are 3.64% Series A Senior Notes due June 10, 2018 (the “2013 Series A Notes”) and $265,000,000 are 4.78% Series B Senior Notes due June 10, 2023 (together with the 2013 Series A Notes, the “Third Notes”). The Company may prepay the Third Notes at any time provided it pays a make whole payment to the holders.  The Third Notes are also guaranteed by the Guarantors.  The covenants, including the financial covenants, and events of default under the Third Note Purchase Agreement and the Third Notes are similar to the covenants and events of default under the Credit Agreement, the Note Purchase Agreement and the Second Note Purchase Agreement.

ITEM 14

AUDIT COMMITTEE

The Audit Committee is responsible for monitoring the Company’s systems and procedures for financial reporting and internal control, reviewing certain public disclosure documents and monitoring the performance and independence of the Company’s external auditors. The committee is also responsible for reviewing the Company’s annual audited financial statements, unaudited quarterly financial statements and management’s discussion and analysis of financial results of operations for both annual and interim financial statements and review of related operations prior to their approval by the full board of directors of the Company.

The Audit Committee’s charter sets out its responsibilities and duties, qualifications for membership, procedures for committee member removal and appointment and reporting to the board of directors of the Company. A copy of the charter is attached hereto as Schedule “A”.

During the year ended December 31, 2013, the Audit Committee was comprised of four directors, all of whom were independent directors. The current members of the Audit Committee are: Richard Graff (Chair), John Begeman, Patrick J. Mars and Carl Renzoni. In addition to being independent directors as described above, all members of the Company’s Audit Committee must meet an additional “independence” test under Multilateral Instrument 52-110, “Audit Committees” in that their directors’ fees are the only compensation they, or their firms, receive from the Company and that they are not affiliated with the Company. Each member of the Audit Committee is financially literate within the meaning of Multilateral Instrument 52-110.

The Audit Committee met four times during the most recently completed financial year and all persons who were members of the committee at the time of holding such meetings were in attendance.

Relevant Educational Experience

Set out below is a description of the education and experience of each of the Company’s four current audit committee members, which is relevant to the performance of his responsibilities as an audit committee member.

Richard Graff – Mr. Graff is a retired partner from PricewaterhouseCoopers LLP where he served as the audit leader in the United States for the mining industry. Since his retirement, Mr. Graff has been a consultant to the mining industry and was a member of a Financial Accounting Standards Board task force for establishing accounting and financial reporting guidance in the mining industry. He represents a consortium of international mining companies and has provided recommendations to the IASB on mining industry issues and to regulators on industry disclosure requirements of securities legislation. He received his undergraduate degree in Economics from Boston College and his post-graduate degree in Accounting from Northeastern University. He serves as Chairman of the board, chairman of the audit committee and a member of the compensation and corporate governance and nominating committee of Alacer. He also serves as chairman of the audit committee and a member of the corporate governance committee of the board of directors of Dynamic.

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John Begeman – Mr. Begeman currently sits on the board of directors of Premier and acts as its lead director and chairman of its audit committee. He previously served as the President and Chief Executive Officer of Avion Gold Corporation, as the Chief Operating Officer of Zinifex Canada Inc. and Vice President, Western Operations of Goldcorp. Prior to his employment at Goldcorp, Mr. Begeman held various engineering and management positions with Morrison Knudsen Company in the contract mining operations group throughout the Western United States. Mr. Begeman holds a Bachelor of Science in Mining Engineering, a Master of Science in Engineering Management and a Master of Business Administration.

Patrick J. Mars – Mr. Mars is a Chartered Financial Analyst and has over 30 years experience in the investment industry in Canada. This experience included working as a financial analyst and serving as President of Alfred Bunting & Co./Bunting Warburg from 1981 to 1994. He was a director of Yamana Resources, a predecessor to the Company and has been a director of the Company since August 2001. He has served on numerous audit committees of boards of directors and has been chairman of several of these. Presently, Mr. Mars is a corporate director and serves on the audit committees of Aura Minerals and Sage Gold (Chairman). Mr. Mars holds a Bachelor of Commerce and Master of Business Administration degrees.

Carl Renzoni – Mr. Renzoni has over 30 years of experience in the investment industry in Canada. Mr. Renzoni is retired from BMO Nesbitt Burns, where he worked as a financial analyst from 1969 to 1980 and as Managing Director of the Mining Investment Banking Group from 1980 to 2001. Mr. Renzoni has previously served on the boards of several public mineral exploration companies and also previously served as Chair of the Audit Committee of Meridian.

Pre-Approval Policies and Procedures

The Audit Committee’s charter sets out responsibilities regarding the provision of non-audit services by the Company’s external auditors. This policy encourages consideration of whether the provision of services other than audit services is compatible with maintaining the auditor’s independence and requires Audit Committee pre-approval of permitted audit and audit-related services.

External Auditor Service Fees

Audit Fees

The aggregate audit fees billed by the Company’s external auditors for the year ended December 31, 2013 were Cdn$3,325,000 (December 31, 2012 – Cdn$3,067,000). The audit fees relate to the audit of the annual consolidated financial statements of the Company, and certain statutory audits outside of Canada.

Audited-Related Fees

The aggregate audit-related fees billed by the Company’s external auditors for the year ended December 31, 2013 were Cdn$72,000 (December 31, 2012 – Cdn$68,000). The audit-related fees relate to services provided in connection with oversight of information technology projects, environmental assessments in Argentina and Brazil and investment certificates in Chile.

Tax Fees

The aggregate tax fees billed by the Company’s external auditors for the year ended December 31, 2013 were Cdn$0 (December 31, 2012 – Cdn$0).

All Other Fees

The other fees billed by the Company’s external auditors for the year ended December 31, 2013 was Cdn$252,000 (December 31, 2012 – Cdn$245,000), which related to services related to certain information technology projects.

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ITEM 15

INTERESTS OF EXPERTS

The following are the technical reports prepared in accordance with NI 43-101 from which certain technical information relating to the Company’s material mineral projects contained in this annual information form has been derived, as well as the qualified persons involved in preparing such reports, and details of certain technical information relating to the Company’s material mineral projects contained in this annual information form which have been reviewed and approved by qualified persons.

Chapada Mine – “Technical Report on the Chapada Mine, Brazil” dated March 7, 2014, prepared by or under the supervision of Wayne W. Valliant, P.Geo., and Robert L. Michaud, P. Eng., of RPA.The technical information set forth under the heading “Description of the Business – Material Mineral Properties – Chapada Mine – Current Exploration and Development” has been reviewed and approved by William Wulftange, P.Geo, Senior Vice President, Explorationof the Company, a qualified person pursuant to NI 43-101.

El Peñón Mine – “Technical Report on the El Peñón Mine, Northern Chile” dated December 7, 2010, prepared by or under the supervision of Stuart E. Collins, P.E., and Chester M. Moore, P.Eng., of RPA and Kevin C. Scott, P. Eng., formerly with RPA. The technical information set forth under the heading “Description of the Business – Material Mineral Properties – El Peñón Mine – Current Exploration and Development” has been reviewed and approved by William Wulftange, P.Geo, Senior Vice President, Explorationof the Company, a qualified person pursuant to NI 43-101.

Mercedes Mine – “Technical Report on the Mercedes Gold-Silver Mine, Sonora State, Mexico” dated February 25, 2014, prepared by or under the supervision of R. Dennis Bergen, P. Eng., and Chester M. Moore, P. Eng., of RPA.The technical information set forth under the heading “Description of the Business – Material Mineral Properties – Mercedes Mine – Current Exploration and Development” has been reviewed and approved by William Wulftange, P.Geo, Senior Vice President, Explorationof the Company, a qualified person pursuant to NI 43-101.

Gualcamayo Mine – “Technical Report for Gualcamayo Project, San Juan, Argentina, Report for NI 43-101 pursuant to National Instrument 43-101 of the Canadian Securities Administrators” dated March 25, 2011, prepared by or under the supervision of Guillermo Bagioli, MAusIMM, of Metálica, Marcelo Trujillo, formerly of Metálica, Alvaro Vergara, MAusIMM, of Metálica, Emerson Ricardo Re, MSc, MAusIMM, Corporate Manager R&R, Yamana, Marcos Eduardo Valencia Araya, P.Geo., Regional Resource Estimation Manager, Andes Exploration, Yamana and Renato Petter, P. Eng. The technical information set forth under the heading “Description of the Business – Material Mineral Properties – Gualcamayo Mine – Current Exploration and Development” has been reviewed and approved by William Wulftange, P.Geo, Senior Vice President, Explorationof the Company,a qualified person pursuant to NI 43-101.

Jacobina Mining Complex – “Technical Report on the Jacobina Mine Complex, Bahia State, Brazil” dated February 28, 2014 prepared by or under the supervision of Normand Lecuyer, P.Eng., and Chester M. Moore, P.Eng., of RPA. The technical information set forth under the heading “Description of the Business – Material Mineral Properties – Jacobina Mining Complex – Current Exploration and Development” has been reviewed and approved by William Wulftange,P.Geo, Senior Vice President, Explorationof the Company, a qualified person pursuant to NI 43-101.

Each of the technical reports noted above are available on the Company’s SEDAR profile at www.sedar.com, and a summary of each report is contained in this annual information form under “Description of the Business – Mineral Projects – Material Mineral Properties”.

The following are the qualified persons responsible for the Mineral Resource and Mineral Reserve estimates for each of the Company’s mineral projects set out in this annual information form under “Description of the Business – Mineral Projects – Summary of Mineral Reserve and Mineral Resource Estimates” and “Description of the Business – Material Mineral Properties – Chapada Mine – Mineral Resource and Mineral Reserve Estimates”, as applicable.

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Property	Qualified Persons for Mineral Reserves	Qualified Persons for Mineral Resources
Alumbrera	Julio Bruna Novillo, AusIMM, Member of CIM, Independent Consulting Geologist	Julio Bruna Novillo, AusIMM, Member of CIM, Independent Consulting Geologist
Amancaya	Not applicable	Chester M. Moore, P.Eng., Roscoe Postle Associates Inc.
Arco Sul	Not applicable	Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc.
C1 Santa Luz	Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc.	Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc.
Chapada	Robert Michaud, P. Eng., Roscoe Postle Associates Inc.	Wayne Valliant, P.Geo., Roscoe Postle Associates Inc.
Cerro Moro	Carlos Guzman, Mining Eng., Registered Member of Chilean Mining Commission, FAusIMM, Principal and Project Director, NCL Ingenieria y Construccion SpA	David (Ted) Coupland, BSc DipGeoSc CFSG ASIA MAusIMM (CP) MMICA, Director, Geological Consulting, Principal Geostatistician Cube Consulting Pty Ltd. and Marcos Valencia A. P.Geo., Registered Member of Chilean Mining Commission, Corporate Manager R&R, Andes/Mexico, Yamana Gold Inc.
El Peñón	Carlos Bottinelli Otárola, P. Eng., Registered Member of Chilean Mining Commission, Development Manager, Yamana Gold Inc.	Max Iribarren Parra, P. Geo., Registered Member of Chilean Mining Commission and Sebastián Ramírez Cuadra, P. Geo., Registered Member of Chilean Mining Commission, Resources Geologist, Yamana Gold Inc.
Ernesto/ Pau-a -Pique	Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc. (for Lavrinha and Ernesto Pit 1) and Marcelo Antonio Batelochi, P.Geo., MAusIMM (CP), Geologist Consultant (for Satellites (Nosde, Japones and Pombinhas)) and Ricardo Miranda Díaz, P.Eng., Registered Member of Chilean Mining Commission, Corporate Technical Manager, Yamana Gold Inc. (for Pau a Pique) and Peter Mokos, B. Eng. (Mining), Dip. Eng. (Mining), MAusIMM (CP), RPEQ, Principal Mining Engineer, AMC Consultants Pty. Ltd. (for Ernesto Pit 2)	Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc. (for Pau a Pique and Lavrinha) and Marcelo Antonio Batelochi, P.Geo., MAusIMM (CP), Geologist Consultant (for Satellites (Nosde, Japones and Pombinhas)) and Rodney Webster, B.Sc..(Applied Geology), MAusIMM, MAIG, Principal Geologist, AMC Consultants Pty. Ltd. (for Ernesto (Pits 1 and 2))
Fazenda Brasileiro	Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc.	Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc.
Gualcamayo	Ricardo Miranda Díaz, P.Eng., Registered Member of Chilean Mining Commission, Corporate Technical Manager, Yamana Gold Inc.	Marcos Valencia A. P.Geo., Registered Member of Chilean Mining Commission, Corporate Manager R&R, Andes/Mexico, Yamana Gold Inc.
Jacobina	Normand Lecuyer, B.Sc., P.Eng., Roscoe Postle Associates Inc.	Chester M. Moore, P.Eng., Roscoe Postle Associates Inc.
Jeronimo	Guillermo Bagioli Arce, MAusIMM, Registered Member of Chilean Mining Commission, Metálica Consultores S.A.	Dominique François-Bongarçon, Ph.D, FAusIMM, Agoratek International
La Pepa	Not applicable	Chester M. Moore, P.Eng., Roscoe Postle Associates Inc.
Lavra Velha	Not applicable	Marcelo Antonio Batelochi, P.Geo., MAusIMM (CP), Geologist Consultant
Mercedes	Dennis Bergen, P.Eng., Roscoe Postle Associates Inc.	Chester M. Moore, P.Eng., Roscoe Postle Associates Inc.

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Property	Qualified Persons for Mineral Reserves	Qualified Persons for Mineral Resources
Minera Florida	Carlos Bottinelli Otárola, P. Eng. Registered Member of Chilean Mining Commission, Development Manager, Yamana Gold Inc.	Javier Suazo Guzmán, P.Geo., Registered Member of the Chilean Mining Commission, Resources Geologist, Yamana Gold Inc. and Dafne Herreros Van Norden, P.Geo., Registered Member of Chilean Mining Commission, Resources Geologist, Yamana Gold Inc.
Pilar	Guillermo Bagioli, MAusIMM, Registered Member of Chilean Mining Commission, Metalica Consultores S.A. (for Jordino) and Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc. (for Jordino Extension)	Marco Antonio Alfaro Sironvalle, P.Eng., Ph.D. Eng., MAusIMM, Registered Member of Chilean Mining Commission (for Jordino) and Emerson Ricardo Re, MSc, MAusIMM, Registered Member of Chilean Mining Commission, Corporate Manager R&R, Yamana Gold Inc. (for Jordino Down Dip, Tres Buracos, HG and Ogo Extension and Maria Lazara)
Suyai	Not applicable	Robin J. Young, P. Geo., Western Services Engineering, Inc.
Agua Rica	Enrique Munoz Gonzalez, MAusIMM, Registered Member of Chilean Mining Commission	Evandro Cintra, Ph.D., P. Geo., Vice President, Operational Planning and Support, Yamana Gold Inc.

The aforementioned firms or persons held either less than one percent or no securities of the Company or of any associate or affiliate of the Company when they prepared the reports or the Mineral Reserve estimates or the Mineral Resource estimates referred to, or following the preparation of such reports or data, and either did not receive any or received less than a one percent direct or indirect interest in any securities of the Company or of any associate or affiliate of the Company in connection with the preparation of such reports or data.

None of the aforementioned firms or persons, nor any directors, officers or employees of such firms, are currently, or are expected to be elected, appointed or employed as, a director, officer or employee of the Company or of any associate or affiliate of the Company other than Carlos Bottinelli Otárola, Evandro Cintra, Dafne Herreros Van Norden, Ricardo Miranda Díaz, Sebastián Ramírez Cuadra, Emerson Ricardo Re, Javier Suazo Guzmán, Marcos Eduardo Valencia Araya and William Wulftange, who are all employed by Yamana.

Deloitte LLP is the auditor of Yamana and is independent within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of British Columbia.

ITEM 16

ADDITIONAL INFORMATION

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, as applicable, will be contained in the Company’s management information circular to be filed in connection with its annual shareholders’ meeting for 2014. Additional financial information is provided in the Company’s financial statements and managements’ discussion and analysis for the fiscal year ended December 31, 2013. Additional financial information relating to the Company may also be found under the Company’s SEDAR profile at www.sedar.com.

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SCHEDULE "A"

CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
DATED AS OF AUGUST 7, 2012

1. Purpose

The Audit Committee is a committee of the Board of Directors (the “Board”) of Yamana Gold Inc. (the “Company”). The purpose of the Audit Committee is to:

(a) assist the Board in its oversight responsibilities with respect to: (i) the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) the external auditors’ qualifications and independence; and (iv) the performance of the Company’s internal and external audit functions;

(b) serve as an independent and objective party to monitor the Company’s financial reporting processes and internal control systems;

(c) review and appraise the audit activities of the Company’s external auditors; and

(d) prepare Audit Committee report(s) as required by applicable regulators.

The Audit Committee shall have the authority to delegate to one or more of its members, responsibility for developing recommendations for consideration by the Audit Committee with respect to any of the matters referred to in this Charter.

2. Composition and Meetings

The Audit Committee shall be comprised of three or more directors as determined by the Board, each of whom shall be an “independent director” in accordance with applicable legal requirements, including the requirements of National Instrument 52-110 Audit Committees (“NI 52-110”) and the Corporate Governance Rules of the New York Stock Exchange, as such rules are revised, updated or replaced from time to time, subject to any waivers or exceptions granted by such stock exchange.

All members shall, to the satisfaction of the Board, be “financially literate”, and at least one member shall have accounting or related financial management expertise to qualify as a “financial expert” in accordance with applicable legal requirements, including the requirements of NI 52-110 and the rules adopted by the United States Securities and Exchange Commission (the ‘SEC”), as revised, updated or replaced from time to time.

The members of the Audit Committee and its chairman shall be elected by the Board at the annual organizational meeting of the Board, and shall serve until: the next annual meeting of shareholders; they resign; their successors are duly appointed; or such member is removed from the Audit Committee by the Board. If the Board fails to designate one member as the chairman of the Audit Committee (the “Chairman”), the members of the Audit Committee shall appoint the Chairman from among its members.

The Audit Committee shall meet as frequently as the Audit Committee considers necessary, but not less than once each quarter, to review the financial results of the Company. The Audit Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate, and approve the fees and other retention terms of special or independent counsel, accountants or other experts or advisors, as it deems necessary or appropriate, without seeking approval of the Board or management.

The Audit Committee shall have the authority to meet with the Chief Executive Officer and the Chief Financial Officer, along with internal auditors and the external auditor, and have such other direct and independent interaction with such persons from time to time as the members of the Audit Committee deem appropriate. The Audit Committee may request the CEO to have such officers or employees of the Company or the Company’s outside counsel or external auditor to attend a meeting of the Audit Committee or to meet with any members of, or consultants to, the Audit Committee.

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The external auditors will have direct access and report directly to the Audit Committee at their own initiative.

Quorum for the transaction of business at any meeting of the Audit Committee shall be a majority of the number of members of the Audit Committee or such greater number as the Audit Committee shall by resolution determine.

Meetings of the Audit Committee shall be held from time to time as the Audit Committee or the Chairman shall determine upon notice to each of its members in compliance with the Company’s by-laws. The notice period may be waived by a quorum of the Audit Committee.

3. Responsibilities and Powers

Responsibilities and powers of the Audit Committee include:

General

1. review and assess the adequacy of this Charter at least annually and, where necessary or desirable, recommend changes to the Board provided that this Charter may be amended and restated from time to time without the approval of the Board to ensure that the composition of the Audit Committee and the responsibilities and powers of the Audit Committee comply with applicable laws and stock exchanges;

2. evaluate the functioning and effectiveness of the Audit Committee and its members on an annual basis;

Documents/Reports Review

3. prior to the recommendation to the Board for approval of release of the annual and quarterly financial statements, review and discuss with management and the independent public accountants, upon completion of their audit, the financial results for the year or quarter and the results of the audit, including (i) the Company’s annual financial statements and related footnotes; (ii) management’s discussion and analysis of the financial condition and results of operations; (iii) annual and interim earnings press releases; (iv) the results of the audit, including the nature and amount of unrecorded adjustments resulting from the audit; (v) review with the independent public accountants and management the Company’s policies and procedures relative to the adequacy of internal accounting and financial reporting controls (including any significant deficiencies and significant changes in internal control over financial reporting), including controls over quarterly and annual financial reporting, computerized information systems and security (vi) the independent public accountants’ management recommendations; (vii) any significant transactions which occurred during the year; (viii) any significant adjustments; critical accounting policies and practices (ix) management judgments and accounting estimates; (x) new accounting policies; (xi) all alternative treatments of financial information within generally accepted accounting principles, ramifications of the use of alternative disclosures and treatments, and the treatment preferred by the independent public accountants; and (xii) any disagreements between management and the independent public accountants;

4. ensure that adequate procedures are in place for the review of the issuer’s disclosure of financial information extracted or derived from the issuer’s financial statements and periodically assess the adequacy of such procedures;

5. review the effects of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company;

6. at least annually, (i) inquire of management and the independent public accountant about the significant business, political, regulatory and control issues or exposures to financial risk; (ii) oversee

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and monitor management’s documentation of the significant financial risks that the Company faces and update as events change and risks shift and (iii) assess the steps that management has taken to control identified financial risks to the Company;

Responsibilities of the Audit Committee Chairman

7. the fundamental responsibility of the Audit Committee Chairman is to be responsible for the management and effective performance of the Audit Committee and provide leadership to the Audit Committee in fulfilling its mandate and any other matters delegated to it by the Board. To that end, the Audit Committee Chairman’s responsibilities shall include:

a. working with the Chairman and Chief Executive Officer and the Corporate Secretary to establish the frequency of Audit Committee meetings and the agendas for meetings;

b. providing leadership to the Audit Committee and presiding over Audit Committee meetings;

c. facilitating the flow of information to and from the Audit Committee and fostering an environment in which Audit Committee members may ask questions and express their viewpoints;

d. reporting to the Board with respect to the significant activities of the Audit Committee and any recommendations of the Audit Committee; and

e. leading the Audit Committee in annually reviewing and assessing the adequacy of its mandate and evaluating its effectiveness in fulfilling its mandate; and taking such other steps as are reasonably required to ensure that the Audit Committee carries out its mandate;

External Auditors

8. recommend external auditors nominations to the Board to be put before the shareholders for appointment and, as necessary, the removal of any external auditor in office from time to time;

9. approve the fees and other compensation to be paid to the external auditors and the funding for payment of the external auditors’ compensation and any advisors retained by the Audit Committee;

10. pre-approve all audit services, internal control related services and any permissible non-audit engagements of the external auditors, in accordance with applicable legislation;

11. meet with external auditors and financial management of the Company to review the scope of the proposed audit of the current year, and the audit procedures to be used;

12. meet quarterly with external auditors “in camera” to discuss reasonableness of the financial reporting processes, systems of internal control, significant comments and recommendations, and management performance;

13. advise the external auditors of their ultimate accountability to the Board and the Audit Committee;

14. oversee the work of the external auditors engaged for the purpose of preparing an audit report or performing other audit, review and attest services for the issuer;

15. evaluate the qualifications, performance and independence of the external auditors which are to report directly to the Audit Committee, including: (i) reviewing and evaluating the lead partner on the external auditors’ engagement with the Company, (ii) considering whether the auditors’ quality controls are adequate and the provision of permitted non-audit services is compatible with maintaining the auditors’ independence, (iii) determine the rotation of the lead audit partner and the audit firm, and (iv) take into account the opinions of management and the internal audit function in assessing the external auditors’ qualifications, independence and performance;

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16. present the Audit Committee’s conclusions with respect to its evaluation of external auditors to the Board and take such additional action to satisfy itself of the qualifications, performance and independence of external auditors and make further recommendations to the Board as it considers necessary;

17. obtain and review a report from the external auditors at least annually regarding: (i) the external auditors’ internal quality-control procedures; (ii) material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more external audits carried out by the firm; (iii) any steps taken to deal with any such issues; and (iv) all relationships between the external auditors and the Company;

18. discuss with the external auditors any relationships that might affect the external auditors’ objectivity and independence;

19. recommend to the Board any action required to ensure the independence of the external auditors;

20. review and approve policies for the Company’s hiring of employees or former employees of the present and former external auditors;

Internal Audit

21. receive reports from the Company’s Chief Financial Officer on the scope and material results of its internal SOX audit activities;

22. establish procedures for: (i) the receipt, retention and treatment of complaints regarding accounting, internal controls or auditing matters; and (ii) the confidential, anonymous submission of concerns regarding questionable accounting, internal control and auditing matters;

Financial Reporting Process

23. periodically discuss the integrity, completeness and accuracy of the Company’s internal controls and the financial statements with the external auditors in the absence of the Company’s management;

24. in consultation with the external auditors, review the integrity of the Company’s financial internal and external reporting processes;

25. consider the external auditors’ assessment of the appropriateness of the Company’s auditing and accounting principles as applied in its financial reporting;

26. review and discuss with management and the external auditors at least annually and approve, if appropriate, any material changes to the Company’s internal auditing and accounting principles and practices suggested by the external auditors or management;

27. review disclosures made by the CEO and CFO during their certification process for the annual and interim filings with applicable securities regulatory authorities about any significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or any material weaknesses in the internal controls, and any fraud involving management or other employees who have a significant role in the Company’s internal controls;

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28. establish regular and separate systems of reporting to the Audit Committee by management and the external auditors of any significant decision made in management’s preparation of the financial statements, including the reporting of the view of management and the external auditors as to the appropriateness of such decisions;

29. discuss during the annual audit, and review separately with each of management and the external auditors, any significant matters arising from the course of any audit, including any restrictions on the scope of work or access to required information; whether raised by management or the external auditors;

30. resolve any disagreements between management and the external auditors regarding financial reporting;

31. review with the external auditors and management the extent to which changes or improvements in financial or accounting practices, as approved by the Audit Committee, have been implemented at an appropriate time subsequent to the implementation of such changes or improvements;

32. retain and determine the compensation of any independent counsel, accountants or other advisors to assist in its oversight responsibilities (the Audit Committee shall not be required to obtain the approval of the Board for such purposes);

33. discuss any management or internal control letters or proposals to be issued by the external auditors of the Company;

Legal Compliance

34. review with the Company’s legal counsel any legal matter that the Audit Committee understands could have a significant impact on the Company’s financial statements;

35. conduct or authorize investigations into matters within the Audit Committee’s scope of responsibilities;

36. perform any other activities, in accordance with the Charter, the Company’s by-laws and governing laws, that the Audit Committee or the Board deems necessary or appropriate;

Reporting and Powers

37. record minutes of its meetings and report periodically to the Board on all matters and recommendations made by the Audit Committee and at such other times as the Board may consider appropriate; and

38. exercise such other powers and perform such other duties and responsibilities as are incidental to the purposes, duties and responsibilities specified herein and as may from time to time be delegated to the Audit Committee by the Board.

4. Limitation of Responsibility

While the Audit Committee has the responsibilities and powers provided by this Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with applicable accounting principles and standards. This is the responsibility of management (with respect to whom the Audit Committee performs an oversight function) and the external auditors.

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EX-99.2

EXHIBIT 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

OPERATIONS AND FINANCIAL CONDITION

FOR THE YEAR ENDED DECEMBER 31, 2013

TABLE OF CONTENTS

			Page
1.	Core Business		1
2.	Highlights		1
3.	Outlook and Strategy		4
4.	Summary of Financial and Operating Statistics		7
	4.1:	Annual Financial Statistics	7
	4.2:	Annual Operating Statistics	8
	4.3:	Quarterly Financial Statistics	9
	4.4:	Quarterly Operating Statistics	10
5.	Overview of Annual Results		11
	5.1:	Overview of Annual Financial Results	11
	5.2:	Overview of Annual Operating Results	15
	5.3:	Overview of Quarterly Financial Results	17
	5.4:	Overview of Quarterly Operating Results	20
6.	Operating Mines		21
7.	Construction, Development and Exploration		32
8.	Mineral Reserves and Mineral Resources		36
9.	Liquidity, Capital Resources and Contractual Commitments		41
10.	Income Taxes		43
11.	Economic Trends, Risks and Uncertainties		44
12.	Contingencies		51
13.	Critical Accounting Policies and Estimates		51
14.	Non-GAAP Measures		53
15.	Selected Quarterly Financial and Operating Summary		59
16.	Disclosures Controls and Procedures		62

MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION

(All figures are in United States Dollars unless otherwise specified and are in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).  This Management’s Discussion and Analysis of Operations and Financial Condition should be read in conjunction with the Company’s most recently issued annual consolidated financial statements for the year ended December 31, 2013 ("Consolidated Annual Financial Statements").

Cautionary notes regarding forward-looking statements follow this Management’s Discussion and Analysis of Operations and Financial Condition.

1.    CORE BUSINESS

Yamana Gold Inc. (the “Company” or “Yamana”) is a Canadian-headquartered gold producer engaged in gold mining and related activities including exploration, extraction, processing and reclamation. The Company has significant precious metal properties and land positions throughout the Americas including in Brazil, Chile, Argentina and Mexico.

The Company plans to continue to build on its current production base through existing operating mine expansions and development of new mines, advancement of its exploration properties and by targeting other gold consolidation opportunities with a primary focus in the Americas.

Note 34(a)Related Parties to the most recently audited Consolidated Annual Financial Statements lists Yamana’s significant subsidiaries with 100% equity interest.  The Company does not have any material off-balance sheet arrangements, except as noted in Note 32 Contractual Commitments to the Consolidated Annual Financial Statements.

Yamana is listed on the Toronto Stock Exchange (Symbol: YRI) and the New York Stock Exchange (Symbol: AUY).

2.    HIGHLIGHTS

The Company’s focus continues to be on ensuring a balance between costs and production, margin preservation and on the generation and protection of cash flow. The Company continues to believe this balanced approach is appropriate and prudent to create value in the prevailing commodity price environment.

Financial

For the year ended December 31, 2013

• Revenues of $1.84 billion.

• Net loss^(a) of $446.2 million or $0.59 loss per share, after impairment charges related to mineral properties of $546.1 million, net of taxes.

• Adjusted earnings^(b) of $273.4 million or $0.36 adjusted basic and diluted earnings per share^(b).

• Mine operating earnings of $540.8 million.

• Cash flows from operating activities after changes in non-cash working capital of $653.1 million and cash flows from operating activities before changes in non-cash working capital* of $707.9 million.

For the three months ended December 31, 2013

• Revenues of $420.7 million.

• Net loss^(a) of $583.9 million or $0.78 loss per share, after impairment charges related to mineral properties of $535.8 million, net of taxes.

• Adjusted earnings^(b) of $36.7 million or $0.05 adjusted basic and diluted earnings per share^(b).

• Mine operating earnings of $70.1 million.

• Cash flows from operating activities after changes in non-cash working capital of $184.8 million and cash flows from operating activities before changes in non-cash working capital* of $165.3 million.

________________________________________

(a)    Attributable to Yamana equity holders, after deducting non-controlling interest’s share of non-recurring impairment charge.

(b)     A non-GAAP measure - Refer to Section 14.

1

Operational

For the year ended December 31, 2013

• Production of 1.20 million gold equivalent ounces ("GEO")^(a). 

• Commercial production of 1.14 million GEO.

• Production from operating mines is summarized as follows: 

	For the years ended December 31,
(In GEO)	2013	2012
Chapada	110,618	128,171
El Peñón	467,523	462,496
Mercedes (d)	141,618	126,010
Gualcamayo	120,337	147,310
Jacobina	73,695	116,863
Minera Florida	118,590	105,679
Fazenda Brasileiro	70,079	67,130
Ernesto/Pau-a-Pique (b)	27,571	1,274
C1 Santa Luz (b)	12,997	—
Pilar (b)	15,374	—
Alumbrera (12.5%)	39,157	46,077
Total	1,197,559	1,201,010

• Production of 8.4 million silver ounces.

• Copper production from Chapada of 130.2 million pounds.

• By-product cash costs^(c) of $410 per GEO.

• Co-product cash costs^(c) of $596 per GEO and $1.65 per pound of copper from Chapada.

• All-in sustaining cash costs^(c) of $814 per GEO on a by-product basis and $947 per GEO on a co-product basis.

• Average all-in sustaining cash cost on a co-product basis for the last three quarters was below $925 per GEO exceeding expectations of the cost containment initiative implemented in the second quarter.

• Jacobina, Brazil — Production met the revised goals that were set in the first quarter of 2013 and more importantly, the near term objectives relating to the improvement of costs and underground development were met.

• Mercedes, Mexico — GEO production was 12% higher than 2012.

• Minera Florida, Chile — GEO production was 12% higher than 2012 with new production from the tailings retreatment plant that started in September 2012.

For the three months ended December 31, 2013

• Production of 303,768 GEO.

• Commercial production of 277,447 GEO.

• Production from operating mines is summarized as follows: 

	For the three months ended December 31,
(In GEO)	2013	2012
Chapada	29,817	32,498
El Peñón	101,364	128,119
Mercedes	31,716	39,443
Gualcamayo	34,929	31,502
Jacobina	19,519	28,337
Minera Florida	30,513	32,797
Fazenda Brasileiro	18,270	18,251
Ernesto/Pau-a-Pique (b)	9,707	1,274
C1 Santa Luz (b)	6,120	—
Pilar (b)	10,494	—
Alumbrera (12.5%)	11,319	10,769
Total	303,768	322,990

2

• Production of 2.2 million silver ounces.

• Copper production from Chapada of 36.0 million pounds.

• By-product cash costs^(c) of $417 per GEO.

• Co-product cash costs^(c) of $647 per GEO and $1.53 per pound of copper from Chapada.

• All-in sustaining cash costs^(c) of $754 per GEO on a by-product basis and $935 per GEO on a co-product basis.

• Minera Florida, Chile — GEO production increased each consecutive quarter; fourth quarter production was 11% higher than the third quarter and 15% higher than the second quarter of 2013 with decreases in co-product costs by 22% and 35% for the corresponding periods.

• Gualcamayo, Argentina — Gold production was 26% higher than the third quarter of 2013 with December and January 2014 production averaging over 14,000 ounces per month, consistent with plan and production objectives for the expanded operation.

• Fazenda Brasileiro, Brazil — Gold production was 9.3% higher than the third quarter of 2013.

• El Peñón, Chile & Mercedes, Mexico — Production levels decreased according to normal sequencing of mine plan to contain costs and better position those mines for 2014, although both produced at above guidance expectations.

• Pilar and Ernesto/Pau-a-Pique production increased by 115% and 46% respectively in the fourth quarter over third quarter levels with significant improvements occurring in December.

• Pilar, Brazil — Commissioning continued in the quarter. An infill drilling program is currently underway with a focus to ensure higher grade ore shoots can be mined efficiently. Additionally, the Company has elected to take Maria Lazarus through the development cycle on an expedited basis as the exploration drilling results to date indicate possible contribution to future production.  Completion of commissioning is expected in the third quarter of 2014. New low-profile equipment arrived on site early in 2014.

• C1 Santa Luz, Brazil — Commissioning continued in the quarter. The gradual ramp-up at C1 Santa Luz was due to permitting, availability of equipment and the need to ensure sufficient water reserves for continuous operations, which are now in place.

• Ernesto/Pau-a-Pique, Brazil — The project (operation) was originally planned as a combination of an open-pit at Ernesto and an underground operation at Pau-a-Pique with a common plant. A plan has been developed which continues to include an underground operation at Pau-a-Pique but now contemplates a near-to-surface underground operation at Ernesto. These alternatives are under consideration.

______________________________

(a)GEO assumes gold plus the gold equivalent of silver using a ratio of 50:1 for all periods presented.

(b)    Commissioning production as the mine is not yet in commercial operation.

(c) A non-GAAP measure - refer to Section 14.

(d)    Includes commissioning production of 8,959 GEO in January of 2012, commercial production started on February 1, 2012.

Construction and Development

• Chapada, Brazil — The Company continues to advance programs relating to the optimization of production that include the installation of an in-pit crusher and modifications to the grinding circuit. These initiatives will increase throughput and facilitate the development of new ore bodies including Corpo Sul in the fourth quarter of 2014. This will enable future production to continue at a rate of at least 130,000 GEO and 130 million pounds of copper annually.

• Cerro Moro, Argentina — Work continued at Cerro Moro toward the completion of its updated feasibility study including pre-development work and drilling to support the study and to grow the mineral resource base as well as further advancing the project for a reduced-scale operation. Subject to a positive feasibility study and market conditions, the Company plans to make a construction decision with a goal of initial production in 2016.

• Suyai, Argentina — The Company plans to apply for environmental permits in 2014.  A number of relevant studies have already been completed and others are ongoing, which would position the Company well to apply for permitting this year.  The current plan being evaluated includes an underground operation without any chemical processing onsite that will produce a precious metal concentrate that could be sold to third parties or potentially processed at Cerro Moro. 

• Gualcamayo, Argentina — The QDD Lower West ("QDDLW") underground mine has started to contribute to production. Completion of the underground conveyor is expected in the second quarter and production is expected to ramp-up each quarter during the year.

Exploration

• Gualcamayo, Argentina — Exploration at Gualcamayo has focused on drilling targets surrounding the Rodado and QDD Lower West (“QDDLW”) systems. Positive assays received from drilling in the fourth quarter continued to expand the mineral envelope of Rodado southwest and the potential orebody, which remains open along strike and down dip.

3

• Minera Florida, Chile — The near mine exploration program completed 4,510 metres distributed in 29 holes during the fourth quarter of 2013. The program tested targets within Mina Este such as Triangulo Mineralizado, Lisset and PVO and additional targets including Tribuna, Victoria and Hallazgo. Assay results continue to show positive results from most targets.

• C1 Santa Luz, Brazil — During the fourth quarter of 2013, the near-mine and district exploration drill programs completed 1,634 metres in eight holes. The near-mine program tested the up-dip extension of the southwestern deep target and completed infill holes and tested the northern extensions at Antas III. The regional program tested the Gravata and Rancho do Carneiro targets. Results from both programs are in-line with prior results and are being evaluated for economic potential.

• Ernesto/Pau-a-Pique, Brazil — A total of 13,928 meters were completed in 95 drill holes at the mine during the year to test near-mine targets and extensions. Several new mineral traps were discovered that host potential ore grade gold mineralization which could increase mineral resources and extend the life of mine.

• Pilar, Brazil — Underground mapping at Caiamar and sampling along with computer modeling of drill data has identified moderate to high grade inferred mineral resource ore shoots that will be drill-tested from the surface during 2014 to expand the mineral resource and mineral reserve base at Pilar.

• Cerro Moro, Argentina — The focus of the 2013 exploration program was to develop and test new targets that are both within and outside of the known mineralized structural blocks. During the fourth quarter, 1,077 metres in five holes were drilled to complete the 2013 exploration drill program. This drilling tested the Carlita, Patricia and Margarita veins in an effort to build and expand the known mineralization envelopes. The final hole of the year drilled at the southeast end of the Margarita system cut important gold and silver values leaving the structure open to the southeast and to depth.

3.    OUTLOOK AND STRATEGY

The Company continues to strive to deliver sustainable value. In doing so, the Company remains focused on cost control, operational performance and sustainable volume growth, always with a "simple to understand" objective of performing financially and maximizing cash flows. Emphasis remains on comparatively low costs to drive margins and cash flows, delivery of higher quality ounces and projects while maintaining disciplined capital spending, along with our commitment to adhere to the best practices for health, safety and environmental protection.

In response to the current volatile gold price environment which puts margins at risk, the Company has initiated cost containment and margin reclamation initiatives to focus on quality of ounces produced measured by contribution to cash flows instead of production volume alone. The cost containment and margin reclamation initiatives are consistent with the Company's established focus on cash flow generation. The Company believes prioritizing financial performance over production is an approach that will deliver value, particularly in periods of volatile and uncertain metal prices.

These initiatives have progressed since they were announced in the second quarter. Cost savings are being realized through reductions in operating costs, capital expenditures, exploration costs, and general and administrative costs, in addition to other areas. The Company's progress in executing its cost containment and margin reclamation initiatives is evidenced by a reduction of its all-in sustaining co-product cash costs per gold equivalent ounce ("GEO"). Average all-in sustaining cash costs ("AISC") for the last three quarters was below $925 per GEO on a co-product basis. The reduction in AISC on a co-product basis was primarily driven by:

• General and administrative expenses were $66 per GEO in the fourth quarter, compared to $88 per GEO in the second quarter, representing a 25% decrease.

• Sustaining capital expenditures were $197 per GEO in the fourth quarter, compared to $260 per GEO in the second quarter, representing a 24% decrease. Compared to the previous guidance of sustaining capital expenditure at $310 per GEO for 2013, the reduction was in excess of 55%.

Given the current metal price environment and significant precious metal price volatility, the Company continues to align its production expectation with the new price environment. As marginal ounces are at risk of eroding margins, the Company will be diligent in protecting margins through creating a base production level at a sustainable contained cost structure that will generate cash flow in the current and lower price environments. The Company will not sacrifice margin, or compromise cost structure, for volume growth until costs are believed to be contained so that new production will generate margins in current and lower metal price environments. With costs stabilizing at lower levels, the focus is now returning to maximizing production growth, while generating cash flows and free cash flows will always be the core focus.

The Company has budgeted production of 1.4 million GEO in 2014 at AISC below $850 per GEO on a by-product basis and $925 per GEO on a co-product basis. Silver production is expected to be approximately 8.8 million ounces in 2014 which is included in GEO. Estimated cash costs for 2014 are forecast to be in line with 2013 on both a co-product and by-product basis.

4

Cash costs on a by-product basis are calculated after base metal by-product credits, which assumes a price forecast for copper of $3.20 per pound.

As part of the annual budgeting process, the Company has performed various evaluations to maximize the level of confidence and reliability in the forecast production, costs and cash flow generation capacity at every operation. These evaluations identify ounces that the Company considers to have a lower level of certainty or reliability on any of: production, costs or cash flow generation. For budgeted production in 2014, all of these ounces relate to new operations as they progress to full capacity.  The Company considers 70,000 production ounces, or less than five per cent, of its budgeted production for 2014 to be within this category and most of these ounces would be in pre-commercial production and as such not impact its cash flow expectations for the year.

The Company strives to achieve budgeted production and conducts these evaluations for the purposes of stress testing its business plan and for evaluation of the proper balance between production and costs and other factors that may influence or affect cash flow. While the Company will make every effort to produce at budget levels, this approach provides a reasonable tool for assessing downside risk to production or where costs are at risk or where the level of reliability for certain production is below the level of total of its expected production. The Company remains focused on the generation and maximization of cash flow.

The table below provides the mine-by-mine 2014 production expectations according to budget.

(in GEO)	2014 Estimate
Chapada (i)	103,000
El Peñón (i)	448,000
Mercedes (i)	129,000
Gualcamayo	170,000
Jacobina	89,000
Minera Florida (i)	114,000
C1 Santa Luz	90,000
Ernesto/Pau-a-Pique	58,000
Pilar	90,000
Fazenda Brasileiro	64,000
Alumbrera (12.5% interest)	45,000
Total GEO	1,400,000
Total Copper - Chapada (millions of pounds)	134

________________________________________________________

(i)Silver production is reported as GEO at a ratio of 50:1.

Production in 2015 is expected to further increase. The Company is evaluating proposed plans for production increases in light of its philosophy of balancing production with costs.

Copper production is expected to be approximately 134 million pounds in 2014. This estimate reflects the production from Chapada and does not include the attributable copper production from the Company’s 12.5% interest in Alumbrera.

Expansionary capital spending for 2014 is expected to be approximately $150 million (excluding capitalized interest), which is significantly lower than 2013 as the Company’s newest operations ramp-up to commercial production and the Company continues to allocate capital to those opportunities that can most readily contribute to cash flow.

The Company expects to spend approximately $70 million on exploration in 2014. The 2014 exploration program will continue to focus on increasing mineral reserves and mineral resources with its near-mine and regional exploration programs, as well as continuing to explore identified greenfield targets and generate new targets.

In 2014, sustaining capital expenditures are expected to be in the range of $320 million to $340 million or approximately $250 per GEO.  This allocates all capital to gold ounces with no consideration for copper. The Company treats copper as a by-product and applies all sustaining capital to GEOs. Sustaining capital expenditures are expected to decline in future years as a result, in part, of the cost saving initiatives related to maintenance and the expected growth in gold production. Sustaining capital is included in AISC.

5

For 2014, depreciation, depletion and amortization ("DD&A") is expected to be approximately $340 per GEO when excluding any allocation to copper as the Company treats copper as a by-product and applies all DD&A to GEO. General and administrative expenses are expected to be below $140 million, in line with 2013 levels. The effective tax rate for 2014 is forecast to be between 30% to 32%.

The Company continues to work toward the stated target of 1.5 million to 1.7 million GEO which it believes remains achievable with its existing portfolio of assets. However, with an extended timetable, this further growth can more efficiently be delivered at better costs. Exploration results continue to support the higher level of sustainable production through its producing mines. Details of the exploration program year to date can be found in Section 7 Construction, Development and Exploration.

The Company had approximately $830 million of available cash and undrawn credit at December 31, 2013.

6

4.             SUMMARY OF FINANCIAL AND OPERATING STATISTICS

4.1Annual Financial Statistics

	For the years ended
	Dec 31, 2013			Dec 31, 2012			Dec 31, 2011
(Loss)/earnings per share attributable to Yamana equity holders - basic & diluted	$	(0.59	)	$	0.59		$	0.74
Adjusted earnings per share (i) - basic and diluted	$	0.36		$	0.93		$	0.96
Dividends declared per share	$	0.260		$	0.240		$	0.155
Dividends paid per share	$	0.260		$	0.225		$	0.135
Weighted average number of common shares outstanding  - basic ( in thousands)	752,697			748,095			744,600
Weighted average number of common shares outstanding  - diluted (in thousands)	752,697			749,591			746,144
(In thousands of United States Dollars; unless otherwise noted)
Net (loss)/earnings attributable to Yamana equity holders	$	(446,247	)	$	442,064		$	548,294
Adjusted earnings (i)	$	273,358		$	694,333		$	712,896
Revenues	$	1,842,682		$	2,336,762		$	2,173,325
Mine operating earnings	$	540,778		$	1,121,270		$	1,099,874
Cash flows from operating activities	$	653,135		$	1,158,057		$	1,225,782
Cash flows from operating activities before changes in non-cash working capital (i)	$	707,861		$	1,044,946		$	1,266,373
Cash flows to investing activities	$	(1,053,410	)	$	(1,498,030	)	$	(846,075	)
Cash flows (to)/from financing activities	$	283,843		$	146,399		$	(142,678	)
Average realized gold price per ounce (ii)	$	1,408		$	1,670		$	1,567
Average realized copper price per pound (ii)	$	3.28		$	3.60		$	3.93
Average realized silver price per ounce (ii)	$	23.73		$	30.46		$	35.19
Average market gold price per ounce (iii)	$	1,411		$	1,669		$	1,573
Average market copper price per pound (iii)	$	3.32		$	3.61		$	4.00
Average market silver price per ounce (iii)	$	23.85		$	31.17		$	35.32

	As at
	Dec 31, 2013		Dec 31, 2012		Dec 31, 2011
Total assets	$	11,410,717	$	11,800,163	$	10,769,940
Total long-term liabilities	$	3,615,242	$	3,269,266	$	2,783,786
Total equity	$	7,158,105	$	7,861,878	$	7,491,523
Working capital	$	81,093	$	255,134	$	608,021

_____________________________

(i) A cautionary note regarding non-GAAP measures and their respective reconciliations are included in Section 14 including a discussion and definition of Adjusted Earnings, Adjusted Earnings per Share, and additional measures.

(ii) Realized prices based on gross sales compared to market prices for metals may vary due to infrequent shipments and depending on timing of the sales.

(iii) Source of information: Bloomberg.

7

4.2    Annual Operating Statistics

	For the years ended
	Dec 31, 2013			Dec 31, 2012
Gold Equivalent Ounces (GEO) Production (i)
Brazil
Chapada (ii)	110,618			128,171
Jacobina	73,695			116,863
Fazenda Brasileiro	70,079			67,130
Chile
El Peñón (ii)	467,523			462,496
Minera Florida (ii)	118,590			103,818
Argentina
Gualcamayo	120,337			147,310
Alumbrera (iii)	39,157			46,077
Mexico
Mercedes (ii)(v)	141,618			117,051
Total commercial GEO production (i)	1,141,617			1,188,916
Commissioning GEO (i)(v)	55,942			12,094
Total GEO production(i)	1,197,559			1,201,010
By-product Cash Costs per GEO (i) (iv)
Brazil
Chapada	$	(1,296	)	$	(1,865	)
Jacobina	1,174			747
Fazenda Brasileiro	808			872
Chile
El Peñón	485			440
Minera Florida	747			797
Argentina
Gualcamayo	772			536
Alumbrera (iii)	(252		)	(1,203		)
Mexico
Mercedes	496			485
By-product cash costs per GEO produced (i) (iv)	$	410		$	230
Co-product cash costs per GEO produced (i) (iv)	$	596		$	525
Co-product cash costs per pound of copper produced (iv)	$	1.75		$	1.48
All-in sustaining cash costs per GEO, by-product basis (i) (iv)	$	814		n/a
All-in sustaining cash costs per GEO, co-product basis (i) (iv)	$	947		n/a
Concentrate Production
Chapada concentrate production (tonnes)	239,811			268,135
Chapada copper contained in concentrate production (millions of lbs)	130.2			150.6
Chapada co-product cash costs per pound of copper (iv)	$	1.65		$	1.40
Alumbrera attributable concentrate production (tonnes) (iii)	55,115			65,140
Alumbrera attributable copper contained in concentrate production (millions of lbs) (iii)	30.2			37.4
Alumbrera co-product cash costs per lb of copper (iii) (iv)	$	2.21		$	1.81
Gold Equivalent Ounces Breakdown
Gold ounces produced	1,029,863			1,019,969
Silver ounces produced (millions)	8.4			9.0
Sales
Total GEO sales (including 12.5% interest in Alumbrera)	1,178,972			1,186,991
- Total gold sales (ounces)	1,013,697			1,007,414
- Total silver sales (millions of ounces)	8.3			9.0
Chapada concentrate sales (tonnes)	242,681			263,704
Chapada payable copper contained in concentrate sales (millions of lbs)	126.0			139.0

______________________________

8

(i) Silver production is treated as a gold equivalent. Gold equivalent ounce calculations are based on an average historical silver to gold ratio (50:1) which is used and presented solely for period-over-period comparative purposes only.

(ii) 2013 gold production: El Peñón — 338,231 ounces; Minera Florida — 99,000 ounces, Chapada — 104,096 ounces, and Mercedes — 129,327 ounces; and 2013 silver production: El Peñón — 6.5 million ounces; Minera Florida — 1.0 million ounces, Chapada — 0.3 million ounces and Mercedes — 0.6 million ounces.

(iii) The Company holds a 12.5% equity interest in Alumbrera.

(iv) A cautionary note regarding non-GAAP measures and their respective reconciliations are included in Section 14 including a discussion and definition of Cash Costs.

(v) Commissioning is ongoing at Ernesto/Pau-a-Pique, C1 Santa Luz and Pilar. Commissioning at Mercedes started in 2011 and concluded on February 1, 2012.

4.3Quarterly Financial Statistics

	For the three months ended
	Dec 31, 2013			Dec 31, 2012
(Loss)/earnings per share attributable to Yamana equity holders - basic	$	(0.78	)	$	0.23
(Loss)/earnings per share attributable to Yamana equity holders - diluted	$	(0.78	)	$	0.22
Adjusted earnings per share (i) - basic and diluted	$	0.05		$	0.26
Dividends declared per share	$	0.065		$	0.065
Dividends paid per share	$	0.065		$	0.055
Weighted average number of common shares outstanding - basic ( in thousands)	752,995			751,780
Weighted average number of common shares outstanding - diluted (in thousands)	752,995			753,325
(In thousands of United States Dollars; unless otherwise noted)
Net (loss)/earnings attributable to Yamana equity holders	$	(583,936	)	$	169,161
Adjusted earnings (i)	$	36,719		$	197,368
Revenues	$	420,663		$	629,505
Mine operating earnings	$	70,113		$	322,082
Cash flows from operating activities	$	184,845		$	367,881
Cash flows from operating activities before changes in non-cash working capital (i)	$	165,315		$	298,064
Cash flows to investing activities	$	(259,992	)	$	(375,544	)
Cash flows to/(from) financing activities	$	66,711		$	(44,467	)
Average realized gold price per ounce (ii)	$	1,277		$	1,692
Average realized copper price per pound (ii)	$	3.37		$	3.54
Average realized silver price per ounce (ii)	$	20.63		$	31.37
Average market gold price per ounce (iii)	$	1,272		$	1,718
Average market copper price per pound (iii)	$	3.25		$	3.59
Average market silver price per ounce (iii)	$	20.80		$	32.58

_____________________________

(i) A cautionary note regarding non-GAAP measures and their respective reconciliations are included in Section 14 including a discussion and definition of Adjusted Earnings, Adjusted Earnings per Share, and additional measures.

(ii) Realized prices based on gross sales compared to market prices for metals may vary due to infrequent shipments and depending on timing of the sales.

(iii) Source of information: Bloomberg.

9

4.4    Quarterly Operating Statistics

	For the three months ended
	Dec 31, 2013			Dec 31, 2012
Gold Equivalent Ounces (GEO) Production (i)
Brazil
Chapada (ii)	29,817			32,498
Jacobina	19,519			28,337
Fazenda Brasileiro	18,270			18,251
Chile
El Peñón (ii)	101,364			128,119
Minera Florida (ii)	30,513			32,797
Argentina
Gualcamayo	34,929			31,502
Alumbrera (iii)	11,319			10,769
Mexico
Mercedes (ii)(v)	31,716			39,443
Total commercial GEO production (i)	277,447			321,716
Commissioning GEO (i)(v)	26,321			1,274
Total GEO production(i)	303,768			322,990
By-product Cash Costs per GEO (i) (iv)
Brazil
Chapada	$	(1,547	)	$	(2,021	)
Jacobina	1,140			825
Fazenda Brasileiro	809			856
Chile
El Peñón	593			415
Minera Florida	592			805
Argentina
Gualcamayo	825			485
Alumbrera (iii)	(261		)	(2,012		)
Mexico
Mercedes	656			435
By-product cash costs per GEO produced (i) (iv)	$	417		$	198
Co-product cash costs per GEO produced (i) (iv)	$	647		$	517
Co-product cash costs per pound of copper produced (iv)	$	1.58		$	1.51
All-in sustaining cash costs per GEO, by-product basis (i) (iv)	$	754		n/a
All-in sustaining cash costs per GEO, co-product basis (i) (iv)	$	935		n/a
Concentrate Production
Chapada concentrate production (tonnes)	67,395			72,518
Chapada copper contained in concentrate production (millions of lbs)	36.0			40.5
Chapada co-product cash costs per pound of copper (iv)	$	1.53		$	1.38
Alumbrera attributable concentrate production (tonnes) (iii)	17,547			14,669
Alumbrera attributable copper contained in concentrate production (millions of lbs) (iii)	9.6			8.5
Alumbrera co-product cash costs per lb of copper (iii) (iv)	$	1.75		$	2.15
Gold Equivalent Ounces Breakdown
Gold ounces produced	260,187			276,373
Silver ounces produced (millions)	2.2			2.3
Sales
Total GEO sales (including 12.5% interest in Alumbrera)	305,376			317,615
- Total gold sales (ounces)	263,031			272,524
- Total silver sales (millions of ounces)	2.1			2.3
Chapada concentrate sales (tonnes)	67,616			69,589
Chapada payable copper contained in concentrate sales (millions of lbs)	34.5			37.3

______________________________

10

(i) Silver production is treated as a gold equivalent. Gold equivalent ounce calculations are based on an average historical silver to gold ratio (50:1) which is used and presented solely for quarter-over-quarter comparative purposes only.

(ii) Three-month gold production for the periods ended December 31, 2013: El Peñón — 68,246 ounces; Minera Florida — 24,539 ounces, Chapada — 28,223 ounces, and Mercedes — 28,821 ounces; and three-month silver production: El Peñón — 1.7 million ounces; Minera Florida — 298,696 ounces, Chapada — 79,696 ounces, and Mercedes — 144,715 ounces.

(iii) The Company holds a 12.5% equity interest in Alumbrera.

(iv) A cautionary note regarding non-GAAP measures and their respective reconciliations are included in Section 14 including a discussion and definition of Cash Costs.

(v) Commissioning is ongoing at Ernesto/Pau-a-Pique, C1 Santa Luz and Pilar. Commissioning at Mercedes started in 2011 and concluded on February 1, 2012.

5.    OVERVIEW OF RESULTS

5.1    Overview of Annual Financial Results

	For the years ended December 31,
(In thousands of United States Dollars; unless otherwise noted)	2013			2012
Revenues	$	1,842,682		$	2,336,762
Cost of sales excluding depletion, depreciation and amortization	(900,789		)	(831,754		)
Gross margin	941,893			1,505,008
Depletion, depreciation and amortization	(401,115		)	(383,738		)
Mine operating earnings	540,778			1,121,270
Other expenses (i)	(249,841		)	(289,100		)
Equity (loss)/earnings from associate	(3,905		)	50,642
Impairment of mineral properties and other assets	(682,273		)	(67,684		)
Earnings from operations before income taxes	(395,241		)	815,128
Income tax expense	(79,110		)	(373,064		)
Net (loss) earnings	$	(474,351	)	$	442,064
Earnings adjustments(ii):
Non-cash unrealized foreign exchange losses	45,709			64,648
Reorganization costs	3,969			—
Share-based payments/mark-to-market of deferred share units	7,683			26,292
Impact of change in Mexican tax rates on non-cash deferred tax expense	28,323			—
Impact of change in Chilean tax rates on non-cash deferred tax expense	—			83,830
Deferred income tax expense on translation of intercompany debt	—			(2,983		)
Impairment of mineral properties	682,273			—
Impairment of investment in available-for-sale securities and other assets	70,285			67,684
Other non-cash and non-recurring losses	44,566			16,592
Adjusted earnings before income tax effect	408,457			698,127
Income tax effect of adjustments	(135,099		)	(3,794		)
Adjusted earnings(ii)	$	273,358		$	694,333
Net (loss) earnings per share attributable to Yamana Gold Inc. equity holders - basic and diluted	$	(0.59	)	$	0.59
Adjusted earnings per share (ii) - basic and diluted	$	0.36		$	0.93

______________________________

(i) For 2013, other expenses represent the aggregate of the following expenses: general and administrative of $135.3 million (2012 - $145.9 million), exploration and evaluation of $30.2 million (2012 - $58.0 million), other operating expenses of $78.1 million (2012 - $99.3 million) and net finance expense of 6.3 million (2012 - expense $53.5 million).

(ii) A cautionary note regarding non-GAAP measures and their respective reconciliations are included in Section 14 including a discussion and definition of Adjusted Earnings and Adjusted Earnings per Share.

11

Impairment

The Company assesses at the end of each reporting period whether there is any indication, from external and internal sources of information, that an asset or cash generating unit (“CGU”) may be impaired. Impairment testing is performed using life of mine after-tax cash flow projections.  During the second quarter, the Company updated its after-tax life of mine cash flow projections with updated economic assumptions as a result of the decline in metal prices towards the latter half of the second quarter of 2013. Based on its assessment during the second quarter, the Company concluded that there were no impairment charges in respect to its mineral properties as at June 30, 2013 as a result of the decline in metal prices at that time.  Adverse changes in metal price assumptions were partially offset by other inputs that resulted in lower costs and updated mine plans.  The recoverable values in the impairment assessment in the second quarter were calculated assuming long-term prices of $1,375 per ounce of gold and $3.00 per pound of copper. 

In early October of 2013, after the spot price for gold returned to the $1,350 per ounce level, it started a continuous decline during the fourth quarter and dipped below $1,200 per ounce by late December. During the fourth quarter, the Company performed its impairment test updating its life of mine after-tax cash flow projections for updated reasonable estimates of future metal prices, production based on current estimates of recoverable mineral reserves and mineral resources, recent operating and exploration results, exploration potential, future operating costs, capital expenditures, inflation and long-term foreign exchange rates.  The Company examined future cash flows, the intrinsic value beyond proven and probable mineral reserves, value of land holdings, as well as other factors, which are determinants of commercial viability of each mining property in its portfolio, and concluded that a total of $672.0 million ($563.9 million, net of taxes) of impairment charges should be recognized. The impairment charges in the fourth quarter include the following:

	For the periods ended December 31, 2013
(in million dollars)	Three months					Twelve months
Mine/Project	Impairment		After-tax Impairment			Impairment		After-tax Impairment
Jacobina (goodwill)	$	55.0	$	55.0		$	55.0	$	55.0
Ernesto/Pau-a-Pique	175.0		168.2			175.0		168.2
Alumbrera (12.5% Interest)	70.0		70.0			70.0		70.0
Jeronimo (a)	110.0		88.0			110.0		88.0
Exploration properties	$	262.0	$	182.8		$	272.3	$	193.0
Impairment on mineral properties (b)	$	672.0	$	563.9		$	682.3	$	574.2
Less: Non-controlling interest (43.3%) - Jeronimo			(28.1		)			(28.1		)
Impact on net earnings			$	535.8				$	546.1

_________________

(a) The Company holds 56.7% interest in the Agua de La Falda ("ADLF") project. The ADLF project is an exploration project which includes the Jeronimo deposit and is located in northern Chile.

(b) An impairment charge of $10.3 million was recognized in the second quarter of 2013.

The Company expects there is further or additional value in these properties over and above what they are being written down to but not at the metal price assumptions used in the impairment testing. The valuation of impairment is based on current forecasts for long-term metal prices which have been influenced by the recent decline in spot prices over the last nine months of 2013. These metal price assumptions are then held constant over mine lives which in some cases are in excess of fifteen years. The fair values in the impairment assessment in the fourth quarter were calculated assuming long-term prices of $1,300 per ounce of gold and $3.00 per pound of copper. The historical three-year average gold price was approximately $1,550 per ounce well in excess of the long-term gold price assumption used in its impairment testing. The Company believes that it is prudent to update its metal price assumption used in its impairment testing to reflect current forecasts and it does not rely on higher prices to drive its business plans, however, the Company remains positive on the long-term price fundamentals for its metals. The Company will continue to monitor the valuation of its assets and the impact of changes in economic assumptions and mine plans on these valuations. Higher prices in the future could result in greater volatility in earnings, as the Company reassesses the fair value of its mineral properties and could potentially reverse a portion or all of the impairment charges taken.

In addition to the impairment charges mentioned above, an additional $10.3 million (before and net of taxes) related to minor exploration properties was recognized during the year on the decision of not proceeding with further exploration and/or disposition in the prior quarters of 2013, bringing the impairment charges against mineral properties for the year to a total of $682.3 million (574.2 million, net of taxes).

12

For the year ended December 31, 2013

Cash flows from operating activities before changes in non-cash working capital for the year ended December 31, 2013 were $653.1 million compared to $1.16 billion for the year ended December 31, 2012. Cash flows from operating activities before changes in non-cash working capital items (a non-GAAP measure, see Section 14) for the year ended December 31, 2013 were $707.9 million compared to $1.04 billion for the year ended December 31, 2012. Cash and cash equivalents as at December 31, 2013 were $220.0 million compared to $349.6 million as at December 31, 2012.

Net loss for the year 2013 was $446.2 million or $0.59 per share^(a), compared with net earnings of $442.1 million or basic and diluted earnings per share of $0.59 for the year 2012. Net loss for the year includes an impairment charge of $574.2 million, net of taxes in respect to certain mineral properties. Adjusted earnings were $273.4 million or $0.36 per share in 2013, compared with $694.3 million or $0.93 per share in 2012. Lower adjusted earnings were mainly attributed to the decline in metal prices and lower sales volume of gold, copper and silver, combined with inflationary impacts on costs and lower equity earnings from the Company's 12.5% of interest in Alumbrera.

Revenues were $1.84 billion in 2013 compared with $2.3 billion in 2012. Mine operating earnings were $540.8 million, compared with $1.12 billion in 2012.  Lower revenues and mine operating earnings were due to lower metal prices and lower sales volumes of gold, copper in concentrate and silver. Higher cost of sales, including depletion, depreciation and amortization expenses, was mainly related to higher cost inflation relative to that of 2012.

The average realized gold price in 2013 was $1,408 per ounce versus $1,670 per ounce in 2012 or 16% lower. The average realized copper price was $3.28 per pound versus $3.60 per pound in 2012 or 9% lower. The average realized silver price was $23.73 per ounce compared to $30.46 per ounce in 2012 or 22% lower.

Revenues for 2013 were generated from the sale of 925,496 ounces of gold, 8.3 million ounces of silver and 126.0 million pounds of copper, excluding Alumbrera which is accounted for as an equity investment. This compares to sales, excluding Alumbrera, of 963,833 ounces of gold, 9.0 million ounces of silver and 139.0 million pounds of copper in 2012.

Revenues for the year are comprised of the following:

For the years ended December 31,	2013							2012
(In thousands of United States Dollars; unless otherwise noted)	Quantity  Sold (ii)		Realized Price		Revenues			Revenues
Gold (i)	925,496	oz	$	1,408	$	1,302,687		$	1,609,172
Silver	8,263,729	oz	$	23.73	196,129			273,455
Total precious metals	1,090,771	GEO			1,498,816			1,882,627
Copper (i)	125,999,185	lbs	$	3.28	413,609			499,895
Gross Revenues					$	1,912,425		$	2,382,522
Add (deduct):
- Treatment and refining charges of gold and copper concentrate					$	(33,163	)	$	(30,099	)
- Sales taxes					(26,417		)	(36,718		)
- Metal price adjustments related to concentrate revenues					(10,493		)	19,325
- Other adjustments					330			1,732
Revenues (ii)					$	1,842,682		$	2,336,762

______________________________

(i) Includes payable copper and gold contained in concentrate.

(ii) Excludes Alumbrera which is accounted for as an equity investment.

Cost of sales excluding depletion, depreciation and amortization for 2013 was $900.8 million compared with $831.8 million in the same period of 2012. The increase in cost of sales was mainly due to higher co-product cash costs as a result of inflationary pressures in the countries where the Company operates.

The following table provides a reconciliation of the co-product cash costs to the cost of sales excluding depletion, depreciation and amortization for the year:

13

	2013							2012
For the years ended December 31,	GEO or Pounds of Copper Produced		Co-product  Cash Cost per Unit		Total Costs			Total Costs
(In thousands of United States Dollars; unless otherwise noted)
Chapada — GEO (i)	110,618	oz	$	400	$	44,297		$	42,681
Chapada — Copper	130,239,902	lbs	1.65		214,481			210,072
El Peñón — GEO (i)	467,523	oz	485		226,628			203,724
Jacobina	73,695	oz	1,174		86,488			87,316
Gualcamayo	120,337	oz	772		92,844			78,952
Minera Florida — GEO (i)	118,590	oz	747		88,621			82,793
Fazenda Brasileiro	70,079	oz	808		56,622			58,554
Mercedes — GEO (i)	141,618	oz	496		70,301			60,915
Co-product cash cost of sales (ii)					$	880,282		$	825,007
Add (deduct):
- Inventory movements and adjustments					21,005			5,278
- Chapada concentrate treatment and refining charges					(33,163		)	(32,369		)
- Commercial & other costs					16,108			17,795
- Overseas freight for Chapada concentrate					16,557			16,043
Cost of sales excluding depletion, depreciation and amortization					$	900,789		$	831,754

______________________________

(i) Silver ounces reported from Chapada, El Peñón, Minera Florida and Mercedes are treated as gold equivalent ounces ("GEO").

(ii) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis of Operations and Financial Condition.

Depletion, depreciation and amortization (“DDA”) expense for the year 2013 was $401.1 million, compared to $383.7 million in the same period of 2012. The increase in DDA is attributable to higher levels of depletable capital expenditures and higher cost ore bodies being depleted.

Other expenses including general and administrative, exploration and evaluation, other operating and net finance expenses were $249.8 million in the year ended December 31, 2013, compared to $289.1 million in the year ended December 31, 2012. The net decrease in other expenses is detailed below:

General and administrative expenses were $135.3 million in 2013 compared to $145.9 million in the year ended December 31, 2012.  General and administrative expenses have declined mainly as a result of the Company's cost containment initiative introduced in May 2013, and are expected to be maintained at these lower levels in 2014.

Exploration and evaluation expenses were $30.2 million in 2013, compared to $58.0 million incurred in 2012 as a result of the Company's reduced focus on greenfield exploration.

Other operating expenses were $78.1 million in the year compared to $99.3 million in 2012. Lower other operating expenses reflect lower impairment of investments in available-for-sale securities of $16.3 million for the year compared to $67.7 million in 2012, an $18.1 million write-off of long-term tax credits and a loss of $38.4 million incurred on the sale of non-core exploration properties with no 2012 comparative.

Net finance expenses were $6.3 million for the year compared with net finance expenses of $53.5 million in the same period of 2012.  Lower net finance expense was mainly due to higher foreign exchange gains in the amount of $17.7 million compared to a foreign exchange loss of $25.9 million in the comparative period. 

Equity loss from associate was $3.9 million for 2013 compared with earnings of $50.6 million in 2012. The equity loss was driven by lower revenues as a result of lower metal prices and lower sales volume of copper and gold concentrate due to lower production from Alumbrera. Cash dividends from the Company’s equity investment in Alumbrera during 2013 were $27.9 million compared to $nil in 2012. During the year, the Company also received loan proceeds of $44.6 million from Alumbrera.

The Company recorded an income tax expense of $79.1 million in 2013 compared to $373.1 million in the same period of 2012.  The decrease in the income tax expense is a result of lower earnings relative to the comparative year. The income tax provision for the year ended December 31, 2013 reflects a current income tax expense of $140.6 million compared to current tax expense of $265.5 million in 2012, and a deferred income tax recovery of $61.5 million compared to deferred tax expense of $107.6 million. The effective tax rate on adjusted earnings for the year of 2013 was 30.0% compared to 25.0% for 2012.

14

_______________

(a)    Attributable to Yamana equity holders.

5.2Overview of Annual Operating Results

For the year ended December 31, 2013

Total production for the Company was 1.20 million GEO comparable to 2012 production level of 1.20 million GEO. Total production for the year consisted of 1.03 million ounces of gold and 8.4 million ounces of silver, representing an increase of 1% in gold production and a 7% decrease in silver production over the period of 2012. Total production included the Company’s attributable production from Alumbrera of 39,157 ounces of gold and production during commissioning from Ernesto/Pau-a-Pique, C1 Santa Luz and Pilar of 55,942 ounces of gold. This compares with total production in 2012 of 1.20 million GEO that consisted of 1.01 million ounces of gold and 9.0 million ounces of silver. The 2012 production also included commissioning production of 12,094 GEO from Mercedes, Minera Florida and Ernesto/Pau-a-Pique.

Commercial production for the year consisted of 1.14 million GEO compared with 1.19 million GEO produced in 2012. Commercial production for 2013 consisted of 973,921 ounces of gold and 8.38 million ounces of silver, representing a 1% increase in gold production and a 7% decrease in silver production over the commercial production of 733,910 ounces of gold and 8.93 million ounces of silver in 2012.

By-product cash costs (a non-GAAP measure, see Section 14) for the year averaged $410 per GEO, compared with $230 per GEO in the same period of 2012. By-product cash costs were impacted by a lower copper credit contribution due to lower copper market prices and lower copper sales volume. The average market price for copper in 2013 was 8% lower than the average of 2012. By-product cash costs for 2013 exceeded the Company's previous guidance for a 2013 year-average of below $365 per GEO, which assumed a copper price of $4.00 per pound compared to average market price for the year of $3.32 per pound and the Company's average realized price of $3.28 per pound.

Co-product cash costs (a non-GAAP measure, see Section 14) for the year were $596 per GEO compared with $525 per GEO in 2012.

15

Effective January 1, 2013, the Company began reporting all-in sustaining cash costs (a non-GAAP measure, see Section 14), which seeks to represent total sustaining expenditures of producing gold equivalent ounces from current operations, based on by-product and co-product cash costs, including cost components of mine sustaining capital expenditures, corporate general and administrative expense excluding stock-based compensation and exploration and evaluation expense. For 2013, all-in sustaining cash costs were $814 per GEO on a by-product basis and $947 per GEO on a co-product basis. Average all-in sustaining cash cost on a co-product basis for the last three quarters was below $925 per GEO meeting expectations of the cost containment initiative implemented in the second quarter.

Copper production for the year was 130.2 million pounds from the Chapada mine, compared with 150.6 million pounds for the same period of 2012. Chapada copper production was lower primarily as a result of expected lower copper grade and recovery rate compared with 2012. A total of 30.2 million pounds of copper produced from Alumbrera were attributable to the Company in 2013, compared to 37.4 million pounds for the year ended December 31, 2012. Total copper production for 2013 was 160.5 million pounds, compared with 188.0 million pounds in 2012. The new orebody, Corpo Sul, and the regrinding project at Chapada are expected to contribute to future gold and copper production.

Co-product cash costs per pound of copper (a non-GAAP measure, see Section 14) averaged $1.65 per pound from the Chapada mine in 2013, compared with $1.40 per pound in the year ended December 31, 2012. Co-product cash costs per pound of copper for the year including the Company’s interest in the Alumbrera mine were $1.75 per pound compared to $1.48 per pound for the year ended December 31, 2012.

The Company's total proven and probable mineral reserves including all projects were 18.5 million GEO compared to 19.3 million GEO in 2012 representing a decrease of 4%. This is offset by significant increases in measured and indicated mineral resources, almost all of which are at existing operations. Total measured and indicated mineral resources increased from 2012 mainly due to the addition of mineral resources from Gualcamayo, El Peñón and Chapada, partly offset the reduction of measured and indicated mineral resources at Cerro Moro, which had been upgraded to an initial proven and probable mineral reserves estimate. Total measured and indicated mineral resources including all projects were 17.3 million GEO compared to 15.6 million GEO in 2012, representing an increase in contained ounces of 10%. Total inferred mineral resources increased by 32% to 15.0 million GEO (contained gold - 13.4 million ounces; contained silver - 81.2 million ounces). The overall focus of the exploration program for 2014 will be on the upgrade of the increases in mineral resources in 2013 to mineral reserves and the extension of mine life.

Refer to Section 8 - “Mineral Reserve and Mineral Resource Estimates” for a detailed discussion on the Company's mineral reserve and mineral resource estimates and metal price assumptions. Complete information relating to mineral reserves and mineral resources is also contained in a mineral reserve and mineral resource table which indicates complete information on tonnage and grade. This mineral reserve and mineral resource table accompanies the 2013 annual report and is also available on the Company's website, www.yamana.com.

16

5.3    Overview of Quarterly Financial Results

	For the three months ended
(In thousands of United States Dollars; unless otherwise noted)	Dec 31, 2013			Dec 31, 2012
Revenues	$	420,663		$	629,505
Cost of sales excluding depletion, depreciation and amortization	(239,030		)	(207,228		)
Gross margin	181,633			422,277
Depletion, depreciation and amortization	(111,520		)	(100,195		)
Mine operating earnings	70,113			322,082
Other expenses (i)	(62,708		)	(66,934		)
Equity earnings from associate	(5,086		)	18,147
Impairment of mineral properties	(672,000		)	(10,896		)
Earnings from operations before income taxes	(669,681		)	262,399
Income tax expense	57,641			(93,238		)
Net (loss) earnings	$	(612,040	)	$	169,161
Earnings adjustments(ii):
Non-cash unrealized foreign exchange losses	(284		)	12,371
Reorganization costs	842			—
Share-based payments/mark-to-market of deferred share units	3,474			4,086
Impact of change in Mexican tax rates on non-cash deferred tax expense	28,323			—
Impairment of mineral properties	672,000			—
Impairment of investment in available-for-sale securities and other assets	29,271			10,896
Other non-cash and non-recurring losses	43,649			1,064
Adjusted earnings before income tax effect	165,235			197,578
Income tax effect of adjustments	(128,516		)	(210		)
Adjusted earnings(ii)	$	36,719		$	197,368
Net (loss) earnings per share attributable to Yamana Gold Inc. equity holders - basic	$	(0.78	)	$	0.23
Net (loss) earnings per share attributable to Yamana Gold Inc. equity holders - diluted	$	(0.78	)	$	0.22
Adjusted earnings per share (ii) - basic and diluted	$	0.05		$	0.26

______________________________

(i) For the three-months ended December 31, 2013, other expenses represent the aggregate of the following expenses: general and administrative of $29.8 million (2012 - 39.0 million), exploration and evaluation of $8.0 million (2012 - $15.1 million), other operating expense of $47.1 million (2012 - $5.8 million) and net finance income of $22.1 million (2012 - expense $7.0 million).

(ii) A cautionary note regarding non-GAAP measures and their respective reconciliations are included in Section 14 including a discussion and definition of Adjusted Earnings and Adjusted Earnings per Share.

For the three months ended December 31, 2013

Cash flows from operating activities before changes in non-cash working capital (a non-GAAP measure, see Section 14) for the quarter ended December 31, 2013 were $165.3 million, lower than the $298.1 million generated for the same period of 2012. Lower cash flows from operating activities compared to that of the same quarter in the prior year were mainly due to a decline in revenue as a result of a decline in metal prices and lower sale volumes. However, cash flows from operating activities before changes in non-cash working capital were 10% above levels in the second quarter when the Company’s cost savings and containment program was initiated. Cash flows from operating activities after taking into effect changes in non-cash working capital items for the three month period ended December 31, 2013 were inflows of $184.8 million, compared to inflows of $367.9 million for the three month period ended December 31, 2012, which reflects a decrease in trade receivables.

Net loss for the quarter was $583.9 million or $0.78 per share^(a), compared with net earnings of $169.2 million or basic earnings per share of $0.23 and diluted earnings per share of $0.22 for the three months ended December 31, 2012. Net loss for the year includes an impairment charge of 535.8 million, net of taxes in respect to certain mineral properties. Adjusted earnings were $36.7 million or $0.05 per share in the fourth quarter, compared with $197.4 million or $0.26 per share in the fourth quarter of 2012. Lower adjusted earnings were attributed to lower realized metal prices, lower volume of metal sales, higher cash costs and an equity loss from the Company's 12.5% of interest in Alumbrera.

17

Revenues were $420.7 million in the fourth quarter compared with $629.5 million in the fourth quarter of 2012. Mine operating earnings were $70.1 million, compared with $322.1 million in the fourth quarter of 2012.  Lower revenues and mine operating earnings were primarily due to lower metal prices in addition to lower volume of gold and copper sales. Lower metal prices accounted for 58% of the variance in revenues in comparison to the fourth quarter of 2012 representing approximately $0.16 per share in earnings. Lower cost of sales, including depletion, depreciation and amortization expenses, corresponded to lower sales volumes of gold and copper.

Revenues for the fourth quarter were generated from the sale of 218,223 ounces of gold, 2.1 million ounces of silver and 34.5 million pounds of copper, excluding Alumbrera which is accounted for as an equity investment. This compares to sales, excluding Alumbrera, of 258,978 ounces of gold, 2.3 million ounces of silver and 37.3 million pounds of copper in the three months ended December 31, 2012.

The average realized price of gold in the fourth quarter of 2013 was $1,277 per ounce compared to $1,692 per ounce in the same quarter of 2012, representing a decrease of 24%. The average realized price of copper was $3.37 per pound compared to $3.54 per pound in the fourth quarter of last year, representing a decrease of 5%, and the average realized silver price was $20.63 per ounce compared to $31.37 per ounce in the fourth quarter of 2012, representing a decrease of 33%.

Revenues for the year are comprised of the following:

For the three months ended December 31,	2013							2012
(In thousands of United States Dollars; unless otherwise noted)	Quantity  Sold (ii)		Realized Price		Revenues			Revenues
Gold (i)	218,223	oz	$	1,277	$	278,744		$	438,199
Silver	2,117,273	oz	$	20.63	43,670			70,721
Total precious metals	260,568	GEO			322,414			508,920
Copper (i)	34,510,774	lbs	$	3.37	116,247			131,875
Gross Revenues					$	438,661		$	640,795
Add (deduct):
- Treatment and refining charges of gold and copper concentrate					$	(8,717	)	$	(8,913	)
- Sales taxes					(5,205		)	(7,246		)
- Metal price adjustments related to concentrate revenues					(136		)	4,053
- Other adjustments					(3,940		)	816
Revenues (ii)					$	420,663		$	629,505

______________________________

(i) Includes payable copper and gold contained in concentrate.

(ii) Excludes Alumbrera which is accounted for as an equity investment.

18

The following table provides a reconciliation of the co-product cash costs to the cost of sales excluding depletion, depreciation and amortization for the year:

	2013							2012
For the three months ended December 31,	GEO or Pounds of Copper Produced		Co-product  Cash Cost per Unit		Total Costs			Total Costs
(In thousands of United States Dollars; unless otherwise noted)
Chapada — GEO (i)	29,817	oz	$	377	$	11,253		$	11,327
Chapada — Copper	35,958,765	lbs	1.53		55,148			55,857
El Peñón — GEO (i)	101,364	oz	593		60,062			53,187
Jacobina	19,519	oz	1,140		22,254			23,384
Gualcamayo	34,929	oz	825		28,816			15,271
Minera Florida — GEO (i)	30,513	oz	592		18,069			26,416
Fazenda Brasileiro	18,270	oz	809		14,771			15,615
Mercedes — GEO (i)	31,716	oz	656		20,792			17,154
Co-product cash cost of sales (ii)					$	231,165		$	218,211
Add (deduct):
- Inventory movements and adjustments					8,707			(8,984		)
- Chapada concentrate treatment and refining charges					(8,717		)	(8,913		)
- Commercial & other costs					2,943			3,262
- Overseas freight for Chapada concentrate					4,933			3,652
Cost of sales excluding depletion, depreciation and amortization					$	239,031		$	207,228

______________________________

(i) Silver ounces reported for Chapada, El Peñón, Minera Florida and Mercedes are treated as gold equivalent ounces ("GEO").

(ii) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis of Operations and Financial Condition.

Cost of sales excluding depletion, depreciation and amortization for the fourth quarter of 2013 was $239.0 million compared with $207.2 million in same quarter of 2012. Cost of sales excluding depletion, depreciation and amortization was higher compared to the same period in 2012 was mainly due to the higher co-product cash cost of production.

Depletion, depreciation and amortization (“DDA”) expense for the quarter was $111.5 million, compared to $100.2 million in the fourth quarter of 2012. The increase was attributable to higher DDA at Gualcamayo from AIM which contributed to production levels in 2013 and DDA from the tailings retreatment plant at Minera Florida which also started to contribute to production in 2013.

Other expenses including of general and administrative, exploration and evaluation, other operating and net finance expenses were $62.7 million in the quarter, compared to $66.9 million in the three months ended December 31, 2012. The net decrease in other expenses is detailed below:

General and administrative expenses were $29.8 million in the fourth quarter compared to $39.0 million in the same quarter of 2012.  It is expected that general and administrative expenses will continue to be maintained at current levels as a result of the cost containment initiatives undertaken by the Company.

Exploration and evaluation expenses were $8.0 million, compared to $15.1 million incurred in the fourth quarter of 2012 as a result of the Company's reduced focus on greenfield exploration relative to 2012.

Other operating expenses were $47.1 million in the quarter compared to $5.8 million in the fourth quarter of 2012. The increase in other operating expenses primarily reflects a $38.4 million loss on sale of non-core exploration properties during the quarter.

Net finance income was $22.1 million mainly related to foreign exchange gains in the quarter compared to net finance expenses of $7.0 million in the fourth quarter of 2012.  Foreign exchange gains resulted from favourable exchange rates of country currencies with which the Company settled its mine operating expenses compared to foreign exchange losses in the comparative period of 2012.

Equity loss from associate was $5.1 million for the quarter compared with earnings of $50.6 million in the fourth quarter of 2012. The lower equity earnings were mainly due to lower revenues as a result of lower metal prices and lower sales volume of concentrate in addition to higher co-product cash costs from Alumbrera. Lower volume of concentrate produced was due to mining in lower

19

grade areas. Cash dividends from the Company’s equity investment in Alumbrera received in the quarter were $6.8 million compared to $nil in the fourth quarter of 2012.

The Company recorded an income tax recovery of $57.6 million in the fourth quarter of 2013 compared to tax expense of $93.2 million in the same quarter of 2012.  The lower income tax expense in the fourth quarter of 2013 is attributable to lower earnings relative to that of the fourth quarter of 2012. The income tax provision for the fourth quarter of 2013 reflects a current income tax expense of $40.7 million compared to current tax expense of $106.1 million in the same quarter of 2012, and a deferred income tax recovery of $98.3 million compared to deferred tax recovery of $12.9 million. During the quarter, the exchange rates of Brazilian Real and Argentinean Peso devalued against the US Dollar increased. As a result for local purposes, a reduction of $2.4 million relating to unrealized foreign exchange gain was recorded in the deferred tax expense. The impact of these foreign exchange movements on taxes are non-cash and as such excluded from adjusted earnings. The adjusted tax rate for the fourth quarter of 2013 was 22.3% compared to 29.7% for the fourth quarter of 2012. See Note 29 to the Condensed Consolidated Interim Financial Statements for a breakdown of the foreign exchange and interest and penalties charged to the income tax expense.

____________________

(a)    Attributable to Yamana equity holders.

5.4Overview of Quarterly Operating Results

For the three months ended December 31, 2013

Total production for the fourth quarter of 2013 was 303,768 GEO, a decrease of 6% from the 322,990 GEO produced in the fourth quarter of 2012. Total fourth quarter production consisted of 260,187 ounces of gold and 2.2 million ounces of silver, compared to 276,373 ounces of gold and 2.3 million ounces of silver produced in the same quarter of 2012. Total production included the Company’s attributable production from Alumbrera of 11,319 ounces of gold and production during commissioning from Ernesto/Pau-a-Pique, C1 Santa Luz and Pilar of 26,321 ounces of gold.

Commercial production for the fourth quarter comprised of 277,447 GEO compared with 321,716 GEO produced in the fourth quarter of 2012. Total commercial production consisted of 233,866 of gold and 2.2 million ounces of silver, compared to commercial production of 264,888 ounces of gold and 2.2 million ounces of silver in the same quarter of 2012. The decrease in gold production was mainly due to the decreased production levels from Chapada, Jacobina, El Peñón, Minera Florida and Mercedes, partly offset by increased production levels from Gualcamayo and Alumbrera.

20

By-product cash costs (a non-GAAP measure, see Section 14) for the fourth quarter of 2013 averaged $417 per GEO, compared with $198 per GEO in the fourth quarter of 2012. By-product cash costs were impacted by a lower copper credit contribution from Chapada and Alumbrera due to the decline in the copper price and lower copper sales volume. The average market price for copper in the fourth quarter of 2013 was 9% lower than the average of the same quarter in 2012.

Co-product cash costs (a non-GAAP measure, see Section 14) for the fourth quarter averaged $647 per GEO, compared to $517 per GEO for the fourth quarter of 2012. Planned lower grades at certain mines and higher input costs during the quarter relative to the same quarter of 2012 impacted costs compared to the three months ended December 31, 2012. In comparison to the third quarter of 2013, production levels at El Peñón and Mercedes were tapered to contain increasing costs and better position those mines for 2014.

All-in sustaining cash costs (a non-GAAP measure, see Section 14) were $754 per GEO on a by-product basis well below the guidance level of $850 per GEO and $935 per GEO on a co-product basis for the fourth quarter of 2013 in line with the guidance level of $925 per GEO on a co-product basis.

Copper production for the quarter was 36.0 million pounds from the Chapada mine, compared with 40.5 million pounds for same quarter of 2012. Chapada copper production was lower primarily as a result of expected lower copper grade compared to the fourth quarter of 2012. A total of 9.6 million pounds of copper produced from Alumbrera were attributable to the Company, compared with 8.5 million pounds for the quarter ended December 31, 2012 mainly due to higher copper feed grade. Total copper production for the fourth quarter of 2013 was 45.6 million pounds, compared with 49.0 million pounds in the fourth quarter of 2012.

Co-product cash costs per pound of copper (a non-GAAP measure, see Section 14) averaged $1.53 per pound from the Chapada mine compared to $1.38 per pound of copper in the same quarter of 2012. Co-product cash costs per pound of copper for the quarter including the Company’s interest in Alumbrera were $1.58 per pound compared to $1.51 per pound for the fourth quarter of 2012.

6.    OPERATING MINES

CHAPADA, BRAZIL

21

	For the three months ended December 31,						For the years ended December 31,
Operating Statistics	2013			2012			2013			2012
Production
Concentrate (tonnes)	67,395			72,518			239,811			268,135
GEO contained in concentrate production (i)	29,817			32,498			110,618			128,171
Gold contained in concentrate (ounces)	28,223			30,121			104,096			119,655
Silver contained in concentrate (ounces)	79,696			118,874			326,087			425,805
Copper contained in concentrate (millions of pounds)	36.0			40.5			130.2			150.6
By-product cash costs per GEO produced (ii)	$	(1,547	)	$	(2,021	)	$	(1,296	)	$	(1,865	)
Co-product cash costs per GEO produced (ii)	$	377		$	349		$	400		$	333
Co-product cash costs per pound of copper produced (ii)	$	1.53		$	1.38		$	1.65		$	1.40
Ore mined (tonnes)	5,753,649			5,924,456			21,833,258			22,490,266
Ore processed (tonnes)	5,540,262			5,734,592			21,347,439			21,591,482
Gold feed grade (g/t)	0.28			0.28			0.26			0.29
Copper feed grade (%)	0.37			0.40			0.35			0.39
Concentrate grade - gold (g/t)	13.03			12.92			13.50			13.88
Concentrate grade - copper (%)	24.20			25.33			24.63			25.47
Gold recovery rate (%)	57.5			59.4			57.9			59.4
Copper recovery rate (%)	80.4			81.1			79.7			82.2
Sales(iii)
Concentrate (tonnes)	67,616			69,589			242,681			263,704
Payable gold contained in concentrate (ounces)	26,805			27,692			98,680			115,443
Payable silver contained in concentrate (ounces)	45,103			81,949			166,917			279,371
Payable copper contained in concentrate (millions of pounds)	34.5			37.3			126.0			139.0
Depletion, depreciation and amortization
Per GEO sold	$	98		$	76		$	97		$	72
Per copper pound sold	$	0.32		$	0.24		$	0.31		$	0.25

______________________________

(i) GEO assumes gold plus the gold equivalent of silver using a ratio of 50:1 for all periods presented.

(ii) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis.

(iii) Quantities sold include quantity adjustment on provisional and final invoice settlements.

Chapada produced a total of 110,618 GEO contained in concentrate in 2013 compared with 128,171 GEO contained in concentrate in 2012. The 2013 production consisted of 104,096 ounces of gold and 326,087 ounces of silver compared with 119,655 ounces of gold and 425,805 ounces of silver contained in 2012. Chapada copper production was 130.2 million pounds in 2013 compared with production of 150.6 million pounds of copper in 2012. Production for the current year was lower than 2012 as a result of anticipated lower grades and recovery rates.

By-product cash costs for 2013 were negative$1,296 per GEO, compared with negative$1,865 per GEO for 2012.  Higher by-product cash costs per GEO was mainly due to the effect of lower copper sales volume and lower average copper prices in 2013 compared to 2012 resulting in a lower copper revenue by-product credit. Copper prices were 8% lower in 2013 compared to 2012.

Co-product cash costs were $400 per GEO in 2013, compared to $333 per GEO in 2012.  Co-product cash costs for copper were $1.65 per pound in 2013 versus $1.40 per pound in 2012.

Chapada revenues for the year net of sales taxes and treatment and refining costs were $504.2 million (2012 - $675.1 million).  Revenues included mark-to-market adjustments and provisional pricing settlements in the year of negative$10.5 million (2012 - positive $19.4 million).

In the fourth quarter of 2013, Chapada produced a total of 29,817 GEO, which consisted of 28,223 ounces of gold and 79,696 ounces of silver, contained in concentrate compared with 32,498 GEO, which consisted of 30,121 ounces of gold and 118,874

22

ounces of silver contained in concentrate in the same quarter of 2012. Chapada copper production was 36.0 million pounds in the quarter compared with production of 40.5 million pounds of copper in the fourth quarter of 2012.

Production for the quarter was lower than the fourth quarter of 2012 as a result of the anticipated lower copper grades and recovery rates for 2013 relative to 2012. Production for the second half of 2013 was 22% higher than the first half of the year, reflecting a pattern similar to previous years.

By-product cash costs for the quarter were negative$1,547 per GEO, compared with negative$2,021 per GEO for the same quarter in 2012. Higher by-product cash costs per GEO was mainly due to the effect of lower copper sales volume and lower copper prices in the fourth quarter of 2013 compared to 2012, resulting in a lower copper by-product credit for the quarter.

Co-product cash costs were $377 per GEO in the fourth quarter, compared to $349 per GEO in the same quarter of 2012.  Co-product cash costs for copper were $1.53 per pound in the fourth quarter versus $1.38 per pound in the same quarter of 2012.

Chapada revenues for the quarter net of sales taxes and treatment and refining costs were $135.6 million (Q4 2012 - $174.9 million).  Revenues included mark-to-market adjustments and provisional pricing settlements in the quarter of positive $0.1 million (Q4 2012 - positive $4.1 million).

The Company is evaluating the level of profitable production with minimal capital requirements. Initiatives planned for 2014 include modifications to the grinding circuit, the installation of an in-pit crusher to increase throughput, and the development of new ore bodies including Corpo Sul. These opportunities provide the potential for increased production at Chapada with Corpo Sul being the largest and most prospective new opportunity that are planned to increase production at Chapada towards sustainable future production levels of at least 130,000 GEO and 130 million pounds of copper at an optimal cost structure.

Corpo Sul is a gold and copper deposit at the southwest end of the main ore body of Chapada with mineral resources of higher average grade ores especially near the current Chapada pit. Development and geotechnical work, including the rock mechanics study, the hydrogeological study and the mine study, continued in support of the development of the new Corpo Sul area. Infill drilling at Corpo Sul continues to support the view that ore from this deposit will be higher grade in both copper and gold and thereby, when blended with ore from the main pit, should increase overall gold and copper production at the operation.

Other opportunities under evaluation include Suruca and Arco Sul.

23

EL PEÑÓN, CHILE

	For the three months ended December 31,				For the years ended December 31,
Operating Statistics	2013		2012		2013		2012
Production
GEO production (i)	101,364		128,119		467,523		462,496
Gold production (ounces)	68,246		93,448		338,231		317,557
Silver production (ounces)	1,655,910		1,733,573		6,464,623		7,246,951
Co-product cash costs per GEO produced (ii)	$	593	$	415	$	485	$	440
Ore mined (tonnes)	354,547		377,341		1,376,428		1,442,245
Ore processed (tonnes)	352,276		362,874		1,422,054		1,415,292
Gold feed grade (g/t)	6.46		8.59		7.94		7.47
Silver feed grade (g/t)	183.42		195.00		187.16		199.21
Gold recovery rate (%)	93.0		93.0		93.0		93.5
Silver recovery rate (%)	80.3		76.0		75.7		80.0
Sales
GEO sales (i)	99,546		127,431		466,093		457,704
Gold (ounces)	66,700		92,941		337,337		314,079
Silver (ounces)	1,642,279		1,724,509		6,437,790		7,181,263
Depletion, depreciation and amortizationper GEO sold	$	325	$	269	$	260	$	295

______________________________

(i) GEO assumes gold plus the gold equivalent of silver using a ratio of 50:1 for all periods presented.

(ii) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis.

In 2013, El Peñón produced 467,523 GEO, which consisted of 338,231 ounces of gold and 6.5 million ounces of silver, representing an increase from 462,496 GEO, which consisted of 317,557 ounces of gold and 7.2 million ounces of silver in 2012. Production at El Peñón is expected to normalize to an average of approximately 440,000 GEO per year.

Co-product cash costs for 2013 were $485 per gold ounce, compared with $440 per gold ounce in 2012. The increase in co-product cash costs per GEO was mainly due to labour inflation partially offset by higher gold feed grades.

In the fourth quarter of 2013, El Peñón produced 101,364 GEO, which consisted of 68,246 ounces of gold and 1.7 million ounces of silver, compared to 128,119 GEO, which consisted of 93,448 ounces of gold and 1.7 million ounces of silver in the same quarter of 2012. Production decreased mainly as a result of normal sequencing in the mine plan which called for mining in lower gold and silver grade areas.  Silver recoveries which vary according to the blending of ore being fed to the mill also impacted production.

Co-product cash costs were $593 per gold ounce, compared with $415 per gold ounce in the fourth quarter of 2012. The increase in co-product cash costs per GEO was mainly due to labour inflation and higher per-unit fixed cost as a result of lower GEO production.

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MERCEDES, MEXICO (i)

	For the three months ended December 31,				For the years ended December 31,
Operating Statistics	2013		2012		2013		2012
Production
Total GEO production	31,716		39,443		141,618		126,010
Commercial GEO production (ii)	31,716		39,443		141,618		117,051
Commissioning GEO production	—		—		—		8,959
Total gold production (ounces)	28,821		36,057		129,327		116,215
Commercial gold production (ounces)	28,821		36,057		129,327		108,014
Commissioning gold production (ounces)	—		—		—		8,201
Total silver production (ounces)	144,715		169,313		614,562		489,747
Commercial silver production (ounces)	144,715		169,313		614,562		451,835
Commissioning silver production (ounces)	—		—		—		37,912
Co-product cash costs per GEO produced (iii)	$	656	$	435	$	496	$	485
Ore mined (tonnes)	166,401		136,105		640,967		513,684
Ore processed (tonnes)	169,768		164,285		670,867		603,188
Gold feed grade (g/t)	5.58		7.38		6.16		6.43
Silver feed grade (g/t)	72.84		85.17		79.39		78.42
Gold recovery rate (%)	94.3		95.8		94.5		94.8
Silver recovery rate (%)	35.5		39.0		34.4		32.0
Sales
GEO sales (ii)	33,062		36,879		146,438		126,515
Gold (ounces)	30,102		34,085		133,421		116,894
Silver (ounces)	148,020		139,686		650,873		481,071
Depletion, depreciation and amortization per GEO sold	$	331	$	241	$	281	$	254

______________________________

(i) Mercedes was under construction in 2011. Commissioning of the mine started in November 2011 and was completed February 1, 2012.

(ii) GEO assumes gold plus the gold equivalent of silver using a ratio of 50:1 for all periods presented.

(iii) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis.

In 2013, Mercedes produced 141,618 GEO, which consisted of 129,327 ounces of gold and 614,562 ounces of silver, compared with 126,010 GEO, which consisted of 116,215 ounces of gold and 489,747 ounces of silver in 2012. The production increase was driven by increased tonnage of ore processed which as planned offset lower gold feed grades.

Co-product cash costs averaged $496 per GEO which were 2% higher than the average of $485 per GEO in 2012. Co-product cash costs increased slightly due to higher mining costs per GEO associated with mining in lower grade areas as part of the mine plan.

Production of 31,716 GEO in the fourth quarter consisted of 28,821 ounces of gold and 144,715 ounces of silver, compared with 39,443 GEO, which consisted of 36,057 ounces of gold and 169,313 ounces of silver in the fourth quarter of 2012. The lower quarterly production was the result of normal mine sequencing in areas of lower gold and silver grades.

Co-product cash costs of $656 per GEO were 51% higher than $435 in the same quarter of 2012. Higher co-product cash costs were due to higher mining costs associated with mining in lower grade areas as part of the mine plan.

Development continued at the Barrancas zone, where the higher grade Lagunas Norte vein, one of the newest discoveries at the mine, is located. Production of the Barrancas zone started in the third quarter of 2012. Confirmation of the width and grades of mineralization by infill drilling at Lupita and the recent discovery of high-grade mineralization at Rey del Oro that may be amenable to underground mining methods have positively impacted measured and indicated mineral resources. Development of Diluvio will commence in 2014.

25

GUALCAMAYO, ARGENTINA

	For the three months ended December 31,				For the years ended December 31,
Operating Statistics	2013		2012		2013		2012
Production
Gold production (ounces)	34,929		31,502		120,337		147,310
Co-product cash costs per gold ounce produced (i)	$	825	$	485	$	772	$	536
Ore mined (tonnes)	1,258,735		1,294,174		4,005,487		9,720,842
Ore processed (tonnes)	1,561,180		2,002,170		6,568,912		7,742,140
Gold feed grade (g/t)	1.61		0.66		0.88		0.80
Gold recovery rate (%)	43.7		75.8		72.5		75.5
Sales
Gold sales (ounces)	34,264		33,568		111,134		149,372
Depletion, depreciation and amortization per gold ounce sold	$	522	$	383	$	489	$	352

______________________________

(i) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis.

In 2013, Gualcamayo produced 120,337 ounces of gold compared with 147,310 ounces produced in 2012.  Lower production was the result of fewer tonnes processed and lower recovery rates, partly offset by improved feed grade.  Gualcamayo underwent a transition in 2013 as the mine's open-pit operations at QDD Main transitioned to the new Phase III, resulting in a decline in ore processed compared to that of 2012.  Production at QDD Main Phase III began in August and ramp-up, which has been slower than plan, continued into the fourth quarter impacting the total tonnage. The QDD Lower West ("QDDLW") underground mine also began to contribute to heap leach stacking. Completion of the underground conveyor for QDDLW is expected in the second quarter and production is expected to ramp-up each quarter during 2014.

Co-product cash costs in 2013 averaged $772 per ounce compared with $536 per ounce in 2012.  Co-product cash costs were impacted by the inflationary pressures on the local cost escalation of labour, operational services and contractors.

Gualcamayo produced 34,929 ounces of gold in the fourth quarter compared with 31,502 ounces produced in the fourth quarter of 2012.  Higher production was the result of feed from higher grade ore from QDD Main Phase III, Amelia Ines ("AIM") and QDDLW underground which was partially offset by lower recoveries from AIM and QDDLW ore. Production at Gualcamayo for December and January averaged over 14,000 ounces per month, consistent with expected production levels of the expanded operation.

The metallurgy of the ore from AIM and QDDLW requires a longer leaching cycle than that of QDD Main and will result in lower recoveries. Planned improvements to the existing plant including the installation of a filtering station and an increase in the volume of treatment capacity are planned in 2014 to improve recovery rates.

Co-product cash costs were $825 per ounce in the fourth quarter compared with $485 per ounce in the fourth quarter of 2012.  Higher co-product cash costs were mainly due to delays in the transition to QDD Main Phase III, start-up of higher cost underground mining at QDDLW and the duration of the leaching cycle. Higher cash costs were further exacerbated by the effect of local inflationary pressure on labour and services.

Mining costs decreased by 10% from the third quarter and the trend is expected to continue in the first quarter of 2014.  Efforts are being made to reduce development costs by transitioning the underground mine development to be performed fully in-house by the second half of 2014. To date, most of the equipment has been delivered and the Company is now operating with a planned reduction of contractors. Additionally, the Company is looking at renting equipment for QDD Main as a means of increasing equipment availability and reducing maintenance and overhaul costs.  Cash costs per ounce will, however, vary depending on the

26

area from which ore is being sourced.  Periods with a higher proportion of ore sourced from the underground mine will generate higher operating costs.

The Company continues to have exploration success with the increase of the sulphide resource at QDDLW and related areas including Rodado (refer to Section 8 - Mineral Reserves and Mineral Resources).  As the sulphide portion of the orebody grows, the Company is continuing to progress with studies of the options for processing these newly discovered resources.

JACOBINA, BRAZIL

	For the three months ended December 31,				For the years ended December 31,
Operating Statistics	2013		2012		2013		2012
Production
Gold production (ounces)	19,519		28,337		73,695		116,863
Co-product cash costs per gold ounce produced (i)	$	1,140	$	825	$	1,174	$	747
Ore mined (tonnes)	390,768		503,669		1,569,937		2,109,613
Ore processed (tonnes)	396,235		508,737		1,575,629		2,104,683
Gold feed grade (g/t)	1.64		1.87		1.57		1.84
Gold recovery rate (%)	93.2		92.5		92.2		93.8
Sales
Gold (ounces)	19,105		25,843		77,190		114,786
Depletion, depreciation and amortization per gold ounce sold	$	585	$	487	$	561	$	428

______________________________

(i) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis.

In 2013, Jacobina produced 73,695 ounces of gold, compared with 116,863 ounces of gold produced in 2012.  Production was lower resulting from lower throughput, lower feed grade and higher dilution. Production at Jacobina met the revised goals set in the first quarter of 2013 and more importantly the near term objective for improvement of costs and underground development have been met, and the longer term objective of development of higher grade areas is in progress.

Co-product cash costs averaged $1,174 per ounce for the year compared with $747 per ounce in 2012 as a result of lower production volume in 2013.

Gold production at Jacobina was 19,519 ounces in the fourth quarter, compared with 28,337 ounces produced in the same quarter of 2012.  Production was lower resulting from lower feed grade, higher dilution and lower tonnage processed.

Co-product cash costs were $1,140 per ounce for the fourth quarter, a decline from the beginning of the year as a result of the cost containment initiatives implemented since the second quarter, compared to co-product cash costs of $825 per ounce for the fourth quarter of 2012. Higher co-product cash costs in the fourth quarter compared to the same quarter last year reflect reduced production volume but are expected to return to levels of approximately $800 to $850 per ounce in the longer-term.

The Company has taken an impairment charge of $55.0 million against the carrying value of the goodwill allocated to the Jacobina mine in the fourth quarter. For further details please refer to Section 5.1 of this MD&A.

MINERA FLORIDA, CHILE

27

	For the three months ended December 31,				For the years ended December 31,
Operating Statistics	2013		2012		2013		2012
Production
GEO total production (i)	30,513		32,797		118,590		105,679
GEO commissioning production	—		—		—		1,861
GEO commercial production	30,513		32,797		118,590		103,818
Gold total production (ounces)	24,539		27,889		99,000		89,163
Gold commissioning production (ounces)	—		—		—		1,486
Gold commercial production (ounces)	24,539		27,889		99,000		87,677
Silver total production (ounces)	298,696		245,383		979,514		825,812
Silver commissioning production (ounces)	—		—		—		18,737
Silver commercial production (ounces)	298,696		245,383		979,514		807,075
Co-product cash costs per GEO produced (ii)	$	592	$	805	$	747	$	797
Ore mined (tonnes)	228,086		205,882		798,062		859,953
Ore processed (tonnes)	492,257		222,440		1,754,785		902,788
Gold feed grade (g/t)	2.07		3.53		2.45		3.34
Silver feed grade (g/t)	39.16		46.90		32.02		39.29
Gold recovery rate (%)	79.0		81.6		76.1		81.1
Silver recovery rate (%)	61.6		69.8		57.2		67.6
Sales
GEO sales (i)	29,732		33,244		118,687		107,198
Gold (ounces)	24,095		27,075		98,524		86,455
Silver (ounces)	281,871		308,436		1,008,148		1,037,150
Depletion, depreciation and amortizationper GEO sold	$	657	$	582	$	599	$	600

______________________________

(i) GEO assumes gold plus the gold equivalent of silver using a ratio of 50:1 for all periods presented.

(ii) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis.

In 2013, Minera Florida produced 118,590 GEO, which consisted of 99,000 ounces of gold and 979,514 ounces of silver, compared to 105,679 GEO, which consisted of 89,163 ounces of gold and 825,812 ounces of silver in 2012, representing an increase in GEO production by 12%. Production at Minera Florida was as expected as the expansion for the retreatment of historic tailings made a contribution in the first of a five year planned production profile. Production in 2013 included commissioning production of 1,861 GEO from the tailings retreatment plant.

In addition, the mine produced and sold 5,997 tonnes of zinc in 2013, compared with 5,381 tonnes of zinc produced and sold in 2012.  Zinc is accounted for as a by-product credit to cash costs.

Co-product cash costs for the year were $747 per GEO compared with $797 per GEO in 2012. The retreatment of the tailings has contributed lower cost ounces to Minera Florida’s production profile benefiting from no mining costs. Additionally cash costs benefited from higher credits from the sale of zinc resulting from an 11% increase in volume of zinc sold and higher prices for zinc compared to 2012.

In the fourth quarter of 2013, Minera Florida produced 30,513 GEO, which consisted of 24,539 ounces of gold and 298,696 ounces of silver, compared to 32,797 GEO, which consisted of 27,889 ounces of gold and 245,383 ounces of silver in the fourth quarter of 2012. Lower production was mainly attributed to lower feed grades and lower recovery rates.

Co-product cash costs for the quarter were $592 per GEO, representing a 26% reduction, compared with $805 per GEO in the same quarter in 2012. In 2013, the Company initiated a plan of headcount reductions and cost improvements that resulted in co-product cash costs per GEO in the fourth quarter 22% lower than that of the third quarter and 35% lower than that of the second quarter. Production from the tailings retreatment plant has also benefited from no mining costs associated with the reprocessing of tailings material.

28

The mine produced and sold 1,647 tonnes of zinc concentrate in the quarter, compared with 1,353 tonnes of zinc concentrate produced and sold in the fourth quarter of 2012.  Higher credits from the sale of zinc resulted from a 22% increase in volume of zinc sold compared to the fourth quarter of 2012.

29

OTHER MINES

The following table presents key operating statistics for the Company's other continuing mining operations and its equity investment in Alumbrera:

	For the three months ended December 31,						For the years ended December 31,
	2013			2012			2013			2012
FAZENDA BRASILEIRO, BRAZIL
Production
Gold production (ounces)	18,270			18,251			70,079			67,130
Co-product cash costs per ounce produced (i)	$	809		$	856		$	808		$	872
Ore mined (tonnes)	263,584			260,855			1,036,744			1,018,911
Ore processed (tonnes)	284,684			270,998			1,103,248			1,048,489
Gold feed grade (g/t)	2.15			2.28			2.17			2.22
Gold recovery rate (%)	93.3			91.8			91.1			89.5
Sales
Gold sales (ounces)	17,152			17,773			69,193			66,805
Depletion, depreciation and amortization per gold ounce sold	$	220		$	173		$	214		$	181
ALUMBRERA (12.5% interest), ARGENTINA
Production
Concentrate (tonnes)	17,547			14,669			55,115			65,140
Gold production (ounces)	845			1,112			3,445			3,849
Gold production in concentrate (ounces)	10,474			9,657			35,712			42,228
Total gold produced	11,319			10,769			39,157			46,077
Copper contained in concentrate (millions of pounds)	9.6			8.5			30.2			37.4
By-product cash costs per ounce of gold produced (i)	$	(261	)	$	(2,012	)	$	(252	)	$	(1,203	)
Co-product cash costs per ounce of gold produced (i)	$	313		$	343		$	364		$	308
Co-product cash costs per pound of copper produced (i)	$	1.75		$	2.15		$	2.21		$	1.81
Ore mined (tonnes)	1,195,276			978,841			3,181,381			3,923,822
Ore processed (tonnes)	1,211,561			1,305,186			4,671,322			4,962,373
Gold feed grade (g/t)	0.40			0.36			0.37			0.40
Copper feed grade (%)	0.43			0.30			0.37			0.40
Concentrate grade - gold (g/t)	18.55			20.47			20.32			20.13
Concentrate grade - copper (%)	24.80			26.20			24.90			26.10
Gold recovery rate (%)	73.0			71.0			70.0			71.0
Copper recovery rate (%)	84.0			85.0			79.0			84.0
Sales
Concentrate (tonnes)	12,986			20,139			49,304			64,086
Payable gold contained in concentrate (ounces)	7,246			12,593			31,243			40,455
Gold doré (ounces)	1,045			953			3,278			3,125
Total gold sales (ounces)	8,291			13,546			34,521			43,580
Payable copper contained in concentrate (millions of pounds)	6.6			11.1			25.8			35.4

______________________________

(i) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis.

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FAZENDA BRASILEIRO, BRAZIL

In 2013, Fazenda Brasileiro produced 70,079 ounces of gold compared to 67,130 ounces of gold in 2012, representing a 4% year-over-year increase and its second consecutive yearly increase. Co-product cash costs averaged $808 per ounce for the year, representing a 7% decrease from $872 per ounce in 2012.

Production was 18,270 ounces of gold in the quarter compared to 18,251 ounces of gold in the same quarter of 2012. 

Co-product cash costs averaged $809 per ounce for the fourth quarter, 5% lower than $856 per ounce in the fourth quarter of 2012. In 2013, the Company initiated a plan to reduce costs and now will return the focus to the production growth objectives at Fazenda Brasileiro.

The Company has continued to extend mine life since the operation was acquired in 2003 with two and a half years of mine life remaining based on the known mineral reserves at that time. The Company continues infill and extension drilling at Fazenda Brasileiro with a focus on finding additional mineral reserves and mineral resources.

ALUMBRERA, ARGENTINA

The Company’s interest in Alumbrera is accounted for as an equity investment. The Company recorded a loss from its 12.5% interest in Alumbrera of $3.9 million and $5.1 million for the year and three months ended December 31, 2013, respectively, compared with earnings of $50.6 million and $18.1 million for the same periods of 2012.  Decrease in equity earnings was mainly due to lower revenues as a result of lower metal prices and lower sales volume of the gold and copper concentrate.

The Company received cash distributions $27.9 million in 2013 of which $6.8 million in the quarter ended December 31, 2013, compared with $nil cash distribution in the 2012.

Through its annual impairment testing, the Company has recorded an impairment charge in the amount of $70.0 million in respect to its 12.5% interest in Alumbrera. Further details can be found in Section 5.1 of this MD&A.

Attributable production from Alumbrera was 39,157 ounces of gold and 30.2 million pounds of copper for 2013, compared with 46,077 ounces of gold and 37.4 million pounds of copper for 2012. For the quarter, attributable production from Alumbrera was 11,319 ounces of gold and 9.6 million pounds of copper. This compares with attributable production of 10,769 ounces of gold and 8.5 million pounds of copper in the fourth quarter of 2012.

By-product cash costs per ounce of gold averaged negative $252for the year and negative$261 for the quarter ended December 31, 2013 compared with negative$1,203 and negative$2,012 per ounce for the comparable periods in 2012. By-product cash costs were higher due to the decrease in copper sale credit as a result of lower average market prices for copper and lower volume of copper sales by Alumbrera in 2013. Co-product cash costs per ounce for gold averaged $364 and $313 for the year and quarter ended December 31, 2013, compared with $308 and $343 per ounce for the same periods of 2012. Co-product cash costs for copper averaged $2.21 per pound and $1.75 per pound for the year and quarter ended December 31, 2013, compared with $1.81 per pound and $2.15 per pound for the comparable periods of 2012.

ERNESTO/PAU-A-PIQUE, BRAZIL

Ernesto/Pau-a-Pique was originally planned as a combination of an open-pit operation at Ernesto and an underground operation at Pau-a-Pique with a common plant.  A plan has now been developed which continues to include an underground operation at Pau-a-Pique but now also contemplates a near-to-surface underground operation at Ernesto. The Company continues to evaluate other opportunities including the various satellite open-pit deposits already identified that could further positively contribute to the operation.  Commissioning continued in the quarter from the underground Pau-a-Pique with less ore from the first open-pit in Ernesto as an access ramp is being developed in order to evaluate and better understand the near surface underground orebody at Ernesto.

Commissioning production was 27,571 ounces in 2013 and 9,707 ounces for the fourth quarter, representing an increase of 46% from the third quarter. During the fourth quarter, the Company continued to address challenges associated with start-up. In 2013, a loss during commissioning of $30.4 million was capitalized and netted to the capital expenditures of the project. Completion of commissioning is expected in the second quarter of 2014.

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As a result of the delayed start-up of operations and the decline in the metal prices, the Company has taken an impairment charge of $168.2 million, net of taxes against the carrying value of the Ernesto/Pau-a-Pique mine in the fourth quarter. For further details please refer to Section 5.1 of this MD&A.

C1 SANTA LUZ, BRAZIL

Commissioning began in mid-2013 which was delayed due to permitting, availability of equipment and the need to ensure sufficient water reserves for continuous operations. With permits in place and sufficient water secured, C1 Santa Luz is continuing to ramp-up. Process improvements will be a key factor to improve production at the mine.

The Company has developed and is now implementing certain processing improvements which includes the introduction of a thickener and a regeneration furnace.  In addition, recoveries should improve as mining transitions to fresh sulphide ore. During the commissioning phase a stockpile was accumulated which will provide additional flexibility increasing reliability for the operation as process improvements are implemented and take hold.

Commissioning production was 12,997 in 2013 and 6,120 ounces of gold in the fourth quarter due to lower recoveries. In 2013, loss during commissioning of $25.9 million was capitalized and netted to the capital expenditures of the project. Completion of commissioning is expected in the third quarter of 2014.

PILAR, BRAZIL

Commissioning began at the beginning of the third quarter and has progressed more gradually than expected due to the decline in metal prices and delays in equipment delivery.  However, most of the delayed equipment whose purpose is to improve dilution and productivity has now arrived on site and now better positions the operation to meet 2014 expectations.  This new low profile mining equipment is one of a series of initiatives being implemented to increase mining efficiencies at the operation and reduce dilution. The mine infrastructure to support the new low profile equipment will be fully operational in Q2.  The Company is also evaluating further opportunities including the potential for more selectively mining the higher grade ore shoots that would have positive impact on the operation as the in-situ  grades are higher than the current mineral reserve grade.  Efforts are focused on an infill drilling program that is currently underway to ensure these higher grade ore shoots can be mined efficiently.

Commissioning production for the fourth quarter was 10,494 ounces of gold, representing an increase of 115% from the third quarter. Total commissioning production for the year 2013 was 15,374 gold ounces. In 2013, loss during commissioning of $22.1 million was capitalized and netted to the capital expenditures of the project.

Underground development at Pilar continued to progress.  The ore from Caiamar, a satellite deposit, is expected to be processed at Pilar with the higher grades offsetting the additional transportation costs.  Additionally, the Company has elected to take Maria Lazarus through the development cycle on an expedited basis as the exploration drilling results to date indicate possible contribution to future production.  Completion of commissioning is expected in the third quarter of 2014.

7.    CONSTRUCTION, DEVELOPMENT AND EXPLORATION

DEVELOPMENT

All construction projects and all intermediate stage development projects were advancing towards planned start-up. The following summary highlights key updates from the development projects of the Company for 2013. Refer to Section 6 Operating Mines for discussion on construction projects.

Cerro Moro, Argentina

Cerro Moro was obtained through the acquisition of Extorre Resources Ltd. in 2012 for total consideration of approximately $449.2 million.

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Cerro Moro is a low sulphidation epithermal vein deposit with similarities to the deposits at the El Peñón and Mercedes mines. As of the end of 2013, the deposit hosted probable mineral reserves of 1.53 million GEO, an indicated mineral resource of 352,000 million GEO and an inferred mineral resource of 486,000 GEO.

Work continued on updating the feasibility study and is expected to be completed sometime in 2014. The updated feasibility study includes the following parameters:

• Initial capital costs expected to be approximately $150 million;

• Throughput rate of fewer than 750 tonnes per day;

• Expected production of approximately 150,000 GEO per annum;

• All-in sustaining cash costs are expected to be consistent with the Company’s current costs structure.

Certain pre-development work, including the development of a production ready decline into one of the ore bodies, continues. Depending on the outcome of the studies and subsequent construction decision, production could begin in 2016. This reduced-scale operation aligns with Yamana’s focus to balance production growth and capital spending to maximize value creation, and allows the option to expand the operation in the future if economically justified. The design is consistent with the Company’s objective to be prudent in its capital spending in the current market environment.

Suyai, Argentina

The Company plans to apply for the needed permits in 2014.  A number of relevant studies have already been completed and others are ongoing, which would position the Company well to apply for permitting this year.  The current plan being evaluated includes an underground operation. The plan does not contemplate the use of chemical processes at site for the extraction of precious metals that will produce a precious metal concentrate that could be sold to third parties or potentially processed at Cerro Moro. 

The current plan also includes the following parameters:

• Initial capital costs expected to be approximately $220 million;

• Throughput rate initially of approximately 1,150 tonnes per day, with a plan to expand over time;

• Expected production of approximately 150,000 GEO per annum;

• All-in sustaining cash costs are expected to be below the Company's current costs structure.

This smaller scale mining approach and processing off-site is a new approach not previously contemplated for the development of Suyai.

This high grade gold-silver deposit has similarities to the deposits at El Peñón, Mercedes, and Cerro Moro, and has the potential to add significant value to the Company’s portfolio of producing mines.  Consistent with the Company’s focus to balance production growth and capital allocation the plan for Suyai is being evaluated to ensure it maximizes value creation while mitigating costs.  The Company remains committed to working with local communities and governments to ensure its plan is in compliance with applicable laws and regulations.

EXPLORATION

Exploration at Yamana continues to be a key to unlocking value at existing operations. The 2014 program will continue to focus on finding higher quality ounces, those with the greatest potential to most quickly generate cash flow allowing the Company to grow prudently and profitably.

The exploration expenditure for 2013 was $112.0 million. Exploration expenditures included an infill program at Cerro Moro and Gualcamayo, which added new mineral resources. Exploration will continue to focus on mineral resource discovery and development as well as mineral reserve growth at existing operations, development projects and on new discoveries to continue developing the Company's project pipeline. A total of 242,200 metres of drilling at 12 mines and projects were completed as part of the 2013 exploration program.  

Consistent with the Company’s cost containment initiatives and the focus on ounces that can best contribute to cash flow, the Company has evaluated its exploration program and where prudent has reallocated funds to those programs delivering the most encouraging results.

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The following is a summary of the exploration and evaluation expenditures for the current year and comparative years.

	For the years ended December 31,
(In millions of Dollars)	2013		2012
Exploration and evaluation capitalized (i)	$	81.8	$	101.3
Exploration and evaluation expensed (ii)	30.2		58.0
Total exploration and evaluation	$	112.0	$	159.3

______________________________

(i) Capitalized exploration and evaluation costs are reflected in the consolidated balance sheet, property, plant and equipment as part of the additions to mining property costs not subject to depreciation for near-mine exploration and tangible exploration and evaluation assets with probable future economic benefits.

(ii) Expensed exploration and evaluation costs are reported in the consolidated statements of operations.

The following summary highlights key updates from the exploration program at the Company for 2013.

Chapada, Brazil

The focus of the 2013 exploration program at Chapada was the completion of an infill program at Corpo Sul to further upgrade the mineral resources to mineral reserves. The program at Chapada included 3,545 metres in 51 holes with favorable results. Closer spaced drilling identified southwest trending high grade gold and copper mineralized zones that will improve the average grade of the Corpo Sul and Chapada deposits and add both copper pounds and gold ounces to the mineral resource and mineral reserve inventory. Exploration efforts at Chapada have resulted in increased gold and copper mineral reserves for year end 2013 and have developed important additional targets that will be tested in 2014. The Chapada near mine exploration program investigated several targets including Hidrothermalito Sul, South Mundinho, Suruca and Suruca West using geophysics, geologic mapping and stream and outcrop geochemical sampling to develop drill targets.

Hidrothermalito Sul - Assay results received early in the fourth quarter define drill intercepts of anomalous gold up to 12 metres in length in several holes The Company is encouraged by these initial results and will incorporate this information to develop new targets to be tested in 2014.

Suruca - Final assay results from the 50 by 50 metre infill drill program are in hand and will be evaluated for mineral resource and mineral reserve potential in 2014.

Arco Sul - Arco Sul is a discovery made in late 2010 located in Western Goias State, 260 kilometres southwest of Yamana's Chapada mine. Grade shell models were constructed during the fourth quarter utilizing a 1.5 g/t cut-off grade for the high grade envelopes and 0.5 g/t Au for the low grade envelopes for both the Lavrinha and Vital deposits. A total of 16 mineral zones are defined at Lavrinha and 11 at Vital. Mineral resources will be reported internally at a 1.5, 2.0 and 2.5 cut-off grade to help define deposit economics and sensitivity.

Ernesto/Pau-a-Pique, Brazil

The 2013 exploration program included a total of 13,928 meters that were completed in 95 drill holes investigating near-mine targets and extensions. This program discovered several new mineral traps that host potential ore grade gold mineralization which may lead to higher production rates and extend the life of mine profile. Surface mapping and geochemical sampling located the Upper, Bonus and Ponces Lacerda traps, which are new discoveries on the surface, and drilling has confirmed that the Upper and Bonus traps extend laterally and down dip.

Pilar, Brazil

Underground mapping and sampling along with computer modeling of drill data has identified moderate to high grade inferred resource ore shoots that will be drill-tested from the surface during 2014 to expand the mineral resource and mineral reserve base at Pilar.

Maria Lazarus - The Maria Lazarus target is located 15 kilometres west of the Pilar mine in the Guarinos greenstone belt. The Maria Lazarus access ramp drilling was completed in October with 1,002 metres drilled in 13 holes. A geologic model of Maria Lazarus was developed outlining eight identifiable units including quartz-biotite-chlorite schist which hosts the majority of the gold bearing quartz and quartz-albite vein mineralization at Maria Lazarus. The mineral resource model

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was also developed into three regions (south, central and north) and divided into five levels. The mineral zones at Maria Lazarus dip 40-50 degrees and are thought to be extractable using common underground mining techniques.

Caiamar - Geologic work was focused on mapping the underground exposures. Mapping identified two main phases of deformation via thrust faulting and northwestern to southeastern structural movement.

C1 Santa Luz, Brazil

The 2013 exploration program was successful in identifying and outlining a deep down dip extension to the C1 near-surface deposit that will add important ounces and grade to the mineral resource inventory. The new mineralization is thought to be of sufficient width and grade to be economically extracted using common underground mining techniques. An economic evaluation will be initiated in 2014.

During the year, the near-mine and district exploration drill programs completed 21,332 metres distributed in 66 holes. The near mine program tested the up-dip extension of the southwestern deep target and completed infill holes and tested the northern extensions at Antas III. The regional program tested the Gravata and Rancho do Carneiro targets. Results from both programs are in line with prior results and are being evaluated for economic potential.

Results of additional surveys to be performed to collect IP Resistivity data at C1 and Magnetotellurics (MT) activity over the meta-volcanic rocks to the west will be incorporated into the exploration program for 2014.

Cerro Moro, Argentina

The focus of the 2013 exploration program was to develop and test new targets that are both within and outside of the known mineralized structural blocks. During the fourth quarter, 1,077 metres in five holes were drilled to complete the 2013 exploration drill program. This drilling tested the Carlita, Patricia and Margarita veins in an effort to build and expand the known mineralization envelopes. The final hole of the year drilled at the southeast end of the Margarita system cut important gold and silver values directly beneath the P0/P1 contact leaving the structure open to the southeast and to depth.

Following completion of the exploration drill program, the geology department focused on end of year data compilation, local mapping and sampling programs, development support activities, mineral resource estimation and outlining the 2014 exploration program.

Gualcamayo, Argentina

Due to positive results returned from drill holes testing the Rodado southwest and beneath QDDLW early in the year, exploration drilling was focused on Rodado southwest. During the fourth quarter, two diamond core rigs completed a total of 3,878 metres distributed in nine holes positioned from two underground drill stations. Positive assay results from these holes continued to expand the mineral envelope of Rodado southwest and the potential ore body, which remains open along strike and down dip. This deep mineralization is unoxidized and found largely within hydrothermal and tectonic breccia. A feasibility study is needed to determine the viability of the mineral zones.

El Peñón, Chile

The 2013 exploration program tested the limits of near-mine veins and ore zones for extensions and probed the limits of the El Peñón mine complex for new discoveries. Both programs were successful in finding new veins, such as the NW("north west")1, NW2 and NW3 structures within the Providencia system and the a new vein structure referred to as the Borde Oeste vein located one kilometer east of the Cerro Martillo operations. Both discoveries will be subject to infill drilling during 2014 to upgrade the mineral resources to mineral reserves and find a spot in the life of mine production tables at El Peñón.

Surface and underground based drill-testing of targets within the El Peñón mine area continued through the fourth quarter with 29,514 metres distributed in 95 holes completed, bringing the year 2013 drill totals to 93,333 metres completed in 298 holes. Exploration and limited infill drill-testing of the NW1, NW2 and NW3 targets within the Providencia structural trend continued along with a similarly focused program on the newly discovered Borde Oeste trend.

At the NW1, NW2 and NW3 northwest trending structures tested within the Providencia system, narrow to moderate widths of moderate to high grade gold and silver are being defined.

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In an effort to expand near-mine targets and develop new structures, long horizontal holes have been completed. One drill hole to the west from the south end of the Providencia tunnel cut three potential structural extensions as evidenced by narrow high grade gold and silver assay results. The final 0.5 metre intercept of moderate gold and silver values is 300 meters south of the Pampa Campamento structure. These intercepts will be followed up with both surface and underground based drilling in the first quarter of 2014.

Minera Florida, Chile

The 2013 exploration program at Minera Florida tested numerous targets within the Mina Este structural zone adjacent to the Milenium complex and Tribuna northwest, Sorpresa and Peumo to the northwest, and also executed a near-mine exploration program, testing surface targets close to the Minera Florida mine compex. Exploration was successful testing most of the targets for mineral resource extensions, added new mineral resource ounces and developed new target areas for testing in 2014. In the fourth quarter the program completed 4,510 metres distributed in 29 holes. The program tested targets within Mina Este such as Triangulo Mineralizado, Lisset and PVO and additional targets including Tribuna, Victoria and Hallazgo. Assay results continue to show positive results from most targets. As an example, a hole drilled at the Triangulo Mineralizado target cut 10 mineral intercepts in the first 70 metres of the hole that are characterized as narrow to moderately wide zones of potential ore grade gold equivalent grades.

The near-mine exploration program completed 3,069 metres in 13 holes to test the down dip extensions of the Las Lauras-Fantasma and Gasparin-Lazo-Polvorin structural system from surface based drill locations. Results received to date are mixed. The structural trends were cut by all of the drill holes yet grade continuity was not firmly established. Evaluation of the results is on-going.

8.    MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES

The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101, issued by the Canadian Securities Administrators. This National Instrument lays out the standards of disclosure for mineral projects including rules relating to the determination of mineral reserves and mineral resources. This includes a requirement that a “qualified person” (as defined under the NI 43-101) supervises the preparation of the mineral reserves and mineral resources reports. The Company's mineral reserve and mineral resource reports are reviewed by William Wulftange, Senior Vice President Exploration who is a qualified person.

Complete information relating to mineral reserves and mineral resources indicating tonnage, grade and the various mines and projects will be contained in a complete mineral resource and mineral reserve table accompanying the 2013 annual report.

Total year end 2013 proven and probable mineral reserves were 18.5 million gold equivalent ounces ("GEO") compared to 19.3 million GEO in 2012 representing a decrease of 4%. This is offset by significant increases in measured and indicated mineral resources, almost of all which are at existing operations. On a gold equivalent basis, the average grade of mineral reserves decreased by approximately 6% to 0.90 grams per tonne (“g/t”) from 0.96 g/t in 2012.

Measured and indicated mineral resources on a GEO basis increased by 10% to 17.3 million GEO (contained gold - 16.3 million ounces; contained silver - 51.7 million ounces) as at December 31, 2013, compared with measured and indicated mineral resources of 15.6 million GEO (contained gold - 14.1 million ounces; contained silver - 78.8 million ounces) in 2012. Measured and indicated mineral resources increased from 2012 mainly due to the addition of mineral resources from Cerro Moro and new mineral resources from Gualcamayo. Total inferred mineral resources increased by 32% to 15.0 million GEO (contained gold - 13.4 million ounces; contained silver - 81.2 million ounces).

Assumptions for metal prices used in the estimates of mineral reserves and mineral resources changed for silver and copper from 2012: gold price of $950 per ounce, silver price of $18 per ounce, and copper price of $2.80 per pound, except where noted in the mineral reserve and mineral resource tables contained in the Company's 2013 annual report. Please refer to the mineral reserve and mineral resource table contained in the Company's 2013 annual report and the Company's website for a complete listing of metal-price assumptions used in the calculation of mineral reserves and mineral resources by project.

Exploration continues to be a key to unlocking value at existing operations. The 2014 program will continue to focus on finding higher quality ounces, those with the greatest potential to most quickly generate cash flow allowing the Company to grow prudently and profitably. The Company expects to spend approximately $70 million on exploration in 2014.

The most notable changes are detailed below:

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El Peñón, Chile

Gold equivalent measured and indicated mineral resources increased by more than 100% to 1.4 million GEO at 12.41 g/t contained in 3.4 million tonnes of ore. Gold equivalent mineral reserves decreased by 13% to 3.3 million GEO after production of 534,500 contained GEO. Gold equivalent mineral reserve tonnage at an average grade of 9.66 g/t decreased by 19%. The 2014 exploration program at El Peñón will focus on converting mineral resources to mineral reserves. This includes focused infill drill programs at Providencia Este, Al Este Foot Wall, Al Este East and Borde Oeste. Gold equivalent inferred resources increased to 2.3 million GEO from 1.8 million GEO, representing a 31% increase in contained GEO and an increase in the average grade to 12.6 g/t.

There are currently 35 active mining areas within the El Peñón mine complex. Production of gold and silver at El Peñón was only partly offset by conversion of resource ounces to reserves in 2013. Losses due to mining at Providencia, Al Este, Bonanza, Dominador and other zones were replaced by gains in mineral reserves at Veta Norweste, PAV, Dorada southwest and others. The 2014 exploration program at El Peñón will focus on converting mineral resources to mineral reserves. This includes focused infill drill programs at Providencia Este, Al Este Foot Wall, Al Este East and Borde Oeste.

Chapada, Brazil

Gold equivalent mineral reserves were 3.8 million GEO, at an average grade of 0.25 g/t contained in 479.8 million tonnes, an increase of 156,000 GEO over 2012, after production of 188,000 contained GEO. Measured and indicated gold equivalent mineral resources decreased by approximately 8% to 2.2 million GEO contained in 176.6 million tonnes at 0.38 g/t, mainly as a result of the conversion of mineral resources to mineral reserves at Corpo Sul. Gold equivalent inferred mineral resources also increased by 9% to 933,000 GEO contained in 171.9 million tonnes at 0.17 g/t.

Copper proven and probable mineral reserves increased by 7% to 2.6 billion pounds with an average grade of 0.29%. Copper measured and indicated mineral resources decreased by 62% to 422 million pounds of copper with an average grade of 0.20%.

Chapada mineral reserves increased in both gold and copper content due to several factors. The 50 meter by 50 meter infill program at Corpo Sul encountered long intervals of higher grade copper and gold values compared to those drilled previously resulting in higher average grades, more tonnes and a larger overall ore body despite using a 1.0 revenue factor pit versus the 1.25 revenue factor pit used for the 2012 mineral reserve calculation. Mineral resource tonnes, gold ounces and copper pounds were lower than 2012 levels due to the conversion of measured and indicated mineral resources and the upgrade of inferred mineral resource tonnes, gold ounces and copper pounds to mineral reserves.

Jacobina, Brazil

Measured and indicated gold mineral resources increased by 26% to 2.6 million ounces contained in 33.9 million tonnes of mineral resources at 2.40 g/t. Inferred mineral resources increased by 30% to 1.6 million ounces contained in 15.8 million tonnes of mineral resources at 3.11g/t. Proven and probable gold mineral reserves decreased by approximately 11.0% to 2.2 million ounces, after production of 77,000 contained ounces.

Increases in measured and indicated mineral resources at Moro do Vento, Morro do Cuscuz and Serra do Corrego were accomplished by infill drilling and updates to the geologic model. Reductions in mineral reserves at Jacobina are a result of mining and changes to the resource model at Joao Belo. At Joao Belo, an infill and ore delineation program indicated that portions of the resource model were narrower than previously modeled resulting in a reduction of contained gold mineral reserves. Additional minor mineral reserve losses at Canavieiras Central and Moro Corrego were largely offset by gains due to infill and extension drilling at Canavieiras South and Moro do Vento.

Gualcamayo, Argentina

Gold measured and indicated mineral resources were 94.8 million tonnes at 1.01 g/t containing 3.1 million gold ounces. This represents an increase in gold measured and indicated mineral resources of 163% from the prior year. Similarly, gold inferred mineral resources increased by 268%, partly explained by an increase in the average grade of gold inferred resources of 25% from the prior year. Inferred gold mineral resources were 30.4 million tonnes at 2.08 g/t containing 2.0 million gold ounces. Gold mineral reserves were 32.2 million tonnes at 1.33 g/t containing 1.4 million gold ounces.

Mineral reserves at Gualcamayo decreased by 690,000 gold ounces during 2013 as a result of mining and a revision of planned mining techniques and associated higher mining costs. Gold mineral reserves at the QDD open pit decreased due to the extraction and the degrading of a portion of in-pit mineral reserves to mineral resource status due to a redesign of the life-of-mine pit limits that excludes some ounces previously thought to be more economic. A reduction of 2012 mineral reserves was due to increased costs and a change in mining techniques that were made at QDD Lower West ("QDDLW") and Rodado.

The focus in 2013 at Gualcamayo was on the definition and expansion of the Rodado breccia, a new zone discovered in 2011 southwest of QDDLW. As a result, measured and indicated mineral resources increased by 163% with an 8% decrease in grade.

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A significant amount of gold mineral resources at Gualcamayo are within the Rodado breccia and QDDLW, and given the current size of the sulphide portion of the mineral resources in these zones, further mineral resource increases are expected in these areas hence the Company is undertaking a study to evaluate the installation of a mill.

Minera Florida, Chile

Proven and probable gold equivalent mineral reserves were 706,000 GEO compared to 974,000 GEO in 2012 after production of 164,000 contained GEO. There are 64 individual ore shoots or veins that contribute to the mineral reserve totals at Minera Florida. The majority of production during 2013 was sourced from the Tribuna, Puemo, Hallazgo, Falla Hallazgo, Rafael and Marilyn ore zones. Mining of these zones during 2013 were only partly offset by additions to mineral reserves at Maqui Clavo II, Gasparin, Mejas and other veins.

Measured and indicated mineral resources increased by 49% to 848,000 GEO at an average gold equivalent grade of 6.02 g/t while inferred mineral resources increased by 36%. The increase in mineral resources is the result of many moderate additions to the mineral resource inventory with the more substantial additions from new discoveries and extensions of the Maqui Sur, Aqua Fria, Marisol, Florencia, HME Centro, PVO Sur and Megias veins and mineral zones.

Mercedes, Mexico

Gold equivalent proven and probable mineral reserves were 5.6 million tonnes at 5.03 g/t containing 905,000 GEO. The average grade contained in gold equivalent mineral reserves increased by 4% from prior year. Mineral reserve reductions due to mining and/or a change in estimation parameters occurred at the Corona de Oro, Klondike, Lagunas, and Corona de Oro CAF ore bodies. These mineral reserve losses were partly offset by new discoveries, extensions and mineral resource to mineral reserve upgrades at Casa Blanca, Barrancas Centro, Rey del Oro and Tarasito. The reduction in mineral reserves is also attributable to production and a focus of exploration efforts on adding new gold equivalent ounces to the mineral resource inventory. Measured and indicated gold equivalent mineral resources were 3.6 million tonnes at 3.37 g/t containing 388,000 GEO. This represents an increase of 26% in gold equivalent ounces. Inferred gold equivalent mineral resources were 3.3 million tonnes at 4.15 g/t containing 441,000 GEO. This represents an increase in grade of 10% from the prior year. Important additions to the mineral resource inventory were made at the Klondike, Rey del Oro and Barrancas mineral zones.

Fazenda Brasileiro, Brazil

Proven and probable gold mineral reserves decreased by approximately 45% while grade contained in gold mineral proven and probable reserves increased by 5%. Measured and indicated gold mineral resources decreased by approximately 30% and inferred gold mineral resources remained unchanged from 2012. The Company acquired the mine in 2003 with a 2.5 year mine life remaining based on known mineral reserves. Based on current mineral reserves mine life is approximately three years after having been mined by the Company for ten years.

Ernesto/Pau-a-Pique, Brazil

Proven and probable gold mineral reserves were 4.7 million tonnes at 3.47 g/t containing 526,000 ounces. Measured and indicated gold mineral resources were 324,000 ounces in 4.2 million tonnes at 2.38 g/t, and inferred gold mineral resources of 157,000 ounces in 1.6 million tonnes of ore at 3.03 g/t of gold.

C1 Santa Luz, Brazil

Proven and probable gold mineral reserves were 26.7 million tonnes at 1.57 g/t containing 1.3 million ounces. Measured and indicated gold mineral resources were 478,000 ounces in 11.7 million tonnes at 1.27 g/t. Inferred gold mineral resources increased by 596,000 ounces to 1.1 million ounces at 2.49 g/t of gold due to additions from C1 southwest deep extensions and reductions in inferred and indicated mineral resource zones in the C1 open pit.

Pilar, Brazil

Proven and probable gold mineral reserves were 10.8 million tonnes at 4.03 g/t containing 1.4 million ounces. Measured and indicated gold mineral resources were 270,000 ounces in 1.9 million tonnes at 4.44 g/t. Inferred gold mineral resources increased by 299,000 ounces to 1.7 million ounces contained in 12.7 million tonnes of ore at 4.12 g/t of gold. At Pilar, the zones mined during commissioning in 2013 were depleted from the 2012 mineral reserve estimates as the mine continued in commissioning. The planned use of hydraulic mining techniques has been replaced by more conventional drilling and blasting methods. Room and pillar extraction for zones that dip less than 25 degrees and selective blasting for zones that dip greater than 25 degrees remains in place. Smaller underground equipment is on site and will replace the larger equipment currently employed at the Jordino mine.

Cerro Moro, Argentina

Cerro Moro was acquired as a result of the acquisition of Extorre by the Company in August 2012. The Company commenced an aggressive infill exploration program in October 2012 to re-categorize inferred and indicated mineral resources to support a feasibility study.

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As at December 31, 2013, 2.0 million tonnes of proven and probable GEO mineral reserves at 24.34 g/t containing 1.5 million GEO have been converted from mineral resources. Measured and indicated gold mineral resources at the end of the year were 1.8 million tonnes at 6.16g/t containing 352,000 GEO. The decrease in measured and indicated mineral resources was due to the upgrade of mineral resources to mineral reserves.

Arco Sul, Brazil

Arco Sul is a new discovery made in late 2010. It is located in western Goias State, 200 kilometres from Goiania, 370 kilometres from Brasilia and 295 kilometres from Pilar. Gold mineralization is hosted in a stock work system within a contact zone of subvolcanic intrusives and the Neoproterozoic volcano-sedimentary basement. The Company's closed and reclaimed mine, Fazenda Nova, represents the small, near surface part of the Arco Sul mineralized system. Sulphide potential at depth has been identified and the Company is now exploring this potential. Diamond drilling started in late September 2010 and to date 72 diamond drill holes totaling 29,979 metres have been completed. Mineralization remains open in all directions and an inferred mineral resource estimate has outlined 646,000 ounces of gold in 5.0 million tonnes of ore at an average grade of 4.02 g/t.

Suyai, Argentina

Measured, indicated and inferred gold equivalent mineral resources are unchanged year-over-year as the development focus at Suyai in 2013 was on the execution of further studies to better position the Company to apply for required permits. A number of relevant studies have already been completed and others are ongoing, which should support the Company in applying for permitting this year. This high grade gold-silver deposit has similarities to the deposits at El Peñón and Mercedes, and has the potential to add significant value to the Company’s portfolio of producing mines. The current plan being evaluated includes an underground operation without any chemical processing onsite that will produce a precious metals concentrate that could be sold to third parties or potentially processed at Cerro Moro. Initial capital costs are expected to be low at approximately $220 million, producing approximately 150,000 GEO per annum at an estimated throughput rate of 1,150 tonnes/day.

Lavra Velha, Brazil

Lavra Velha is an early stage exploration target, discovered in 2010, located in Central Bahia State, 550 kilometres from Salvador, 350 kilometres from Jacobina and 480 kilometres from Fazenda Brasileiro. The project lies within a 400 kilometres northwestern trending sequence of Paleoproterozoic acid volcanics which overlie the Archean São Francisco Craton consisting of granitic and mafic intrusions. Four sub-horizontal mineralized levels have been defined at Lavra Velha to date, covering an area of approximately 900 metres by 350 metres. Drilling started in 2010 and 70 diamond drill holes totaling 18,231 metres have been completed to date. Inferred mineral resources of 543,000 ounces of gold have been estimated in 3.9 million tonnes of ore with an average grade of 4.29 g/t. The mineralization is characterized by iron oxide/sulfide rich breccias and remains open in all directions.

The Company's mineral reserves and mineral resources as at December 31, 2013 are summarized in the following table. Complete information relating to mineral reserves and mineral resources indicating tonnage, and grade is contained in a complete mineral resource and mineral reserve table accompanying the 2013 annual report available on the Company's website, www.yamana.com.

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Mineral Reserves & Resources Estimates (a)	Contained Gold		Contained Silver		GEO (b)		Contained Copper
	(in 000's ounces)		(in 000's ounces)		(in 000's GEO)		(in million pounds)
Mine/Project	2013	2012	2013	2012	2013	2012	2013	2012
Proven & Probable Mineral Reserves
Chapada	3,832	3,676	—	—	3,832	3,676	2,649	2,474
El Peñón	1,961	2,291	64,456	72,587	3,250	3,743	—	—
Jacobina	2,157	2,422	—	—	2,157	2,422	—	—
Gualcamayo	1,375	2,065	—	—	1,375	2,065	—	—
Minera Florida	623	845	4,164	6,473	706	974	—	—
Fazenda Brasileiro	168	306	—	—	168	306	—	—
Mercedes	845	953	8,419	10,131	905	1,025	—	—
Ernesto/Pau-a-Pique	526	791	—	—	526	791	—	—
C1 Santa Luz	1,345	1,495	—	—	1,345	1,495	—	—
Pilar	1,402	1,440	—	—	1,402	1,440	—	—
Cerro Moro	715	—	40,723	—	1,529	—	—	—
Jeronimo (57%)	1,082	1,082	—	—	1,082	1,082	—	—
Alumbrera (12.5%)	254	310	—	—	254	310	175	213
Total Proven & Probable Mineral Reserves	16,285	17,676	117,762	89,191	18,531	19,329	2,824	2,687
Measured & Indicated Mineral Resources
Chapada	2,104	2,296	3,775	3,775	2,180	2,372	874	1,097
El Peñón	870	432	24,130	12,040	1,353	673	—	—
Jacobina	2,614	2,077	—	—	2,614	2,077	—	—
Gualcamayo	3,076	1,171	—	—	3,076	1,171	—	—
Minera Florida	759	512	4,459	2,922	848	570	—	—
Fazenda Brasileiro	116	165	—	—	116	165	—	—
Mercedes	357	287	4,351	3,086	388	309	—	—
Ernesto/Pau-a-Pique	324	141	—	—	324	141	—	—
C1 Santa Luz	478	678	—	—	478	678	—	—
Pilar	270	267	—	—	270	267	—	—
Cerro Moro	122	884	11,488	53,500	352	1,954	—	—
Jeronimo (57%)	139	139	—	—	139	139	—	—
La Pepa	2,760	2,760	—	—	2,760	2,760	—	—
Suyai	2,286	2,286	3,523	3,523	2,356	2,356	—	—
Total Measured & Indicated Mineral Resources	16,275	14,095	51,726	78,846	17,254	15,632	874	1,097
Inferred Mineral Resources
Chapada	913	839	982	982	933	859	731	565
El Peñón	1,252	962	53,231	40,493	2,317	1,772	—	—
Jacobina	1,584	1,215	—	—	1,584	1,215	—	—
Gualcamayo	2,029	552	—	—	2,029	552	—	—
Minera Florida	907	664	6,023	4,691	1,027	758	—	—
Fazenda Brasileiro	611	611	—	—	611	611	—	—
Mercedes	414	372	3,843	4,284	441	403	—	—
Ernesto/Pau-a-Pique	157	293	—	—	157	293	—	—
C1 Santa Luz	1,086	490	—	—	1,086	490	—	—
Pilar	1,676	1,377	—	—	1,676	1,377	—	—
Cerro Moro	220	222	13,297	13,408	486	490	—	—
Jeronimo (57%)	161	161	—	—	161	161	—	—
La Pepa	620	620	—	—	620	620	—	—
Lavra Velha	543	543	—	—	543	543	—	—
Arco Sul	646	522	—	—	646	522	—	—
Suyai	274	274	575	575	286	286	—	—
Amancaya	351	351	3,270	3,270	416	416	—	—
Total Inferred Mineral Resources	13,444	10,068	81,221	67,703	15,019	11,368	731	565

__________________

(a)    Refer to the complete Mineral Reserves & Mineral Resources tables in the Company's 2013 Annual Report.

(b) GEO assumes gold plus the gold equivalent of silver using a ratio of 50:1 with the exception of Mercedes which uses a ratio of 140:1.

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9.    LIQUIDITY, CAPITAL RESOURCES AND CONTRACTUAL COMMITMENTS

LIQUIDITY

In response to the current volatile gold price environment, the Company continues to focus on containing costs in order to maximize available cash. For the year ended 2013, cash flows from operating activities remained strong notwithstanding significant declines in precious metals prices. In the second quarter, the Company implemented a cost savings program which continued into year end.

The following is a summary of liquidity and capital resources balances:

	As at December 31,
(in thousands of United States Dollars)	2013		2012
Cash	$	220,018	$	349,594
Trade and other receivables	$	80,101	$	175,297
Long-term debt	$	1,189,762	$	765,912
Working capital (i)	$	81,093	$	255,134

______________________________

(i)Working capital is defined as the excess of current assets over current liabilities.

Cash and cash equivalents were $220.0 million as at December 31, 2013 compared to $349.6 million as at December 31, 2012.  Cash and cash equivalents were comprised of cash in bank and bank term deposits. The sources and uses of cash and cash equivalent during the year are explained below.

Trade and other receivables at the end of the year were $80.1 million compared with $175.3 million as at December 31, 2012. Gold sales are made at spot prices and gold sale receivables are settled in less than a month. Copper concentrate sales are made in accordance with certain smelter off-take agreements whereby provisional payments of approximately 90% are received within one to four weeks after shipping. Final assays and payment related to these sales are received approximately two to three months thereafter.

Working capital was $81.1 million as at December 31, 2013, compared to $255.1 million as at December 31, 2012.

The following table summarizes yearly cash inflows and outflows:

	For the years ended December 31,
(In thousands of United States Dollars of inflows/(outflows))	2013			2012
Cash flows from operating activities	$	653,135		$	1,158,057
Cash flows from operating activities before changes in non-cash working capital	$	707,861		$	1,044,946
Cash flows from financing activities	$	283,843		$	146,399
Cash flows used in investing activities	$	(1,053,410	)	$	(1,498,030	)

CASH FLOWS FROM OPERATING ACTIVITIES

Cash flows from operating activities after taking into effect changes in working capital items for 2013 were $653.1 million, compared to $1.16 billion for 2012.

Changes in non-cash working capital items for the year ended December 31, 2013 were cash outflows of $54.7 million compared to inflows of $113.1 million for 2012. As at December 31, 2013, accounts receivable balances were $114.0 million lower relative to the balance as at December 31, 2012 due to lower sales volume and a lower mark-to-market adjustment on concentrate receivables as a result of lower metal prices.  Additionally, trade and other payables also declined year-over-year as at December 31, 2013.

Cash flows from operating activities before changes in non-cash working capital (a non-GAAP measure, see Section 14) were $707.9 million for the year compared to $1.04 billion for 2012 mainly due to lower earnings before tax.

The Company considers the undistributed earnings of some of our foreign subsidiaries, as disclosed in Note 29 of the Consolidated Financial Statements, as of December 31, 2013, to be indefinitely reinvested, and accordingly, no distribution taxes have been provided thereon.  As of December 31, 2013, the amount of cash associated with indefinitely reinvested foreign earnings was

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approximately $39.7 million.  We have not, nor do we anticipate the need to repatriate these funds to Canada to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements.

CASH FLOWS FROM FINANCING ACTIVITIES

For the year 2013, cash inflows from financing activities were $283.8 million compared to inflows of $146.4 million in 2012. During the year, the Company drew down on its revolving facility in the amount of $145.0 million compared to $nil million in 2012. In the second quarter of 2013, the Company issued senior debt notes for a total of $300.0 million of which $35.0 million has a maturity date of June 10, 2023 bearing interest at a rate of 4.78% per annum. Also included in cash flows from financing activities are dividends in the amount of $196.3 million at a rate of $0.26 per share per annum. this compares to $168.2 million of dividends paid in 2012 at a rate of $0.25 per share per annum.

CASH FLOWS USED IN INVESTING ACTIVITIES

Cash outflows for investing activities were $1.05 billion for the year ended December 31, 2013, compared to cash outflows of $1.50 billion for the year ended December 31, 2012. Lower cash outflows used in investing activities was a result of lower capital expenditures as all construction projects were in the commissioning phase by the end of the year.

The following is a summary of capital expenditures including sustaining, expansionary and capitalized exploration and evaluation by mine, which represented the majority of the cash flows used in investing activities:

	For the three months ended December 31,		For the years ended December 31,
(in thousands of United States Dollars)	2013		2013		2012
BRAZIL
Chapada	$	34,084	$	101,152	$	155,396
Jacobina	11,374		52,815		60,494
Fazenda Brasileiro	5,200		18,701		32,025
Ernesto/Pau-a-Pique (i)	18,835		87,459		123,488
C1 Santa Luz (i)	27,920		90,395		122,973
Pilar (i)	68,219		186,174		135,453
CHILE
El Peñón	29,163		131,176		109,481
Minera Florida	21,065		84,670		142,951
Other	350		1,726		8,783
ARGENTINA
Gualcamayo	34,018		149,699		136,369
Cerro Moro	13,258		49,099		386,105
Other	691		2,410		8,575
MEXICO
Mercedes	12,245		51,058		52,076
CANADA & OTHER	12,254		40,992		63,825
Total capital expenditures	$	288,676	$	1,047,526	$	1,537,994

______________________________

(i) Net of movement in accounts payable.

CAPITAL RESOURCES

In order to maintain or adjust its capital structure, the Company may issue shares or debt securities, pay dividends, or undertake other activities as deemed appropriate under the specific circumstances.

The Company is authorized to issue an unlimited number of common shares at no par value and a maximum of eight million first preference shares. There are no first preference shares issued or outstanding. As of February 14, 2014, the total number of shares

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outstanding were 753.4 million, the total number of stock options outstanding were 2.7 million, the total number of DSUs outstanding were 2.6 million and the total number of RSUs outstanding were 2.1 million.

In 2013, the Company paid annual dividends of $0.26 per share compared to 2012 of $0.25 per share per annum.  Total dividend payments in 2013 were $196.3 million, representing a 14% increase over the dividends payments of $168.2 million in 2012.

The following table summarizes the weighted average common shares and dilutive equity instruments outstanding as at December 31, 2013:

	Equity instruments outstanding as at	Dilutive equity instruments (i), three months ended	Dilutive equity instruments (i), year ended
(In thousands)	December 31, 2013	December 31, 2013	December 31, 2013
Common shares	753,303	752,995	752,697
Options	2,728	—	—
RSUs	2,192	—	—
DSUs	2,634	—	—
		752,995	752,697

______________________________

(i) Total options excluded from the computation of diluted earnings per share because the exercise prices exceeded the average market value of the common shares for the three- and twelve-month periods ended December 31, 2013 were 2.1 million and 0.9 million, respectively (three and twelve months ended December 31, 2012 — 1.1 million and 1.1 million , respectively).

CONTRACTUAL COMMITMENTS

Day-to-day mining, sustaining and expansionary capital expenditures as well as administrative operations give rise to contracts requiring agreed upon future minimum payments. Management is of the view that such commitments will be sufficiently funded by current working capital, future operating cash flows and available credit facilities which provide access to additional funds.

As at December 31, 2013, the Company is contractually committed to the following:

(In thousands of United States Dollars)	Within  1 year		Between 1 to 3 years		Between 3 to 5 years		After  5 years		Total
Mine operating/construction and service contracts and other	$	583,989	$	397,255	$	142,121	$	7,236	$	1,130,601
Long-term debt principal repayments (i)	15,000		73,500		255,000		871,500		1,215,000
Decommissioning, Restoration and Similar Liabilities (undiscounted)	4,904		17,950		24,772		193,218		240,844
	$	603,893	$	488,705	$	421,893	$	1,071,954	$	2,586,445

______________________________

(i) Excludes interest expense.

10.    INCOME TAXES

The Company recorded an income tax expense of $79.1 million for the year (2012 - $373.1 million). The decrease in the income tax expense for the year is a result of lower earnings for the year relative to the prior year. The income tax provision reflects a current income tax expense of $140.6 million (2012 - $265.5 million) and a deferred income tax recovery of $61.5 million (2012 - $107.6 million).

The Consolidated Balance Sheet reflects recoverable tax installments in the amount of $34.2 million and an income tax liability of $53.5 million. Additionally, the balance sheet reflects a deferred tax asset of $121.6 million and a deferred tax liability of $2.0 billion.

The income tax provision is subject to a number of factors including the allocation of income between different countries, different tax rates in the various jurisdictions, the non-recognition of tax assets, foreign currency exchange movements, changes in tax laws and the impact of specific transaction and assessments.  Due to the number of factors that can potentially impact the effective tax

43

rate, it is expected that the Company's effective tax rate will fluctuate in future periods. The effective tax rate on adjusted earnings for 2013 was 30.0% (2012 - 25.0%)

The Company has elected, under IFRS, to record foreign exchange related to deferred income tax assets and liabilities and interest and penalties in the income tax expense, therefore, due to foreign exchange differences, the tax rate will fluctuate during the year with the change in the Brazilian Real, Argentinean Peso and Mexican Peso.

During the year the Brazilian Real, Argentinean Peso, Chilean Peso and Mexican Peso devalued against the US Dollar. As a result for local purposes, a charge of $68.6 million relating to unrealized foreign exchange was recorded in the deferred tax expense. The impact of these foreign exchange movements on taxes are non-cash and, as such, are excluded from adjusted earnings.

On September 23, 2013, Argentina's federal Income Tax Statute was amended to include a 10% income tax withholding on dividend distributions by Argentine corporations.

On December 26, 2013, the 2014 Tax Reform Bill was enacted by Presidential Decree in Mexico. Included in the bill was the cancellation of previously announced tax rate decreases thereby keeping the corporate income tax rate at 30%. The bill also introduced a new dividend withholding tax of 10%, subject to any treaty reductions. Also included in the bill was the introduction of a Special Mining Duty of 7.5% on taxable EBITDA and the introduction of an Extraordinary Mining Duty of 0.5% on gross revenues from the sale of gold, silver and platinum. Both of these new taxes are deductible for corporate income tax purposes. As a result of this change, a non-cash charge of $28.3 million to the deferred tax liabilities was recognized in the financial statements. This deferred tax liability will decrease in the future as the mine is depleted. This charge has been added back in the calculation of adjusted earnings.

The deferred taxes relating to the operating mines will reverse in the future as the assets are depreciated or depleted. The deferred tax liabilities relating to exploration will not reverse until the property becomes a mine subject to depletion, is written off or sold. The deferred income taxes would only be paid on a direct disposition of the asset that may never occur. 

The largest components of the deferred tax liabilities relate to:

(in thousands of United States Dollars)
Gualcamayo	$	230,748
Agua Rica	$	396,096
El Peñón	$	289,305
Exploration Potential	$	405,740

See Note 29 to the Consolidated Financial Statements for a breakdown of the foreign exchange and interest and penalties charged to the income tax expense and Section 11 - Economic trends, risks and uncertainties - foreign operations and political risks of this Management Discussion and Analysis of Operations and Financial Condition for additional information.

11.    ECONOMIC TRENDS, RISKS AND UNCERTAINTIES

Exploration, development and mining of precious metals involve numerous inherent risks as a result of the nature of the business, global economic trends as well as local social, political, environmental and economic conditions in the various geographical areas of operation. As such, the Company is subject to several financial and operational risks that could have a significant impact on its profitability and levels of operating cash flows.

The Company assesses and minimizes these risks by adhering to its internal risk management protocols which include the application of high operating standards empowering individuals and establishing processes to be able to identify, assess, report and monitor risk at all levels of the organization. Through careful management and planning of its facilities, hiring qualified personnel and developing a skilled workforce through training and development programs, the Company is able to generate shareholder value in a safe, resilient and responsible manner.

Below is a summary of the principal risks and related uncertainties facing the Company. Readers are also encouraged to read and consider the risk factors more particularly described in the Company’s Annual Information Form for the period ended December

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31, 2013. Such risk factors could materially affect the future operating results of the Company and could cause actual events to differ materially from those described in forward-looking statements relating to the Company.

Metal Price Risk

The mining industry is highly dependent on commodity prices which are the result of the economic interplay of supply and demand. The profitability of the Company is directly related to the market prices of gold and copper and to a lesser extent, silver. Market price fluctuations of these commodities could adversely affect profitability of the Company's operations and might lead to impairment of mineral properties. The market prices for the aforementioned commodities fluctuate widely and these fluctuations are caused by numerous factors beyond the Company's control. For example, the market price of gold may change for a variety of reasons, including:

• the strength of the United States Dollar, in which the gold price trades internationally, relative to other currencies;

• financial market expectations regarding the rate of inflation;

• monetary policies announced, changed or implemented by central banks;

• changes in the demand for gold, including the demand from the gold exchange traded fund ("ETF"), as an investment or as a result of leasing arrangements;

• changes in the physical demand for gold used in jewelry;

• changes in the supply of gold from production, divestment, scrap and hedging;

• global or regional political or economic events, and

• speculative positions taken by investors or traders in gold.

Gold Price Three-Year Trend (Bloomberg: USD per ounce of gold)

For the quarter ended December 31, 2013, spot gold prices averaged $1,272 per ounce, or 26% lower, compared with $1,718 per ounce in the fourth quarter of 2012. The average spot price for the year ended December 31, 2013 was $1,411 per ounce, a decline of 15% versus the average spot price for 2012.

Gold prices generally trended lower over the course of the quarter primarily due to reduced investor demand as the US dollar strengthened, US Treasury yields increased and equity markets performed very well. While both exchange traded fund (“ETF”) holdings and net futures exchange positioning declined during the quarter, the selling pressure was not as pronounced as earlier in the year. The US Dollar was aided by generally strong US economic data and the expectation that the United States Federal Reserve (“US Fed”) would slow the pace of its quantitative easing (“QE”) programs. This expectation was realized in December, when the US Fed announced that it would begin to slow the pace of QE. The anticipation of this announcement was a significant contributor to the lower year-over-year gold price.

The US Fed's QE programs have been supportive of gold prices, but with the reduction in QE and the expectation of further reductions, a benign inflation outlook and rising US Treasury yields, investors have been reallocating investments in gold to other investments. While it is expected that the US Fed will to continue to slow the pace of its QE programs, it will still be several quarters before an increase in the Fed Funds rate is considered and the US Fed continues to reiterate this. Global monetary policy continues to be generally easy and most governments are struggling with the fiscal situations they face and this should be supportive for gold over the longer term. Physical demand, particularly in China, continues to be robust on pullbacks and this has provided support to the market. While central bank purchases are estimated to have declined year-over-year, it is expected that they will

45

remain net buyers in 2014. Physical and central bank demand should help offset any further investment related liquidation in 2014.

In spite of the positive signs with respect to the physical demand for gold, following the recent decline in gold prices, the Company has revised its production targets for future years to favour a lower cost structure. The Company is evaluating the producing mines whose all-in cost exceeds the Company's average cost structure. The objective is to pursue quality ounces with sustainable margins and maximize profitability and as such, in the short term the emphasis will be on reducing costs rather than maximizing production.

The Company has not hedged any of its gold sales.

Copper Price Three-Year Trend (Bloomberg: USD per pound of copper)

For the quarter ended December 31, 2013, spot copper prices averaged $3.25 per pound, representing a decrease of 9% compared with $3.59 per pound in 2012. The average spot price for the year ended December 31, 2013 was $3.32 per ounce, declined by 8% versus the average spot price for 2012.

Over the past few years copper prices have been driven by tight supply/demand fundamentals and steady appetite from emerging markets, mainly China. However, concerns about the sustainability of current economic growth levels in China, reduced investor demand and, more recently, the prospect of new mine supply have negatively impacted copper prices and have been the primary drivers of the year-over-year decline in price. In the short-term, these factors would likely limit the potential upside for copper prices but longer-term concerns surrounding supply should result in a situation that is much more supportive of copper price.

The Company periodically uses forward contracts to economically hedge against the risk of declining copper prices for a portion of its forecast copper concentrate sales.

Currency Risk

Conducting exploration, development and production operations in Latin America exposes the Company to currency risk. The Company’s revenues are denominated in United States Dollars (USD).  However, the Company’s operating expenses are incurred in United States Dollars, Brazilian Reais (BRL), Chilean Pesos (CLP), Argentine Pesos (ARG), Mexican Pesos (MXN) and to a lesser extent in Canadian Dollars (CAD). Accordingly, fluctuations in the exchange rates can significantly impact the results of operations.

The following summarizes the movement in key currencies vis-à-vis the United States Dollar:

46

Average and Period-end Market Exchange Rates

For the three months ended	Dec 31, 2013	Dec 31, 2012	Variance
Average Exchange Rate
USD-CAD	1.0494	0.9883	6.2	%
USD-BRL	2.2763	2.0566	10.7	%
USD-ARG	6.065	4.7688	27.2	%
USD-CLP	516.65	476.40	8.4	%
USD-MXN	13.019	12.932	0.7	%

For the year ended	Dec 31, 2013	Dec 31, 2012	Variance
Average Exchange Rate
USD-CAD	1.0299	1.0003	3.0	%
USD-BRL	2.1585	1.9537	10.5	%
USD-ARG	5.4777	4.5272	21.0	%
USD-CLP	495.37	487.06	1.7	%
USD-MXN	12.756	13.177	-3.2	%

As at	Dec 31, 2013	Dec 31, 2012	Variance		Dec 31, 2012	Variance
Period-end Exchange Rate
USD-CAD	1.0623	0.9921	7.1	%	1.0213	4.0	%
USD-BRL	2.3621	2.0435	15.6	%	1.8758	25.9	%
USD-ARG	6.5197	4.9155	32.6	%	4.3000	51.6	%
USD-CLP	525.45	479.20	9.7	%	519.55	1.1	%
USD-MXN	13.037	12.853	1.4	%	13.936	-6.5	%

The Company entered into forward contracts to economically hedge against the risk of an increase in the value of the Brazilian Real versus the United States Dollar. Currency contracts totaling 1.0 billion Reais at an average rate of 2.17 Reais to the United States Dollar have been designated against forecast Reais denominated expenditures as a hedge against the variability of the United States Dollar amount of those expenditures caused by changes in the currency exchange rates for 2014 through to 2015.

The Company also entered into forward contracts to economically hedge against the risk of an increase in the value of the Mexican Pesos versus the United States Dollar. Currency contracts totaling 221.0 million Pesos at an average rate of 13.32 Pesos to the

47

United States Dollar have been designated against forecast Pesos denominated expenditures as a hedge against the variability of the United States Dollar amount of those expenditures caused by changes in the currency exchange rates for 2014 through to 2015.

The currency hedge has been accounted for as a cash flow hedge with the effective portion taken to other comprehensive income and the ineffective portion taken to income. Although the currency hedging program has provided additional cash flow over the years in excess of $100 million, the value of the program can become negative in a short period of time due to the volatility of foreign currency relative to the Dollar.

The following table summarizes the details of the currency hedging program as at December 31, 2013:

(Quantities in thousands)	Brazilian Real				Mexican Peso
Year of  Settlement	Notional Amount	Weighted Average Contract Rate	Market rate as at Dec 31, 2013	Year of Settlement	Notional Amount	Weighted Average Contract Rate	Market rate as at Dec 31, 2013
2014	483,360	2.0677	2.3621	2014	156,000	13.320	13.037
2015	519,048	2.2828	2.3621	2015	65,000	13.320	13.037
	1,002,408	2.1738	2.3621		221,000	13.320	13.037

Interest Rate Risk

The Company is exposed to interest rate risk on its variable rate debt. Monetary policy by central banks in the countries in which the Company operates have maintained interest rates relatively low to avoid a relapse of the credit crisis and incentivize economic growth. At December 31, 2013, the majority of the Company’s long-term debt was carried at fixed rates, hence there is limited market risk arising from fluctuations in floating interest rate.

Credit Risk

Credit risk is the risk that a third party might fail to fulfill its performance obligations under the terms of a financial instrument. For cash, cash equivalents and trade and other receivables, credit risk is represented by the carrying amount on the balance sheet. For derivatives, the Company assumes no credit risk when the fair value of the instruments is negative. When the fair value of the instruments is positive, this is a reasonable measure of credit risk. The Company limits credit risk by entering into business arrangements with high credit-quality counterparties, limiting the amount of exposure to each counterparty and monitoring the financial condition of counterparties.

Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Under the terms of our trading agreements, counterparties cannot require the Company to immediately settle outstanding derivatives except upon the occurrence of customary events of default. The Company mitigates liquidity risk through the implementation of its Capital Management Policy by spreading the maturity dates of derivatives over time, managing its capital expenditures and operation cash flows, and by maintaining adequate lines of credit.

Investment Risk

Investment risk is the risk that a financial instrument’s value will deviate from the expected returns as a result of changes in market conditions, whether those changes are caused by factors specific to the individual investment or factors affecting all investments traded in the market. Although the factors that affect investment risk are outside the Company’s control, the Company mitigates investment risk by limiting its investment exposure in terms of total funds to be invested and by being selective of high quality investments.

Construction and Start-up of New Mines Risk

The success of construction projects and the start-up of new mines by the Company is subject to a number of factors including the availability and performance of engineering and construction contractors, mining contractors, suppliers and consultants, the receipt of required governmental approvals and permits in connection with the construction of mining facilities and the conduct of mining operations (including environmental permits), the successful completion and operation of ore passes, the ADR plants and conveyors to move ore, among other operational elements. Any delay in the performance of any one or more of the contractors,

48

suppliers, consultants or other persons on which the Company is dependent in connection with its construction activities, a delay in or failure to receive the required governmental approvals and permits in a timely manner or on reasonable terms, or a delay in or failure in connection with the completion and successful operation of the operational elements in connection with new mines could delay or prevent the construction and start-up of new mines as planned. There can be no assurance that current or future construction and start-up plans implemented by the Company will be successful; that the Company will be able to obtain sufficient funds to finance construction and start-up activities; that available personnel and equipment will be available in a timely manner or on reasonable terms to successfully complete construction projects; that the Company will be able to obtain all necessary governmental approvals and permits; and that the completion of the construction, the start-up costs and the ongoing operating costs associated with the development of new mines will not be significantly higher than anticipated by the Company. Any of the foregoing factors could adversely impact the operations and financial condition of the Company.

The Company's projects have no operating history upon which to base estimates of future cash flow. The capital expenditures and time required to develop new mines or other projects are considerable and changes in costs or construction schedules can affect project economics. Thus, it is possible that actual costs may change significantly and economic returns may differ materially from the Company's estimates.

Currently, the Company has three mines under construction in Brazil, namely, Ernesto/Pau-a-Pique, C1 Santa Luz and Pilar. While C1 Santa Luz and Pilar commenced commissioning in the second half of 2013, both of which remain within the normal progression expectation of the commissioning process, Ernesto/Pau-a-Pique has been commissioning since the fourth quarter of 2012. Commercial viability of a new mine or development project is predicated on many factors. There is no certainty that the realization of mineral reserves and mineral resources projected by the feasibility study and technical assessment performed on the project may be realized, the necessary permits can be obtained and future metal prices to ensure commercial viability will materialize. Consequently, there is a risk that start-up of new mine and development projects may be subject to write-down and/or closure as there is no certainties that they are commercially viable.

Foreign Operations and Political Risk

The Company holds mining and exploration properties in Brazil, Argentina, Chile and Mexico exposing it to the socioeconomic conditions as well as the laws governing the mining industry in those countries. Inherent risks with conducting foreign operations include, but are not limited to, high rates of inflation; military repression; war or civil war; social and labour unrest; organized crime and hostage taking which cannot be timely predicted and could have a material adverse effect on the Company’s operations and profitability. The governments in those countries are currently generally supportive of the mining industry but changes in government laws and regulations including taxation, royalties, the repatriation of profits, restrictions on production, export controls, changes in taxation policies, environmental and ecological compliance, expropriation of property and shifts in the political stability of the country could adversely affect the Company’s exploration, development and production initiatives in these countries.

In efforts to tighten capital flows and protect foreign exchange reserves, the Government of Argentina issued foreign exchange resolutions with respect to export revenues that resulted in a temporary suspension of export sales of concentrate at Alumbrera during the second quarter of 2012 as management evaluated how to comply with the new resolution. The Government of Argentina subsequently announced amendment to the foreign exchange resolution extending the time for exporters to repatriate net proceeds from export sales enabling Alumbrera to resume exports in July 2012. The Government of Argentina has also introduced certain protocols relating to the importation of goods and services and providing where possible for the substitution of Argentine produced goods and services. During 2012, Alumbrera was unable to obtain permission to repatriate dividends although certain accommodations have since been made to permit distribution of profits from Argentina. Discussion between the joint venture and the Argentine government on approval to remit dividends are ongoing. The Company continues to monitor developments and policies in all its jurisdictions and the impact thereof to its operations.

Brazil is in the process of reviewing the royalties on mining companies. The finalization of the royalty rates are subject to change during the review and approval process therefore the final rates are not determinable at this time. The magnitude of change in royalty rates might affect net earnings and cash flows from the Company's operations in Brazil.

In Mexico, a Tax Reform Bill was enacted on December 26, 2013 regarding the decree to reform and add certain provisions to the Mining and Fiscal Coordination Laws. The proposal submitted through this bill focuses on creating an obligation for mining concession holders whose mines are currently in production, which consists of a compensation payment equal to 7.5% of the amount by applying the regular and other deductions allowed by the Income Tax Law (LISR) to the taxable revenues generated by the mining company, while excluding interest, taxes and amortization. In addition, the bill also includes a new royalty of 0.5% on all sales. These amounts are deductible for income tax purposes which would bring the effective rate of the taxes to approximately 5.8%. The Company has determined this to be approximately 3.8% on a net smelter royalty ("NSR") basis. The bill also proposes

49

to double the payment of duties by hectare by differentiating nonproductive mining concessions. The magnitude of new royalty rates might affect net earnings and cash flows from the Company's operations in Mexico.

On September 23, 2013, Argentina's federal Income Tax Statute was amended to include a 10% income tax withholding on dividend distributions by Argentine corporations.

Consistent with its risk management protocol, to mitigate land title risks, the Company makes no commitments and does not undertake exploration without first determining that necessary property rights are in good standing. However, despite the Company’s best efforts, land title may still be affected by undetected defects.

Health, Safety and Environmental Risk

Mining, like many other extractive natural resource industries, is subject to potential risks and liabilities due to accidents that could result in serious injury or death and or material damage to the environment and Company assets. The impact of such accidents could affect the profitability of the operations, cause an interruption to operations, lead to a loss of licenses, affect the reputation of the Company and its ability to obtain further licenses, damage community relations and reduce the perceived appeal of the Company as an employer. Yamana has rigorous procedures in place to manage health and safety protocols in order to reduce the risk of occurrence and the severity of any accident and is continually investing time and resources to enhance health and safety at all operations.

The Company’s operations are subject to various laws and regulations governing the protection of the environment, exploration, development, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, mine safety, and other matters. Permits from various governmental authorities are necessary in order to engage in mining operations in all jurisdictions in which the Company operates. Such permits relate to many aspects of mining operations, including maintenance of air, water and soil quality standards. In most jurisdictions, the requisite permits cannot be obtained prior to completion of an environmental impact statement and, in some cases, public consultation. Further, the Company may be required to submit for government approval a reclamation plan, to post financial assurance for the reclamation costs of the mine site, and to pay for the reclamation of the mine site upon the completion of mining activities. The Company mitigates this risk by performing certain reclamation activities concurrent with production.

Environmental liability may result from mining activities conducted by others prior to the Company’s ownership of a property. To the extent Yamana is subject to uninsured environmental liabilities, the payment of such liabilities would reduce funds otherwise available for business activities and could have a material adverse effect on the Company. Should the Company be unable to fully fund the cost of remedying an environmental problem, the Company might be required to suspend operations or enter into interim compliance measures pending completion of the required remedy, which may have a material adverse effect. The Company mitigates the likelihood and potential severity of these environmental risks it encounters in its day-to-day operations through the application of its high operating standards as dictated by the Yamana management system.

The Company has insurance policies in place to cover accidents and business interruption and regularly monitors the adequacy of such policies.

Energy Risk

The Company consumes energy in mining activities, primarily in the form of diesel fuel, electricity and natural gas. As many of the Company’s mines are in remote locations and energy is generally a limited resource, the Company faces the risk that there may not be sufficient energy available to carry out mining activities efficiently or that certain sources of energy may not be available. The Company manages this risk by means of long-term electricity agreements with local power authorities and inventory control process on consumables including fuel. Many of the mines have on-site generator sets as back-up to mitigate the anticipated and unanticipated interruptions from the energy providers. Furthermore, the Company’s operations are continually improved to reduce input costs and maximize output.

Nature and Climatic Condition Risk

The Company and the mining industry are facing continued geotechnical challenges, which could adversely impact the Company's production and profitability. No assurances can be given that unanticipated adverse geotechnical and hydrological conditions, such as landslides, droughts and pit wall failures, will not occur in the future or that such events will be detected in advance. Geotechnical instabilities and adverse climatic conditions can be difficult to predict and are often affected by risks and hazards outside of the Company's control, such as severe weather and considerable rainfall, which may lead to periodic floods, mudslides, wall instability and seismic activity, which may result in slippage of material.

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Geotechnical failures could result in limited or restricted access to mine sites, suspension of operations, government investigations, increased monitoring costs, remediation costs, loss of ore and other impacts, which could cause one or more of the Company's projects to be less profitable than currently anticipated and could result in a material adverse effect on the Company's results of operations and financial position.

12.    CONTINGENCIES

Due to the size, complexity and nature of the Company’s operations, various legal and tax matters arise in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated.  In the opinion of management, these matters will not have a material effect on the Condensed Consolidated Interim Financial Statements of the Company.

In 2004, a former director of Northern Orion commenced proceedings in Argentina against Northern Orion claiming damages in the amount of $177.0 million for alleged breaches of agreements entered into with the plaintiff. The plaintiff alleged that the agreements entitled him to a pre-emption right to participate in acquisitions by Northern Orion in Argentina and claimed damages in connection with the acquisition by Northern Orion of its 12.5% equity interest in the Alumbrera project. On August 22, 2008, the National Commercial Court No. 13 of the City of Buenos Aires issued a first-instance judgment rejecting the claim. The plaintiff appealed this judgment to the National Commercial Appeals Court. On May 22, 2013, the appellate court overturned the first-instance decision. The appellate court determined that the plaintiff was entitled to make 50% of Northern Orion’s investment in the Alumbrera acquisition, although weighted the chance of the plaintiff's 50% participation at 15%. The matter was remanded to the first instance court to determine the value. On June 12, 2013, Northern Orion filed an extraordinary recourse with the appellate court in order to bring the matter before the Supreme Court for considering the National Commercial Appeals Court’s decision to be arbitrary. The extraordinary recourse was denied by the appellate court and this decision was notified to Northern Orion on December 20, 2013. Based on this decision, Northern Orion filed an appeal directly with the Supreme Court of Argentina on February 3, 2014. Pending the decision of the Supreme Court, Northern Orion will make submissions to the first instance court to address value. The outcome of this case is uncertain and cannot be reasonably estimated.

The Company has received assessments from the Brazilian federal tax authorities disallowing certain deductions relating to debentures for the periods 2007-2010. The Company believes these debentures were issued on commercial terms permitted under applicable laws and is challenging these assessments. As such, the Company does not believe it is probable that any amounts will be paid with respect to these assessments with the Brazilian authorities and the amount and timing of any assessments cannot be reasonably estimated.

13.    CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). The significant accounting policies applied and recent accounting pronouncements are described in Note 3 and Note 5 to the Company's annual consolidated financial statements for the year ended December 31, 2013.

In preparing the consolidated financial statements in accordance with the IFRS, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses for the period end. Critical accounting estimates represent estimates that are uncertain and for which changes in those estimates could materially impact on the Company's consolidated financial statements. Actual future outcomes could differ from present estimates. Management reviews its estimates and assumptions on an ongoing basis using the most current information available.

The critical judgements and key sources of estimation uncertainty in the application of accounting policies during the year ended December 31, 2013 were similar to those disclosed in Note 4 to the Company's annual consolidated financial statements for the year ended December 31, 2012. Additional information has been provided in Note 4 to the Company's annual consolidated financial statements for the year ended December 31, 2013.

Impairment of mineral properties and goodwill

The Company assesses at the end of each reporting period whether there is any indication, from external and internal sources of information, that an asset or cash generating unit (“CGU”) and goodwill may be impaired. While assessing whether any indications of impairment exist for mineral properties and goodwill, consideration is given to both external and internal sources of information. Information the Company considers include changes in the market, economic and legal environment in which the Company

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operates that are not within its control and affect the recoverable amount of mineral properties and goodwill. Internal sources of information include the manner in which property and plant and equipment are being used or are expected to be used and indications of economic performance of the assets. Estimates include but are not limited to estimates of the discounted future after-tax cash flows expected to be derived from the Company's mining properties, costs to sell the mining properties and the discount rate. Reductions in metal price forecasts, increases in estimated future costs of production, increases in estimated future capital costs, reductions in the amount of recoverable mineral reserves and mineral resources and/or adverse current economics can result in a write-down of the carrying amounts of the Company's mineral properties and/or goodwill. An impairment loss is recognized when the carrying amount exceeds the recoverable amount. When there is an indication of impairment on a CGU containing goodwill, the impairment loss is recognized on goodwill first and then any remaining impairment loss is applied to the mineral property. In testing impairment, including goodwill, the following are the key applicable assumptions: discount rate of 4.6% (2012 - 5.9%) as determined by the real weighted average cost of capital and long-term gold price of $1,300 per ounce (2012 - $1,375 per ounce) and copper price of $3.00 per pound (2012 - $3.00 per pound).

During the second quarter, the Company updated its after-tax life of mine cash flow projections with updated economic assumptions as a result of the decline in metal prices towards the latter half of the second quarter of 2013. Based on its assessment during the second quarter, the Company concluded that there were no impairment charges in respect to its mineral properties as at June 30, 2013 as a result of the decline in metal prices at that time. Adverse changes in metal price assumptions were partially offset by other inputs that resulted in lower costs and updated mine plans. The impairment assessment in the second quarter was calculated assuming long-term prices of $1,375 per ounce of gold and $3.00 per pound of copper. In early October of 2013, after the spot price for gold returned to the $1,350 per ounce level, it started a continuous decline during the fourth quarter and dipped below $1,200 per ounce by late December.

During the fourth quarter, the Company performed its impairment test updating its life of mine after-tax cash flow projects for updated reasonable estimates of future metal prices, production based on current estimates of recoverable mineral reserves and mineral resources, recent operating and exploration results, exploration potential, future operating costs, capital expenditures, inflation and long-term foreign exchange rates.

The value-in-use in the impairment assessments in the fourth quarter were calculated assuming long-term prices of $1,300 per ounce of gold and $3.00 per pound of copper. The Company examined future cash flows, the intrinsic value of value beyond proven and probable mineral reserves, value of land holdings, as well as other factors, which are determinants of commercial viability of each and every mining property in its portfolio, and concluded that a total of $672.0 million ($563.9 million, net of taxes) (2012 - $nil) of impairment charges on the following mineral properties, goodwill and investment in associate should be recognized in the fourth quarter:

• Various exploration properties, Argentina and Chile - A total impairment charge $181.1 million in respect to exploration properties in Argentina and $80.9 million in respect to Amancaya in Chile for a total of $262.0 million ($182.7 million, net of taxes) as a result of the continuous downward trend in metal prices resulting in lower in situ market and income values for exploration potential and below-expectation exploration results.

• Ernesto/Pau-a-Pique, Brazil - Impairment charge of $175.0 million ($168.2 million, net of taxes) against the carrying value was recognized due to the continuous downward trend in metal prices and commissioning delays resulting in higher capital expenditures.

• Jeronimo, Chile - Impairment charge of $110.0 million ($88.0 million, net of taxes) against the carrying value of the project was recognized on the decision of not proceeding with construction at this time; future construction decision is subject to finding additional project enhancements.

• Alumbrera, Argentina - Impairment charge of $70.0 million (before and net of taxes) is recognized against the carrying value of the Company’s 12.5% equity interest in the Alumbrera mine due to the continuous downward trend in metal prices. Additionally, Alumbrera is near the end of its mine life requiring greater waste removal to access mineable ore resulting in higher future operating costs.

• Jacobina, Brazil - Impairment of Goodwill of $55.0 million (before and net of taxes) (Refer to Note 14 to the Consolidated Financial Statements) as a result of the continuous downward trend in metal prices, the mine's recent operating and exploration results and exploration potential.

In addition to the impairment charges mentioned above, an additional $10.3 million (before and net of taxes) related to minor exploration properties was recognized during the year on the decision of not proceeding with further exploration and/or disposition in the prior quarters of 2013, bringing the impairment charges against mineral properties for the year to a total of $682.3 million ($574.2 million, net of taxes).

The Company expects there is further or additional value in these properties over and above what they are being written down to but not at the metal price assumption used in the impairment testing. The valuation of impairment is based on current forecasts for long-term metal prices which have been influenced by the recent decline in spot prices over the last nine months of 2013.

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These metal price assumptions are then held constant over mine lives which in some cases are in excess of fifteen years. The Company believes that it is prudent to update its metal price assumption used in its impairment testing to reflect current forecasts and it does not rely on higher prices to drive its business plans, however, the Company remains positive on the long-term price fundamentals for its metals. The Company will continue to monitor the valuation of its assets and the impact of changes in economic assumptions and mine plans on these valuations. Higher prices in the future could result in greater volatility in earnings, as the Company reassesses the fair value of its mineral properties and could potentially reverse a portion or all of the impairment charges taken.

Estimated Recoverable Ounces

The carrying amounts of the Company’s mining properties are depleted based on recoverable ounces contained in mineral proven and probable reserves plus a portion in mineral resources. The Company includes a portion of mineral resources where it is considered probable that those mineral resources will be economically extracted. Changes to estimates of recoverable ounces and depletable costs including changes resulting from revisions to the Company’s mine plans and changes in metal price forecasts can result in a change in future depletion rates.

14.    NON-GAAP MEASURES

The Company has included certain non-GAAP measures including “Co-productcash costs per gold equivalent ounce”, “Co-product cash costs per pound of copper”, “By-product cash costs per gold equivalent ounce”, “Adjusted Earnings or Loss and Adjusted Earnings or Loss per share” to supplement its condensed consolidated interim financial statements, which are presented in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). The term IFRS and generally accepted accounting principles (“GAAP”) are used interchangeably throughout this MD&A.

The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-GAAP measures do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

CASH COSTS

The Company discloses “cash costs” because it understands that certain investors use this information to determine the Company’s ability to generate earnings and cash flows for use in investing and other activities. The Company believes that conventional measures of performance prepared in accordance with IFRS do not fully illustrate the ability of its operating mines to generate cash flows. The measures, as determined under IFRS, are not necessarily indicative of operating profit or cash flows from operating activities. Cash costs figures are calculated in accordance with a standard developed by The Gold Institute, which was a worldwide association of suppliers of gold and gold products and included leading North American gold producers. The Gold Institute ceased operations in 2002, but the standard remains the generally accepted standard of reporting cash costs of production in North America. Adoption of the standard is voluntary and the cost measures presented herein may not be comparable to other similarly titled measures of other companies.

The Company’s business model is focused on the production and sale of precious metals - gold and silver, which accounts for a significant portion of the Company's total revenue generated. The emphasis on precious metals therefore entails the necessity to provide investors with cash costs information that is relevant to their evaluation of the Company’s ability to generate earnings and cash flows for use in investing and other activities. Cash costs are computed on a co-product, by-product, all-in sustaining co-product and all-in sustaining by-product basis. Cash costs include mine site operating costs such as mining, processing, administration, royalties and production taxes, but are exclusive of amortization, reclamation, capital, development and exploration costs.

In excess of 75% of the Company's revenues are generated from sales of precious metals, therefore, cash costs are also calculated on a by-product basis in order to provide investors with a measure that focuses on the Company's core business in mining and producing precious metals. Cash costs per gold equivalent ounce on a by-product basis is calculated by applying copper and zinc net revenue as a credit to the cost of gold production and as such the by-product gold equivalent ounce cash costs are impacted by realized copper and zinc prices. These costs are then divided by gold equivalent ounces produced. Gold equivalent ounces are determined by converting silver production to its gold equivalent using relative gold/silver metal prices at an assumed ratio and adding the converted silver production expressed in gold ounces to the ounces of gold production.

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Effective 2013, the Company is adopting an all-in sustaining cash costs measure, which seeks to represent total sustaining expenditures of producing gold equivalent ounces from current operations, based on by-product and co-product cash costs, including cost components of mine sustaining capital expenditures, corporate general and administrative expense excluding stock-based compensation, and exploration and evaluation expense. All-in sustaining by-product cash costs reflects by-product copper revenue credits and 100% of the aforementioned cost components. All-in sustaining co-product cash costs reflects allocations of the aforementioned cost components on the basis that is consistent with the nature of each of the cost component to the gold or copper production activities.

As such, it does not include capital expenditures attributable to projects or mine expansions, exploration and evaluation costs attributable to growth projects, income tax payments, financing costs and dividend payments. Consequently, this measure is not representative of all of the Company's cash expenditures. In addition, our calculation of all-in sustaining cash costs does not include depletion, depreciation and amortization expense as it does not reflect the impact of expenditures incurred in prior periods. This performance measure has no standard meaning and is intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP.

Cash costs per gold equivalent ounce and per pound of copper are calculated on a weighted average basis.

The measure of cash costs, along with revenue from sales, is considered to be a key indicator of a company’s ability to generate operating earnings and cash flow from its mining operations. This data is furnished to provide additional information and is a non-GAAP measure. It should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS and is not necessarily indicative of operating costs, operating profit or cash flows presented under IFRS.

Per Gold Equivalent Ounce (“GEO”)

Silver production is treated as a gold equivalent. GEO calculations are based on an average historical silver to gold price ratio (50:1) which is used and presented for comparative purposes only.

The following tables provide a reconciliation of cost of sales per the condensed consolidated interim financial statements to (i) By-product cash costs per GEO, (ii) Co-product cash costs per GEO, (iii) Co-product cash costs per pound of copper, (iv) All-in sustaining by-product cash costs per GEO, and (v) All-in sustaining co-product cash costs per GEO.

(i)    Reconciliation of Cost of Sales per the consolidated financial statements to by-product cash costs per GEO:

GEO	In thousands of United States Dollars						United States Dollars per gold equivalent ounce
For the three months ended December 31,	2013			2012			2013			2012
Cost of sales(i)	$	239,030		$	207,228		$	898		$	666
Adjustments:
Chapada treatment and refining costs related to gold and copper	8,717			8,913			33			29
Inventory movements and adjustments	(8,707		)	10,375			(33		)	33
Commercial, overseas freight and other costs	(7,868		)	(8,305		)	(30		)	(27		)
By-product credits from Chapada copper revenue including copper pricing adjustment	(112,521		)	(132,877		)	(423		)	(426		)
Total GEO by-product cash costs (excluding Alumbrera)	$	118,651		$	85,334		$	445		$	275
Minera Alumbrera (12.5% interest) by-product cash costs	(2,951		)	(21,666		)	(261		)	(2,012		)
Total GEO by-product cash costs(i)	$	115,700		$	63,668		$	417		$	198
Commercial GEO produced excluding Alumbrera	266,128			310,947
Commercial GEO produced including Alumbrera	277,446			321,716

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GEO	In thousands of United States Dollars						United States Dollars per gold equivalent ounce
For the twelve months ended December 31,	2013			2012			2013			2012
Cost of sales(i) (ii)	$	900,789		$	831,754		$	817		$	728
Adjustments:
Chapada treatment and refining costs related to gold and copper	33,880			30,111			31			26
Inventory movements and adjustments	(23,221		)	(13,976		)	(21		)	(12		)
Commercial, overseas freight and other costs	(30,611		)	(28,856		)	(28		)	(25		)
By-product credits from Chapada copper revenue including copper pricing adjustment	(402,824		)	(491,638		)	(365		)	(430		)
Total GEO by-product cash costs (excluding Alumbrera)	$	478,013		$	327,395		$	434		$	287
Minera Alumbrera (12.5% interest) by-product cash costs	(9,857		)	(53,815		)	(252		)	(1,168		)
Total GEO by-product cash costs(ii)	$	468,156		$	273,580		$	410		$	230
Commercial GEO produced excluding Alumbrera	1,102,460			1,142,838
Commercial GEO produced including Alumbrera	1,141,617			1,188,915

______________________________

(i) Cost of sales includes non-cash items including the impact of the movement in inventory.

(ii) Depletion, depreciation and amortization are excluded from both total cash costs and cost of sales.

(ii)    Reconciliation of cost of sales per the consolidated financial statements to co-product cash costs per GEO:

GEO	In thousands of United States Dollars						United States Dollars per gold equivalent ounce
For the three months ended December 31,	2013			2012			2013			2012
Cost of sales(i) (iii)	$	239,030		$	207,228		$	898		$	666
Adjustments:
Copper contained in concentrate related cash costs (excluding related TCRC’s) (ii)	(47,713		)	(48,222		)	(179		)	(154		)
Treatment and refining costs (“TCRC”) related to Chapada gold	1,281			1,279			5			4
Inventory movements and adjustments	(8,707		)	10,375			(33		)	33
Commercial, overseas freight and other costs	(7,868		)	(8,305		)	(30		)	(27		)
Total GEO co-product cash costs (excluding Alumbrera)	$	176,023		$	162,355		$	661		$	522
Minera Alumbrera (12.5% interest) GEO cash costs	3,547			3,695			313			343
Total GEO co-product cash costs(iii)	$	179,570		$	166,050		$	647		$	516
Commercial GEO produced excluding Alumbrera	266,128			310,947
Commercial GEO produced including Alumbrera	277,446			321,716

GEO	In thousands of United States Dollars						United States Dollars per gold equivalent ounce
For the twelve months ended December 31,	2013			2012			2013			2012
Cost of sales(i) (iii)	$	900,789		$	831,754		$	817		$	728
Adjustments:
Copper contained in concentrate related cash costs (excluding related TCRC’s) (ii)	(186,143		)	(184,362		)	(168		)	(161		)
TCRC related to Chapada gold	4,817			4,650			4			4
Inventory movements and adjustments	(23,221		)	(13,976		)	(21		)	(12		)
Commercial, overseas freight and other costs	(30,611		)	(28,856		)	(28		)	(25		)
Total GEO co-product cash costs (excluding Alumbrera)	$	665,631		$	609,210		$	604		$	534
Minera Alumbrera (12.5% interest) GEO cash costs	14,257			14,178			364			308
Total GEO co-product cash costs(iii)	$	679,888		$	623,388		$	596		$	524
Commercial GEO produced excluding Alumbrera	1,102,460			1,142,839
Commercial GEO produced including Alumbrera	1,141,617			1,188,917

_____________________________

(i) Cost of sales includes non-cash items including the impact of the movement in inventory.

(ii) Costs directly attributed to a specific metal are allocated to that metal. Costs not directly attributed to a specific metal are allocated based on relative value. As a rule of thumb, the relative value has been 80/75% copper and 20/25% gold. TCRC’s are defined as treatment and refining charges.

(iii) Depletion, depreciation and amortization are excluded from both total cash costs and cost of sales.

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(iii)    Reconciliation of cost of sales per the consolidated financial statements to co-product cash costs per pound of copper:

Copper	In thousands of United States Dollars						United States Dollars per pound of copper
For the three months ended December 31,	2013			2012			2013			2012
Cost of sales(i) (iii)	$	239,030		$	207,228		$	6.65		$	5.12
Adjustments:
GEO related cash costs (excluding related TCRC’s) (ii)	(174,741		)	(161,076		)	(4.87		)	(3.99		)
TCRC related to Chapada copper	7,435			7,634			0.21			0.19
Inventory movements and adjustments	(8,707		)	10,375			(0.24		)	0.27
Commercial, overseas freight and other costs	(7,868		)	(8,305		)	(0.22		)	(0.21		)
Total copper co-product cash costs (excluding Alumbrera)	$	55,149		$	55,856		$	1.53		$	1.38
Minera Alumbrera (12.5% interest) copper cash costs	16,777			18,220			1.75			2.15
Total copper co-product cash costs(iii)	$	71,926		$	74,076		$	1.58		$	1.51
Commercial copper produced excluding Alumbrera(millions of lbs)	36.0			40.5
Commercial copper produced including Alumbrera(millions of lbs)	45.6			48.9

Copper	In thousands of United States Dollars						United States Dollars per pound of copper
For the twelve months ended December 31,	2013			2012			2013			2012
Cost of sales(i) (iii)	$	900,789		$	831,754		$	6.92		$	5.52
Adjustments:
GEO related cash costs (excluding related TCRC’s) (ii)	(660,997		)	(604,560		)	(5.07		)	(4.01		)
TCRC related to Chapada copper	28,510			25,461			0.22			0.17
Inventory movements and adjustments	(23,221		)	(13,976		)	(0.18		)	(0.09		)
Commercial, overseas freight and other costs	(30,611		)	(28,856		)	(0.24		)	(0.19		)
Total copper co-product cash costs (excluding Alumbrera)	$	214,470		$	209,823		$	1.65		$	1.40
Minera Alumbrera (12.5% interest) copper cash costs	66,625			67,837			2.21			1.81
Total copper co-product cash costs(iii)	$	281,095		$	277,660		$	1.75		$	1.48
Commercial copper produced excluding Alumbrera(millions of lbs)	130.2			150.6
Commercial copper produced including Alumbrera(millions of lbs)	160.5			188.0

______________________________

(i) Cost of sales includes non-cash items including the impact of the movement in inventory.

(ii) Costs directly attributed to a specific metal are allocated to that metal. Costs not directly attributed to a specific metal are allocated based on relative value. As a rule of thumb, the relative value has been 80/75% copper and 20/25% gold. TCRC’s are defined as treatment and refining charges.

(iii) Depletion, depreciation and amortization are excluded from both total cash costs and cost of sales.

(iv)    All-in sustaining cash costs per GEO on a by-product basis:

GEO	In thousands of United States Dollars				United States Dollars per GEO
For the periods ended December 31, 2013	Three months		Twelve months		Three months		Twelve months
Total GEO by-product cash costs (i)	$	115,700	$	468,156	$	417	$	410
General and administrative, excluding share-based compensation (ii)	22,657		110,283		82		97
Sustaining capital expenditures (ii)	63,010		321,483		226		281
Exploration and evaluation expense (ii)	7,910		29,713		29		26
Total all-in sustaining by-product cash costs per GEO	$	209,277	$	929,635	$	754	$	814
Commercial GEO produced including Alumbrera	277,446		1,141,617

___________

(i) Chapada copper revenue credits reflected in GEO by-product cash costs.

(ii) 100% of the cost component is included.

(v)    All-in sustaining cash costs per GEO on a co-product basis:

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GEO	In thousands of United States Dollars				United States Dollars per GEO
For the periods ended December 31, 2013	Three months		Twelve months		Three months		Twelve months
Total GEO co-product cash costs	$	179,570	$	679,888	$	647	$	596
General and administrative, excluding share-based compensation (i)	18,175		88,092		66		77
Sustaining capital expenditures (ii)	54,731		285,348		197		250
Exploration and evaluation expense (i)	7,019		27,286		25		24
Total all-in sustaining co-product cash costs per GEO	$	259,495	$	1,080,614	$	935	$	947
Commercial GEO produced including Alumbrera	277,446		1,141,617

___________

(i) Chapada's general and administrative ("G&A") expense and exploration expense are allocated 20% to gold and 80% to copper, reflecting costs incurred on the related activities at Chapada. G&A and exploration expenses of all other operations are allocated 80% to gold and 20% to copper based on the relative proportions of consolidated revenues from gold and copper sales.

(ii) Chapada's sustaining capital expenditures are allocated 20% to gold and 80% to copper, reflecting costs incurred on the related activities at Chapada. Sustaining capital expenditures of all other operations are allocated 100% to gold.

ADJUSTED EARNINGS OR LOSS AND ADJUSTED EARNINGS OR LOSS PER SHARE

The Company uses the financial measures “Adjusted Earnings or Loss” and “Adjusted Earnings or Loss per share” to supplement information in its consolidated financial statements. The Company believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information to evaluate the Company’s performance. The presentation of adjusted measures are not meant to be a substitute for net earnings or loss or net earnings or loss per share presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. Adjusted Earnings or Loss and Adjusted Earnings or Loss per share are calculated as net earnings excluding (a) share-based payments and other compensation, (b) unrealized foreign exchange (gains) losses related to revaluation of deferred income tax asset and liability on non-monetary items, (c) unrealized foreign exchange (gains) losses related to other items, (d) unrealized (gains) losses on commodity derivatives, (e) impairment losses and reversals, (f) deferred income tax expense (recovery) on the translation of foreign currency inter-corporate debt, (g) mark-to-market (gains) losses on share-purchase warrants, (h) write-down of investments and other assets and any other non-recurring adjustments. Non-recurring adjustments from unusual events or circumstances are reviewed from time to time based on materiality and the nature of the event or circumstance. Earnings adjustments for the comparative period reflect both continuing and discontinued operations.

The terms “Adjusted Earnings (Loss)” and “Adjusted Earnings (Loss) per share” do not have a standardized meaning prescribed by IFRS, and therefore the Company’s definitions are unlikely to be comparable to similar measures presented by other companies. Management believes that the presentation of Adjusted Earnings or Loss and Adjusted Earnings or Loss per share provide useful information to investors because they exclude non-cash and other charges and are a better indication of the Company’s profitability from operations. The items excluded from the computation of Adjusted Earnings or Loss and Adjusted Earnings or Loss per share, which are otherwise included in the determination of net earnings or loss and net earnings or loss per share prepared in accordance with IFRS, are items that the Company does not consider to be meaningful in evaluating the Company’s past financial performance or the future prospects and may hinder a comparison of its period-to-period profitability. Reconciliation of Adjusted Earnings to net earnings is provided in Section 5.1, Overview of Financial Results for the three and twelve months ended December 31, 2013.

ADDITIONAL MEASURES

The Company uses other financial measures the presentation of which is not meant to be a substitute for other subtotals or totals presented in accordance with IFRS, but rather should be evaluated in conjunction with such IFRS measures. The following other financial measures are used:

• Gross margin - represents the amount of revenues in excess of cost of sales excluding depletion, depreciation and amortization.

• Mine operating earnings - represents the amount of revenues in excess of cost of sales excluding depletion, depreciation and amortization and depletion, depreciation and amortization.

• Operating earnings - represents the amount of earnings before net finance income/expense and income tax expense.

• Cash flows from operating activities before changes in non-cash working capital — excludes the non-cash movement from period-to-period in working capital items including trade and other receivables, other assets, inventories, trade and other payables.

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The terms described above do not have a standardized meaning prescribed by IFRS, and therefore the Company’s definitions are unlikely to be comparable to similar measures presented by other companies. The Company’s management believes that their presentation provides useful information to investors because gross margin excludes the non-cash operating cost item (i.e. depreciation, depletion and amortization), cash flows from operating activities before changes in non-cash working capital excludes the non-cash movement in working capital items, mine operating earnings excludes expenses not directly associate with commercial production and operating earnings excludes finance and tax related expenses and income/recoveries. These, in management’s view, provide useful information of the Company’s cash flows from operating activities and are considered to be meaningful in evaluating the Company’s past financial performance or the future prospects.

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15.    SELECTED QUARTERLY FINANCIAL AND OPERATING SUMMARY

	December 31,			September 30,			June 30,			March 31,
(In thousands of United States Dollars, unless otherwise noted)	2013			2013			2013			2013
Financial results
Revenues (i)	$	420,663		$	456,675		$	430,471		$	534,873
Mine operating earnings	$	70,113		$	144,010		$	118,646		$	208,009
Net (loss)/earnings attributed to Yamana equity holders	$	(583,936	)	$	43,450		$	(7,898	)	$	102,096
Adjusted earnings (ii)	$	36,719		$	69,530		$	50,181		$	116,980
Cash flows from operating activities	$	184,845		$	99,078		$	195,418		$	173,801
Cash flows from operating activities before changes in non-cash working capital (ii)	$	165,315		$	177,416		$	150,918		$	214,219
Cash flows to investing activities	$	(259,992	)	$	(217,601	)	$	(300,368	)	$	(275,452	)
Cash flows from (to) financing activities	$	66,711		$	(27,308	)	$	150,089		$	94,350
Per share financial results
Earnings per share attributable to Yamana equity holders
Basic and diluted	$	(0.78	)	$	0.06		$	(0.01	)	$	0.14
Adjusted earnings per share (ii)
Basic and diluted	$	0.05		$	0.09		$	0.07		$	0.16
Financial position
Cash and cash equivalents	$	220,018		$	232,125		$	379,817		$	342,596
Total assets	$	11,410,717		$	12,026,181		$	11,960,854		$	11,806,864
Total long-term liabilities	$	3,615,242		$	3,589,579		$	3,593,059		$	3,269,266
Production
Commercial GEO produced (iii)	277,447			289,176			287,791			287,203
Commissioning GEO produced (iii)(iv)	26,321			17,758			7,754			4,109
Total GEO produced (iii)	303,768			306,934			295,545			291,312
By-product cash costs per GEO produced, including 12.5% equity interest in Alumbrera (ii)(iii)	$	417		$	365		$	476		$	383
Co-product cash costs per GEO produced, including 12.5% equity interest in Alumbrera (ii)(iii)	$	647		$	574		$	577		$	587
All-in by-product cash costs per GEO produced, including 12.5% equity interest in Alumbrera (ii)(iii)	$	754		$	730		$	916		$	855
All-in co-product cash costs per GEO produced, including 12.5% equity interest in Alumbrera (ii)(iii)	$	935		$	888		$	950		1,014
Chapada concentrate production (tonnes)	67,395			67,315			55,511			49,591
Chapada copper contained in concentrate production (millions of pounds)	36.0			36.8			30.1			27.4
Chapada co-product cash costs per pound of copper	$	1.53		$	1.48		$	1.76		$	1.90
Alumbrera (12.5% interest) attributable concentrate production (tonnes)	17,547			13,179			13,129			11,260
Alumbrera (12.5% interest) attributable copper contained in concentrate production (millions of pounds)	9.6			7.1			7.2			6.3
Alumbrera co-product cash costs per pound of copper (ii)	1.75			2.45			2.40			2.40
Gold Equivalent Ounces Breakdown
Total gold ounces produced	260,187			263,830			257,608			248,239
Total silver ounces produced (millions of ounces)	2.2			2.2			1.9			2.2
Sales
Total GEO sales (iii)	305,376			297,225			278,909			292,039
Total gold sales (ounces)	263,031			254,062			242,416			248,766
Total silver sales (millions of ounces)	2.1			2.2			1.8			2.2
Total gold sales, excluding Alumbrera (ounces)	254,740			243,385			234,370			241,259
Chapada concentrate sales (tonnes)	67,616			68,512			50,728			55,826
Chapada payable copper contained in concentrate sales (millions of pounds)	34.5			35.7			26.7			29.1
Average realized gold price per ounce (i)	$	1,277		$	1,332		$	1,385		$	1,620
Average realized copper price per pound (i)	$	3.37		$	3.13		$	3.05		$	3.58
Average realized silver price per ounce (i)	$	20.63		$	21.45		$	22.55		$	29.81

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	December 31,			September 30,			June 30,			March 31,
(in thousands of United States Dollars)	2012			2012			2012			2012
Financial results
Revenues (i)	$	629,505		$	611,807		$	535,705		$	559,745
Mine operating earnings	$	322,082		$	279,158		$	239,896		$	280,134
Net earnings attributed to Yamana equity holders	$	169,161		$	59,965		$	42,913		$	170,025
Adjusted earnings (ii)	$	197,368		$	177,588		$	134,887		$	184,306
Cash flows from operating activities	$	367,881		$	363,059		$	139,213		$	287,902
Cash flows from operating activities before changes in non-cash working capital (ii)	$	298,064		$	285,696		$	240,767		$	220,417
Cash flows to investing activities	$	(375,544	)	$	(619,134	)	$	(247,177	)	$	(256,173	)
Cash flows (to) from financing activities	$	(44,467	)	$	(42,678	)	$	(48,636	)	$	282,181
Per share financial results
Earnings per share attributable to Yamana equity holders
Basic	$	0.23		$	0.08		$	0.06		$	0.23
Diluted	$	0.22		$	0.08		$	0.06		$	0.02
Adjusted earnings per share (ii)
Basic and diluted	$	0.26		$	0.24		$	0.18		$	0.25
Financial position
Cash and cash equivalents	$	349,594		$	400,419		$	698,884		$	867,577
Total assets	$	11,800,163		$	11,495,917		$	11,190,392		$	11,238,213
Total long-term liabilities	$	3,269,266		$	3,248,086		$	3,150,730		$	3,117,393
Production
Commercial GEO produced (iii)	321,716			308,629			288,700			269,873
Commissioning GEO produced (iii) (iv)	1,274			1,861			—			8,959
Total GEO produced (iii)	322,990			310,490			288,700			278,832
By-product cash costs per GEO produced, including 12.5% equity interest in Alumbrera (ii)(iii)	n/a			n/a			n/a			n/a
Co-product cash costs per GEO produced, including 12.5% equity interest in Alumbrera (ii)(iii)	n/a			n/a			n/a			n/a
All-in by-product cash costs per GEO produced, including 12.5% equity interest in Alumbrera (ii)(iii)	754			730			916			1
All-in co-product cash costs per GEO produced, including 12.5% equity interest in Alumbrera (ii)(iii)	935			888			950			1
Chapada concentrate production (tonnes)	72,518			70,151			71,801			53,665
Chapada copper contained in concentrate production (millions of pounds)	40.5			39.4			40.4			30.3
Chapada co-product cash costs per pound of copper	$	1.38		$	1.38		$	1.34		$	1.51
Alumbrera (12.5% interest) attributable concentrate production (tonnes)	14,669			17,830			18,492			14,149
Alumbrera (12.5% interest) attributable copper contained in concentrate production (millions of pounds)	8.5			10.4			10.5			8.0
Alumbrera co-product cash costs per pound of copper (ii)	2.15			1.92			1.41			1.85
Gold Equivalent Ounces Breakdown
Total gold ounces produced	276,373			266,374			242,692			234,532
Total silver ounces produced (millions of ounces)	2.3			2.2			2.3			2.2
Sales
Total GEO sales (iii)	317,615			315,972			271,683			281,721
Total gold sales (ounces)	272,524			271,380			226,521			236,990
Total Silver sales (millions of ounces)	2.3			2.2			2.3			2.2
Total gold sales, excluding Alumbrera (ounces)	258,978			252,814			223,279			228,763
Chapada concentrate sales (tonnes)	69,589			69,694			71,656			52,765
Chapada payable copper contained in concentrate sales (millions of pounds)	37.3			37.1			37.4			27.3
Average realized gold price per ounce (i)	$	1,692		$	1,680		$	1,605		$	1,696
Average realized copper price per pound (i)	$	3.54		$	3.54		$	3.60		$	3.73
Average realized silver price per ounce (i)	$	31.37		$	30.76		$	26.93		$	32.94

______________________________

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(i) Revenues consist of sales net of sales taxes. Revenue per ounce data is calculated based on gross sales. Realized prices reflect continuing operations.

(ii) A cautionary note regarding non-GAAP measures is included in Section 14 of this Management’s Discussion and Analysis of Operations and Financial Condition.

(iii) GEO assumes gold plus the gold equivalent of silver using a ratio of 50:1.

(iv) Including commissioning GEO from Mercedes (Q4 2011 to Q1 2012), Minera Florida's tailings retreatment project (Q3 2012 to Q4, 2012), Ernesto/Pau-a-Pique (since Q4 2012), C1 Santa Luz (since Q2 2013) and Pilar (since Q3 2013).

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16.    DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Company’s Chairman and Chief Executive Officer and Executive Vice President, Finance and Chief Financial Officer, on a timely basis so that appropriate decisions can be made regarding public disclosure. The Company’s system of disclosure controls and procedures includes, but is not limited to, our Timely Disclosure and Confidentiality Policy, our Code of Conduct, our Insider Trading Policy, our Corporate Controls Policy, the effective functioning of our Audit Committee and procedures in place to systematically identify matters warranting consideration of disclosure by the Audit Committee.

As at the end of the period covered by this Management’s Discussion and Analysis, management of the Company, with the participation of the Chairman and Chief Executive Officer and the Executive Vice President, Finance and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as required by applicable rules of the Canadian Securities Administrators (or Canadian securities regulatory authorities). The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate in the circumstances. Based on that evaluation, the Chairman and Chief Executive Officer and the Executive Vice President, Finance and Chief Financial Officer have concluded that, as of the end of the period covered by this management’s discussion and analysis, the disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) were effective to provide reasonable assurance that information required to be disclosed in the Company’s annual filings and interim filings and other reports filed or submitted under applicable securities laws, is recorded, processed, summarized and reported within time periods specified by those laws and that material information is accumulated and communicated to management of the Company, including the Chairman and Chief Executive Officer and the Executive Vice President, Finance and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as such term is defined in the rules of the United States Securities and Exchange Commission and the Canadian Securities Administrators. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of the Company’s financial reporting for external purposes in accordance with IFRS.  The Company’s internal control over financial reporting includes:

• maintaining records, that in reasonable detail, accurately and fairly reflect our transactions and dispositions of the assets of the Company;

• providing reasonable assurance that transactions are recorded as necessary for preparation of our consolidated financial statements in accordance with generally accepted accounting principles;

• providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and the directors of the Company; and

• providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on the Company’s consolidated financial statements would be prevented or detected on a timely basis.

The Company’s internal control over financial reporting may not prevent or detect all misstatements because of inherent limitations.  Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions or deterioration in the degree of compliance with the Company’s policies and procedures.

Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2013 based on the criteria set forth in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has concluded that, as of December 31, 2013, the Company's internal control over financial reporting is effective and no material weaknesses were identified. The Company has certified the above in its annual filings with both the U.S. Securities and Exchange Commission on Form 40-F as required by the United States Sarbanes-Oxley Act and with Canadian securities regulatory authorities.

Deloitte LLP, the Company's Independent Registered Chartered Accountants, have audited the annual consolidated financial statements of the Company for the year ended December 31, 2013, and have also issued a report on the internal controls over financial reporting based on the criteria established in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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CHANGES IN INTERNAL CONTROLS

During the year ended December 31, 2013, there has been no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

LIMITATIONS OF CONTROLS AND PROCEDURES

The Company’s management, including the Chairman and Chief Executive Officer and the Executive Vice President, Finance and Chief Financial Officer, believe that any disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.

This report provides a discussion and analysis of the financial condition and results of operations (“Management’s Discussion and Analysis”) to enable a reader to assess material changes in financial condition between December 31, 2013 and December 31, 2012 and results of operations for the periods ended December 31, 2013 and December 31, 2012.

This Management’s Discussion and Analysis has been prepared as of February 18, 2014. The condensed consolidated interim financial statements prepared in accordance with IFRS as issued by the IASB follow this Management’s Discussion and Analysis. This Management’s Discussion and Analysis is intended to supplement and complement the annual audited consolidated financial statements and notes thereto as at and for the year ended December 31, 2013 (collectively the “Financial Statements”). You are encouraged to review the financial statements in conjunction with your review of this Management’s Discussion and Analysis. This Management’s Discussion and Analysis should be read in conjunction with both the annual audited consolidated financial statements for the year ended December 31, 2013 and the most recent Annual Information Form for the year ended December 31, 2013 on file with the Securities Commissions of all of the provinces in Canada, which are included in the 2013 Annual Report on Form 40-F on file with the United States Securities and Exchange Commission. Certain notes to the Financial Statements are specifically referred to in this Management’s Discussion and Analysis and such notes are incorporated by reference herein. All Dollar amounts in the Management’s Discussion and Analysis are in United States Dollars, unless otherwise specified.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Management’s Discussion and Analysis contains or incorporates by reference “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” under applicable Canadian securities legislation. Except for statements of historical fact relating to the Company, information contained herein constitutes forward-looking statements, including any information as to the Company’s strategy, plans or future financial or operating performance. Forward-looking statements are characterized by words such as “plan,” “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the Company’s expectations in connection with the expected production and exploration, development and expansion plans at the Company's projects discussed herein being met, the impact of proposed optimizations at the Company's projects, the impact of the proposed new mining law in Brazil, and the impact of general business and economic conditions, global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future conditions, fluctuating metal prices (such as gold, copper, silver and zinc), currency exchange rates (such as the Brazilian Real, the Chilean Peso, the Argentine Peso and the Mexican Peso versus the United States Dollar), the impact of inflation, possible variations in ore grade or recovery rates, changes in the Company’s hedging program, changes in accounting policies, changes in mineral resources and mineral reserves, risks related to non-core mine disposition, risks related to acquisitions, changes in project parameters as plans continue to be refined, changes in project development, construction, production and commissioning time frames, risks related to joint venture operations, the possibility of project cost overruns or unanticipated costs and expenses, higher prices for fuel, steel, power, labour and other consumables contributing to higher costs and general risks of the mining

63

industry, failure of plant, equipment or processes to operate as anticipated, unexpected changes in mine life, final pricing for concentrate sales, unanticipated results of future studies, seasonality and unanticipated weather changes, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, government regulation and the risk of government expropriation or nationalization of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, limitations on insurance coverage and timing and possible outcome of pending litigation and labour disputes, as well as those risk factors discussed or referred to herein and in the Company's Annual Information Form filed with the securities regulatory authorities in all provinces of Canada and available at www.sedar.com, and the Company’s Annual Report on Form 40-F filed with the United States Securities and Exchange Commission. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended.  There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The Company undertakes no obligation to update forward-looking statements if circumstances or management’s estimates, assumptions or opinions should change, except as required by applicable law. The reader is cautioned not to place undue reliance on forward-looking statements. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and operational performance and results as at and for the periods ended on the dates presented in the Company’s plans and objectives and may not be appropriate for other purposes.

CAUTIONARY NOTE REGARDING MINERAL RESERVES AND MINERAL RESOURCES

Readers should refer to the Annual Information Form of the Company for the year ended December 31, 2013 and other continuous disclosure documents filed by the Company since January 1, 2014 available at www.sedar.com, for further information on mineral reserves and mineral resources, which is subject to the qualifications and notes set forth therein.

CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF MINERAL RESERVES AND MINERAL RESOURCES

This Management’s Discussion and Analysis has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ in certain material respects from the disclosure requirements of United States securities laws.  The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in the disclosure requirements promulgated by the Securities and Exchange Commission (the “Commission”) and contained in Industry Guide 7 (“Industry Guide 7”).  Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report mineral reserves, the three-year historical average price is used in any mineral reserve or cash flow analysis to designate mineral reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101.  However, these terms are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the Commission.  Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into mineral reserves.  “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable.  Disclosure of “contained ounces” in a mineral resource is permitted disclosure under Canadian regulations.  In contrast, the Commission only permits U.S. companies to report mineralization that does not constitute “mineral reserves” by Commission standards as in place tonnage and grade without reference to unit measures.

Accordingly, information contained in this Management’s Discussion and Analysis may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations of the Commission thereunder.

*************

64

EX-99.3

EXHIBIT 99.3

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

1

TABLE OF CONTENTS
		Page
	Management's Responsibility for Financial Reporting	3
	Audit Reports	3
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Statements of Cash Flows	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Changes in Equity	7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS:
Note 1:	Nature of Operations	8
Note 2:	Basis of Consolidation and Presentation	8
Note 3:	Significant Accounting Policies	8
Note 4:	Critical Judgements and Estimation Uncertainties	8
Note 5:	Recent Accounting Pronouncements	23
Note 6:	Acquisition of Mineral Interests	23
Note 7:	Trade and Other Receivables	23
Note 8:	Inventories	24
Note 9:	Other Financial Assets	24
Note 10:	Other Assets	24
Note 11:	Property, Plant and Equipment	25
Note 12:	Investment in Associate	26
Note 13:	Investments	27
Note 14:	Goodwill and Intangibles	27
Note 15:	Trade and Other Payables	27
Note 16:	Other Financial Liabilities	28
Note 17:	Other Provisions and Liabilities	28
Note 18:	Long-term Debt	29
Note 19:	Decommissioning, Restoration and Similar Liabilities	29
Note 20:	Share Capital	30
Note 21:	Other Comprehensive Income and Reserves	31
Note 22:	Share-based Payments	32
Note 23:	Non-Controlling Interest	34
Note 24:	Cost of Sales Excluding Depletion, Depreciation and Amortization	34
Note 25:	Employee Compensation and Benefits Expenses	34
Note 26:	Finance Income and Expense	35
Note 27:	Capital Management	35
Note 28:	Financial Instruments	36
Note 29:	Income Taxes	40
Note 30:	Supplementary Cash Flow Information	42
Note 31:	Operating Segments	43
Note 32:	Contractual Commitments	45
Note 33:	Contingencies	45
Note 34:	Related Parties	45

2

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements of Yamana Gold Inc. and all the information in this annual report are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements have been prepared by management on a going concern basis in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). When alternative accounting methods exist, management has chosen those it deems most appropriate in the circumstances. Financial statements are not exact since they include certain amounts based on estimates and judgements. Management has determined such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly, in all material respects. Management has prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with that in the financial statements.

Yamana Gold Inc. maintains systems of internal accounting and administrative controls in order to provide, on a reasonable basis, assurance that the financial information is relevant, reliable and accurate and that the Company's assets are appropriately accounted for and adequately safeguarded.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the financial statements. The Board carries out this responsibility principally through its Audit Committee.

The Audit Committee is appointed by the Board, and all of its members are independent directors. The Committee meets at least four times a year with management, as well as the external auditors, to discuss internal controls over the financial reporting process, auditing matters and financial reporting issues, to satisfy itself that each party is properly discharging its responsibilities, and to review the quarterly and the annual reports, the financial statements and the external auditors' report. The Committee reports its findings to the Board for consideration when approving the financial statements for issuance to the shareholders. The Committee also considers, for review by the Board and approval by the shareholders, the engagement or reappointment of the external auditors. The consolidated financial statements have been audited by Deloitte LLP, Chartered Accountants, in accordance with Canadian generally accepted auditing standards and standards of the Public Company Accounting Oversight Board (United States) on behalf of the shareholders. Deloitte LLP have full and free access to the Audit Committee.

“Peter Marrone”“Charles B. Main”

Chairman and                 Executive Vice President, Finance and

Chief Executive Officer Chief Financial Officer

February 18, 2014

1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Yamana Gold Inc.

We have audited the accompanying consolidated financial statements of Yamana Gold Inc. and subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2013 and December 31, 2012, and the consolidated statement of operations, comprehensive income, changes in equity, and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Yamana Gold Inc. and subsidiaries as at December 31, 2013 and December 31, 2012, and their financial performance and their cash flows for the years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Other Matter

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2014 expressed an unqualified opinion on the Company’s internal control over financial reporting.

/S/ Deloitte LLP

Chartered Accountants

February 18, 2014

Vancouver, Canada

2

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Yamana Gold Inc.

We have audited the internal control over financial reporting of Yamana Gold Inc. and subsidiaries (the “Company”) as of December 31, 2013, based on the criteria established in Internal Control-Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with International Financial Reporting Standards, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on the criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2013 of the Company and our report dated February 18, 2014 expressed an unqualified opinion on those financial statements.

/S/ Deloitte LLP

Chartered Accountants

February 18, 2014

Vancouver, Canada

3

YAMANA GOLD INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands of United States Dollars except for shares and per share amounts)	2013			2012
Revenue	$	1,842,682		$	2,336,762
Cost of sales excluding depletion, depreciation and amortization (Note 24)	(900,789		)	(831,754		)
Gross margin	941,893			1,505,008
Depletion, depreciation and amortization	(401,115		)	(383,738		)
Mine operating earnings	540,778			1,121,270
Expenses
General and administrative	(135,320		)	(145,856		)
Exploration and evaluation	(30,151		)	(58,049		)
Equity earnings from associate (Note 12)	(3,905		)	50,642
Other operating expenses	(78,073		)	(99,340		)
Impairment of mining properties and goodwill (Notes 4, 11, 12 and 14)	(682,273		)	—
Operating earnings	(388,944		)	868,667
Finance income (Note 26)	25,086			4,079
Finance expense (Note 26)	(31,383		)	(57,618		)
Net finance expense	(6,297		)	(53,539		)
(Loss)/earnings before taxes	(395,241		)	815,128
Income tax expense (Note 29)	(79,110		)	(373,064		)
Net (loss)/earnings	$	(474,351	)	$	442,064
Attributable to:
Yamana Gold Inc. equity holders	$	(446,247	)	$	442,064
Non-controlling interests	(28,104		)	—
	$	(474,351	)	$	442,064
Net (loss)/earnings per share attributable to Yamana Gold Inc. equity holders - basic and diluted	$	(0.59	)	$	0.59
Weighted average number of shares outstanding (Note 20(b))
Basic	752,697			748,095
Diluted	752,697			749,591

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31,

(In thousands of United States Dollars)	2013			2012
Net (loss)/ earnings	$	(474,351	)	$	442,064
Other comprehensive (loss)/income, net of taxes (Note 21(a))
Items that may be reclassified subsequently to profit or loss:
- Net change in unrealized gains on available-for-sale securities	365			15,736
- Net change in fair value of hedging instruments	(51,449		)	(8,559		)
Total other comprehensive (loss)/income	(51,084		)	7,177
Total comprehensive (loss)/income	$	(525,435	)	$	449,241
Attributable to:
Yamana Gold Inc. equity holders	$	(497,331	)	$	449,241
Non-controlling interests	(28,104		)	$	—

The accompanying notes are an integral part of the consolidated financial statements.

4

YAMANA GOLD INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,

(In thousands of United States Dollars)	2013			2012
Operating activities
(Loss)/earnings before taxes	$	(395,241	)	$	815,128
Adjustments to reconcile earnings before taxes to net operating cash flows:
Depletion, depreciation and amortization	401,115			383,738
Share-based payments (Note 22)	7,682			26,293
Decommissioning, restoration and similar liabilities paid (Note 19)	(4,289		)	(3,239		)
Equity earnings from associate (Note 12)	3,905			(50,642		)
Finance income (Note 26)	(25,086		)	(4,079		)
Finance expense (Note 26)	31,383			57,618
Mark-to-market on sales of concentrate and price adjustments on unsettled invoices (Note 28(a))	3,124			(16,882		)
Impairment of available-for-sale securities and other assets	75,304			73,859
Impairment of mineral properties (Notes 4, 11 and 12)	682,273			—
Other non-cash operating expenses	59,345			18,921
Cash distributions from associate (Note 12)	27,924			—
Income taxes paid	(159,578		)	(255,769		)
Cash flows from operating activities before non-cash working capital	707,861			1,044,946
Net change in non-cash working capital (Note 30(b))	(54,726		)	113,111
Cash flows from operating activities	$	653,135		$	1,158,057
Investing activities
Acquisition of property, plant and equipment (Note 6)	$	(1,047,526	)	$	(1,537,994	)
Proceeds from option on mineral property	—			20,034
Proceeds on disposition of mineral interests	8,730			244
Acquisition of available-for-sale securities	(3,825		)	(2,796		)
Acquisition of other long-term assets	(50,269		)	—
Interest income received	1,516			2,110
Other assets and investments	37,964			20,372
Cash flows used in investing activities	$	(1,053,410	)	$	(1,498,030	)
Financing activities
Issue of common shares upon exercise of options and warrants	$	—		$	8,972
Dividends paid (Note 20(c))	(196,199		)	(168,244		)
Interest and other finance expenses paid	(13,972		)	(26,697		)
Repayment of notes payable and long-term liabilities (Note 18)	(100,000		)	(167,632		)
Proceeds of notes payable and long-term liabilities	594,014			500,000
Cash flows from financing activities	$	283,843		$	146,399
Effect of foreign exchange on non-United States Dollar denominated cash and cash equivalents	(13,144		)	(7,270		)
(Decrease) increase in cash and cash equivalents	$	(129,576	)	$	(200,844	)
Cash and cash equivalents, beginning of year	$	349,594		550,438
Cash and cash equivalents, end of year	$	220,018		$	349,594
Cash and cash equivalents are comprised of the following:
Cash at bank	$	218,565		$	299,314
Bank term deposits	$	1,453		$	50,280
Total	$	220,018		$	349,594

Supplementary cash flow information (Note 30)

The accompanying notes are an integral part of the consolidated financial statements.

YAMANA GOLD INC.

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31,

5

(In thousands of United States Dollars)	2013			2012
Assets
Current assets:
Cash and cash equivalents	$	220,018		$	349,594
Trade and other receivables (Note 7)	80,101			175,297
Inventories (Note 8)	229,225			230,216
Other financial assets (Note 9)	44,493			4,516
Other assets (Note 10)	144,626			164,530
	718,463			924,153
Non-current assets:
Property, plant and equipment (Note 11)	10,260,801			10,276,071
Investment in associate (Note 12)	117,915			219,744
Investments (Note 13)	9,122			20,480
Other financial assets (Note 9)	9,274			14,691
Deferred tax assets (Note 29(b))	121,599			124,843
Goodwill and intangibles (Note 14)	65,548			98,514
Other assets (Note 10)	107,995			121,667
Total assets	$	11,410,717		$	11,800,163
Liabilities
Current liabilities:
Trade and other payables (Note 15)	$	456,893		$	522,932
Income taxes payable	53,458			103,490
Other financial liabilities (Note 16)	94,926			13,790
Other provisions and liabilities (Note 17)	32,093			28,807
	637,370			669,019
Non-current liabilities:
Long-term debt (Note 18)	1,189,762			765,912
Decommissioning, restoration and similar liabilities (Note 19)	174,523			215,695
Deferred tax liabilities (Note 29(b))	2,024,541			2,072,741
Other financial liabilities (Note 16)	93,839			109,133
Other provisions and liabilities (Note 17)	132,577			105,785
Total liabilities	$	4,252,612		$	3,938,285
Equity
Share capital (Note 20)
Issued and outstanding 753,303,613 common shares (December 31, 2012 - 752,222,459 shares)	6,320,138			6,304,801
Reserves (Note 21(b))	(41,236		)	7,261
Retained earnings	860,507			1,503,016
Equity attributable to Yamana shareholders	$	7,139,409		$	7,815,078
Non-controlling interest (Note 23)	18,696			46,800
Total equity	7,158,105			7,861,878
Total equity and liabilities	$	11,410,717		$	11,800,163

Contractual commitments and contingencies (Notes 32 and 33).

The accompanying notes are an integral part of the consolidated financial statements.

Approved by the Board

“Peter Marrone”	“Patrick Mars”
Director	Director

6

YAMANA GOLD INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31,

(In thousands of United States Dollars)	Share capital		Equity reserve			Hedging reserve			Available -for-sale reserve			Total reserves			Retained earnings			Equity attributable to Yamana shareholders			Non- controlling interest			Total equity
Balance at January 1, 2012	$	6,209,136	$	16,767		$	(6,091	)	$	(15,956	)	$	(5,280	)	$	1,240,867		$	7,444,723		$	46,800		$	7,491,523
Net earnings	—		—			—			—			—			442,064			442,064			—			442,064
Other comprehensive income, net of income tax (Note 21(a))	—		—			(8,559		)	15,736			7,177			—			7,177			—			7,177
Transactions with owners
Exercise of stock options and share appreciation (Note 22(a))	11,346		(2,387		)	—			—			(2,387		)	—			8,959			—			8,959
Issued on vesting of restricted share units (Note 22(c))	9,923		(9,923		)	—			—			(9,923		)	—			—			—			—
Share options and restricted share units (Note 22(a)(c))	—		14,090			—			—			14,090			—			14,090			—			14,090
Issued on acquisition of mineral interest (Note 6(a))	74,396		3,584			—			—			3,584			—			77,980			—			77,980
Dividends (Note 20(c))	—		—			—			—			—			(179,915		)	(179,915		)	—			(179,915		)
Balance at December 31, 2012	$	6,304,801	$	22,131		$	(14,650	)	$	(220	)	$	7,261		$	1,503,016		$	7,815,078		$	46,800		$	7,861,878
Balance at January 1, 2013	$	6,304,801	$	22,131		$	(14,650	)	$	(220	)	$	7,261		$	1,503,016		$	7,815,078		$	46,800		$	7,861,878
Net loss	—		—			—			—			—			(446,247		)	(446,247		)	(28,104		)	(474,351		)
Other comprehensive income, net of income tax (Note 21(a))	—		—			(51,449		)	365			(51,084		)	—			(51,084		)	—			(51,084		)
Transactions with owners
Exercise of stock options and share appreciation (Note 22(a))	140		(35		)	—			—			(35		)	—			105			—			105
Issued on vesting of restricted share units (Note 22(c))	15,197		(15,197		)	—			—			(15,197		)	—			—			—			—
Restricted share units (Note 22(a)(c))	—		17,819			—			—			17,819			—			17,819			—			17,819
Issued on acquisition of mineral interest (Note 6(a))	—		—			—			—			—			—			—			—			—
Dividends (Note 20(c))	—		—			—			—			—			(196,262		)	(196,262		)	—			(196,262		)
Balance at December 31, 2013	$	6,320,138	$	24,718		$	(66,099	)	$	145		$	(41,236	)	$	860,507		$	7,139,409		$	18,696		$	7,158,105

The accompanying notes are an integral part of the consolidated financial statements.

7

YAMANA GOLD INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND DECEMBER 31, 2012

(Tabular amounts in thousands of United States Dollars unless otherwise noted)

1.    NATURE OF OPERATIONS

Yamana Gold Inc. (the “Company” or “Yamana”) is a Canadian-headquartered gold producer engaged in gold mining and related activities including exploration, extraction, processing and reclamation. The Company has significant precious metal properties and land positions throughout the Americas including in Brazil, Chile, Argentina and Mexico.

The Company plans to continue to build on its current production base through existing operating mine expansions and development of new mines, advancement of its exploration properties and by targeting other gold consolidation opportunities with a primary focus in the Americas.

Yamana Gold Inc. is a company domiciled in Canada. The address of the Company’s registered office is 200 Bay Street, Suite 2200, RBC Plaza North Tower Toronto, Ontario, Canada, M5J 2J3. The Company is listed on the Toronto Stock Exchange (Symbol: YRI) and The New York Stock Exchange (Symbol: AUY). During the year, the Company delisted from The London Stock Exchange.

The consolidated financial statements of the Company as at and for the years ended December 31, 2013 and December 31, 2012 comprise the Company, its subsidiaries (Note 34(a)) and the Company’s interest in its associate Minera Alumbrera Ltd.

2.    BASIS OF CONSOLIDATION AND PRESENTATION

(a) Statement of Compliance

These consolidated financial statements of the Company, including comparatives, have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS").

These consolidated financial statements were authorized for issuance by the Board of Directors of the Company on February 18, 2014.

(b) Basis of Preparation and Presentation

The consolidated financial statements have been prepared on a going concern basis using historical cost except for the following items in the consolidated balance sheet which are measured at fair value:

• Derivative financial instruments

• Financial instruments at fair value through profit or loss

• Available-for-sale financial assets

• Liabilities for cash-settled share-based payment arrangements

• Certain property, plant and equipment measured at recoverable amounts

The consolidated financial statements are presented in United States Dollars, which is the Company’s functional and presentation currency, and all values are rounded to the nearest thousand except where otherwise indicated.

(c) Basis of Consolidation

The financial statements of entities which are controlled by the Company through voting equity interests, referred to as subsidiaries, are consolidated. The Company’s 56.7% interest in ADLF, is consolidated and the non-controlling interest of the Company’s partner is recorded (Note 23). All inter-company transactions and balances, revenue and expenses are eliminated on consolidation.

Joint ventures are those entities over whose activities the Company has joint control, established by contractual agreement. The consolidated financial statements include the Company’s proportionate share of its 50% interest in Aguas Frias S.A’s assets, liabilities, revenue and expenses with items of a similar nature on a line-by-line basis, from the date that joint control commences until the date that control ceases. A jointly controlled operation is a joint venture carried on by each venturer using its own assets

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in pursuit of the joint operations. The consolidated financial statements include the assets that the Company controls and the liabilities that it incurs in the course of pursuing the joint operation and the expenses that the Company incurs and its share of the income that it earns from the joint operation.

An associate is an entity over which the Company’s ownership and rights arising from its equity investment provide the Company with the ability to exercise significant influence and are accounted for using the equity method. The Company’s investment in Minera Alumbrera Ltd. ("Alumbrera"), which owns the Bajo de la Alumbrera Mine in Argentina, has been accounted for using the equity method. Profits are debited to the equity investment and cash distributions received are credited to the equity investment. Where the Company transacts with an associate of the Company, profits and losses are eliminated to the extent of the Company’s interest in the associate. Balances outstanding between the Company and associate are not eliminated in the consolidated financial statements.

The Company does not have any material off-balance sheet arrangements, except as noted in Note 32.

3.     SIGNIFICANT ACCOUNTING POLICIES

The accounting policies summarized below have been applied consistently in all material respects in preparing the consolidated financial statements.

(a) Foreign Currency Translation

The Company's mining operations operate primarily within an economic environment where the functional currency is the United States Dollar. Transactions in foreign currencies are translated to functional currency at exchange rates in effect at the dates of the transactions. Monetary assets and liabilities of the Company's operations denominated in a currency other than the United States Dollar are translated into United States Dollars at the exchange rate prevailing as at the balance sheet date. Non-monetary assets and liabilities are translated at historical exchange rates prevailing at each transaction date. Revenue and expenses are translated at the average exchange rates prevailing during the year, with the exception of depletion, depreciation and amortization which is translated at historical exchange rates. Exchange gains and losses from translation are included in earnings. Foreign exchange gains and losses and interest and penalties related to tax, if any, are reported within the income tax expense line.

(b) Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand, cash on deposit with banks, banks term deposits and highly liquid short-term investments with terms of less than 90 days.

(c) Inventories

Inventories consisting of product inventories, work-in-process (metal-in-circuit and gold-in-process) and ore stockpiles are valued at the lower of the cost of production and net realizable value. Net realizable value is calculated as the difference between estimated costs to complete production into a saleable form and the estimated future precious metal price based on prevailing and long-term metal prices.

The cost of production includes an appropriate proportion of depreciation and overhead. Work-in-process (metal-in-circuit and gold-in-process) represents inventories that are currently in the process of being converted to a saleable product. The assumptions used in the valuation of work-in-process inventories include estimates of metal contained and recoverable in the ore stacked on leach pads, the amount of metal stacked in the mill circuits that is expected to be recovered from the leach pads, the amount of gold in these mill circuits and an assumption of the precious metal price expected to be realized when the precious metal is recovered. If the cost of inventories is not recoverable due to decline in selling prices or the costs of completion or the estimated costs to be incurred to make the sale have increased, the Company would be required to write-down the recorded value of its work-in-process inventories to net realizable value.

Ore in stockpiles is comprised of ore extracted from the mine and available for further processing. Costs are added to ore in stock piles at the current mining cost per tonne and removed at the accumulated average cost per tonne. Costs are added to ore on the heap leach pads based on current mining costs and removed from the heap leach pad as ounces are recovered in process at the plant based on the average cost per recoverable ounce on the heap leach pad. Although the quantities of recoverable gold placed on the heap leach pads are reconciled by comparing the grades of ore placed on the heap leach pads to the quantities of gold actually recovered, the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As such, engineering estimates are refined based on actual results over time. Variances between actual and estimated quantities resulting

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from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from each heap leach pad will not be known until the leaching process is concluded.

Inventories of materials and supplies expected to be used in production are valued at the lower of cost and net realizable value. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of write-down is reversed up to the original write-down. Write-downs of inventory and reversals of write-downs are reported as a component of current period costs.

(d) Property, Plant and Equipment

i. Land, Building, Plant and Equipment

Land, building, plant and equipment are recorded at cost, less accumulated depreciation and accumulated impairment losses. The cost is comprised of the asset's purchase price, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the estimated decommissioning and restoration costs associated with the asset.

The depreciable amount of building, plant and equipment is recorded on a straight-line basis to the residual value of the asset over the lesser of mine life or estimated useful life of the asset. Each part of an item of building, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately if their useful lives differ. Useful lives of building, plant and equipment items range from two to fifteen years, but do not exceed the related estimated mine life based on proven and probable mineral reserves and the portion of mineral resources that management expects to become mineral reserves in the future and be economically extracted.

	Depreciation Method	Useful Life
Building	Straight Line	4 to 15 years
Machinery and equipment	Straight Line	2 to 7 years
Vehicles	Straight Line	3 to 5 years
Furniture and office equipment	Straight Line	2 to 10 years
Computer equipment and software	Straight Line	3 to 5 years
Land	Not depreciated

The Company reviews the useful life, depreciation method, residual value and carrying value of its building, plant and equipment at least annually. Where the carrying value is estimated to exceed the estimated recoverable amount, a provision for impairment is measured and recorded based on the higher of fair value less costs to sell or the asset's value in use.

Expenditures that extend the useful lives of existing facilities or equipment are capitalized and amortized over the remaining useful lives of the assets. Repairs and maintenance expenditures are expensed as incurred.

ii. Exploration, Evaluation Assets and Depletable Producing Properties

The Company's tangible exploration and evaluation assets are comprised of mineral resources and exploration potential. The value associated with mineral resources and exploration potential is the value beyond proven and probable mineral reserves.

Exploration and evaluation assets acquired as part of an asset acquisition or a business combination are recorded as tangible exploration and evaluation assets and are capitalized at cost, which represents the fair value of the assets at the time of acquisition determined by estimating the fair value of the property's mineral reserves, mineral resources and exploration potential at such time.

The value of such assets when acquired is primarily a function of the nature and amount of mineralized material contained in such properties. Exploration and evaluation stage mineral interests represent interests in properties that potentially contain mineralized material consisting of measured, indicated and inferred mineral resources; other mine exploration potential such as inferred mineral resources not immediately adjacent to existing mineral reserves but located around and near mine or project areas; other mine-related exploration potential that is not part of measured, indicated and inferred mineral resources; and any acquired right to explore and develop a potential mineral deposit.

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Exploration and evaluation expenditures incurred by the Company are capitalized at cost if management determines that probable future economic benefits will be generated as a result of the expenditures. Expenditures incurred before the Company has obtained legal rights to explore a specific area of interest are expensed. Costs incurred for general exploration that is either not project-specific or does not result in the acquisition of mineral properties are considered greenfield expenditures and charged to operations. Brownfield expenditures, which typically occur in areas surrounding known deposits and/or re-exploring older mines using new technologies to determine if greater mineral reserves and mineral resources exist, are capitalized. Brownfield activities are focused on the discovery of mineral reserves and mineral resources close to existing operations, including around mine or near-mine, reserve/resource extension and infill drilling.

Exploration expenditures include the costs incurred in either the initial exploration for mineral deposits with economic potential or in the process of obtaining more information about existing mineral deposits.

Evaluation expenditures include the costs incurred to establish the technical feasibility and commercial viability of developing mineral deposits identified through exploration activities or by acquisition. Evaluation expenditures include the cost of:

• acquiring the rights to explore;

• establishing the volume and grade of deposits through drilling of core samples, trenching and sampling activities in an ore body that is classified as either a mineral resource or a proven and probable mineral reserve;

• determining the optimal methods of extraction and metallurgical and treatment processes;

• studies related to surveying, transportation and infrastructure requirements;

• permitting activities; and

• economic evaluations to determine whether development of the mineralized material is commercially justified, including scoping, prefeasibility and final feasibility studies.

The values assigned to the tangible exploration and evaluation assets are carried at acquired costs until such time as the technical feasibility and commercial viability of extracting the mineral resource is demonstrated, which occurs when the related project or component of a mineral reserve or mineral resource that does not form part of the mine plan of a producing mine is considered economically feasible for development. At that time, the property and the related costs are reclassified as part of the development costs of a producing property not yet subject to depletion, and are capitalized. Assessment for impairment is conducted before reclassification.

Depletion or depreciation of those capitalized exploration and evaluation costs and development costs commences upon completion of commissioning of the associated project or component. Depletion of mining properties and amortization of preproduction and development costs are calculated and recorded on a unit-of-production basis over the estimate of recoverable ounces. The depletable costs relating to the ore body or component of the ore body in production are multiplied by the number of ounces produced divided by the estimated recoverable ounces, which includes proven and probable mineral reserves of the mine and the portion of mineral resources expected to be classified as mineral reserves and economically extracted. Management assesses the estimated recoverable ounces used in the calculation of depletion at least annually, or whenever facts and circumstances warrant that an assessment should be made. Changes to estimates of recoverable ounces and depletable costs including changes resulting from revisions to the Company's mine plans and changes in metal price forecasts can result in a change in future depletion rates.

The Company reviews and evaluates its exploration and evaluation assets and mining properties for impairment, and subsequent reversal of impairment, at least annually or when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Costs related to areas of interest abandoned are written off when such a decision is made. Refer to (i) “Impairment of Assets and Goodwill” for detail of the policy. An impairment assessment of the exploration and evaluation assets is conducted before the reclassification or transfer of exploration and evaluation assets to depletable producing properties.

iii. Stripping Costs

In open pit mining operations, it is necessary to remove overburden and other waste in order to access the ore body. When accounting for deferred stripping when multiple pits exist within a mining complex using a common infrastructure:

• In circumstances where the new development is not closely located to a producing mine or is development of a new ore body, the Company accounts for the pre-stripping costs as if the development was a separately identified mine under assets under construction.

• In circumstances where the stripping costs are not separately identifiable for the pits, the costs are allocated to the pits on a relevant production measure.

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• In circumstances where the stripping costs incurred relate to improvement of access to ore body that benefit future period production, the Company capitalizes the stripping costs and amortizes the costs over the life of the component of the ore body from which future benefits are expected.

During the pre-production phase, stripping costs are deferred and classified as part of the mineral properties, if the costs relate to anticipated future benefits and meet the definition of an asset. Once mine production enters the area related to the capitalized stripping costs, these are depleted on a unit-of-production basis over the mineral reserves and the portion of the mineral resources expected to be classified as mineral reserves that directly benefit from the specific stripping activity.

During the production phase, regular waste removal that does not give rise to future benefits is accounted for as variable production costs and included in the cost of the inventory produced during the period that the stripping costs are incurred. Stripping costs during the production phase are recognized as an asset if, and only if, all of the following are met:

• it is possible that the future benefit, i.e. improved access to the ore body, associated with the stripping activity will flow to the Company;

• the Company can identify the component of the ore body for which access has been improved; and

• the costs relating to the stripping activity associated with the component can be measure reliably.

When the costs of the stripping activity asset and the inventory produced are not separately identifiable, the Company uses a stripping ratio to allocate the production stripping costs between the inventory produced and the stripping asset activity asset. A stripping ratio, which represents a unit amount of overburden or waste anticipated to be removed to gain access to a unit amount of ore or mineral material, is developed as part of the initial mine plan and reviewed periodically for reasonableness. Changes in the estimated stripping ratio can result in a change to the future capitalization of stripping costs incurred. A stripping activity asset recognized during the production phase of an open pit mining operation is depleted on a unit-of-production basis over the mineral reserves and the portion of the mineral resources expected to be classified as mineral reserves of the ore body or the related component of the ore body from the date on which production commences. As at December 31, 2013, a total of $181.4 million of stripping costs were capitalized (2012 - $129.0 million).

iv. Assets Under Construction

Assets under construction consist of expenditures for the construction of future mines and include pre-production revenues and expenses prior to achieving completion of commissioning. Completion of commissioning is a convention for determining the point in time at which a mine and plant has achieved operational results that are expected to remain at a sustainable operational level over a period of time, after which production costs are no longer capitalized and are reported as operating costs. The determination of when completion of commissioning has been achieved is based on several qualitative and quantitative factors including but not limited to the following:

• A significant portion of planned capacity, production levels, grades and recovery rates are achieved at a sustainable level

• Achievement of mechanical completion and operating effectiveness

• Significant milestones such as obtaining necessary permits and production inputs are achieved to allow continuous and sustainable operations

Costs associated with commissioning new assets, in the period before they are capable of operating in the manner intended by management, are capitalized. Borrowing costs, including interest, associated with projects that are actively being prepared for production are capitalized to assets under construction. These costs are elements of the historical cost of acquiring an asset when a period of time is required to bring it to the condition and location necessary for its intended use. Capitalized interest costs are amortized on the same basis as the corresponding qualifying asset with which they are associated.

Once the mining project has been established as commercially feasible, capitalized expenditures other than that on land, buildings, plant and equipment are transferred to mining properties subject to depreciation or depletion together with any amounts transferred from exploration and evaluation assets.

v. Option Agreements Relating to Mineral Properties

Option payments made by an interested acquirer prior to the acquirer's decision to exercise the purchase option are deferred until the sale and transfer of the assets are assured. If the option payments are not reimbursable to the acquirer, the option payments are recorded as a reduction of the value of the asset. If the option payments are reimbursable, such amounts are recorded as a liability until the final resolution of the sale.

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(e) Borrowing Costs

Interest on borrowings related to qualifying assets including construction or development projects is capitalized until substantially all activities that are necessary to make the asset ready for its intended use are complete. This is usually signaled by the Company's declaration of completion of commissioning at the mine. All other borrowing costs are charged to earnings in the period incurred.

(f) Financial Instruments

Financial assets and financial liabilities, including derivatives, are recognized when the Company becomes a party to the contractual provisions of the financial instrument. All financial instruments are measured at fair value on initial recognition. Measurement in subsequent periods depends on whether the financial instrument has been classified as fair value through profit or loss, available-for-sale, or other financial liabilities.

Fair Value Through Profit or Loss (“FVTPL”)

Financial assets and financial liabilities which are classified as FVTPL are measured at fair value with changes in those fair values recognized as finance income/expense.

Amortized Cost

Other financial liabilities are measured at amortized cost and are amortized using the effective interest method. At the end of each reporting period, the Company determines if there is objective evidence that an impairment loss on financial assets measured at amortized costs has been incurred. If objective evidence that impairment loss for such assets has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the financial asset's original effective interest rate. The amount of the loss is recognized in profit or loss.

Available-For-Sale (“AFS”)

AFS financial assets, designated based on the criteria that management does not hold these for the purposes of trading, are presented as investments and measured at fair value with unrealized gains and losses recognized in other comprehensive income (“OCI”). Realized gains and losses are recorded in earnings when investments mature or are sold and are calculated using the cost of securities sold. AFS financial assets are reviewed quarterly for significant or prolonged decline in fair value requiring impairment and more frequently when economic or market concerns warrant such evaluation. The review includes an analysis of the facts and circumstances of the financial assets, the market price of actively traded securities, as well as the severity of loss, the financial position and near-term prospects of the investment, credit risk of the counterparties, the length of time the fair value has been below costs, both positive and negative evidence that the carrying amount is recoverable within a reasonable period of time, management's intent and ability to hold the financial assets for a period of time sufficient to allow for any anticipated recovery of fair value and management's market view and outlook. When a decline in the fair value of an available-for-sale investment has been recognized in OCI and there is objective evidence that the asset is impaired after management's review, any cumulative losses that had been recognized in OCI are reclassified as an impairment loss in the consolidated statement of operations. The reclassification adjustment is calculated as the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognized, if applicable. Impairment losses recognized in the consolidated statement of operations for an investment are subject to reversal, except for an equity instrument classified as available-for-sale.

Derivative instruments

Derivative instruments are recorded at fair value, including those derivatives that are embedded in financial or non-financial contracts that are not closely related to the host contracts. Changes in the fair values of derivative instruments are recognized in finance income/expense with the exception of derivatives designated as effective cash flow hedges.

For cash flow hedges that qualify under the hedging requirements of IAS 39 Financial Instruments: Recognition and Measurement (“IAS39”), the effective portion of any gain or loss on the hedging instrument is recognized in OCI and the ineffective portion is reported as an unrealized gain (loss) on derivatives contracts as finance income/expense in the Statement of Operations.

i. Commodity Derivatives

The Company enters into commodity derivatives including forward contracts to manage exposure to fluctuations in metal prices such as copper, zinc and silver. In the case of forwards, these contracts are intended to reduce the risk of declining prices on future sales. Purchased options are intended to allow the Company to benefit from higher market metal prices. In instances where the call option purchases offset the committed quantities of the corresponding forward, derivative assets/liabilities are presented net of amounts to counterparties. Some of the derivative transactions are effective in achieving the Company's risk management goals, however, they do not meet the hedging requirements of IAS 39, therefore the changes in fair value are recorded in earnings.

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The Company has entered into non-hedge derivatives that include forward contracts intended to manage the risk of declining copper prices. The Company does not hedge any of its gold sales.

ii. Currency Derivatives

The Company, from time to time, may enter into currency forward contracts to manage the foreign exchange exposure of the operating and capital expenditures associated with its international operations. The Company tests the hedge effectiveness quarterly. Effective unrealized changes in fair value are recorded in OCI. Ineffective changes in fair value are recorded in earnings. At settlement, the fair value amount settled is recognized as follows:

• Amount related to hedging of operating expenditures is added to cost of sales to offset the foreign exchange effect recorded by the mines.

• Amount related to hedging of capital expenditures is added to capitalized purchases of goods or services to offset the foreign exchange recorded by the mines or development projects.

iii. Interest Rate Derivatives

The Company, from time to time, may enter into interest rate swap contracts to manage its exposure to fluctuations in interest rates. The Company tests the hedge effectiveness quarterly. Effective unrealized changes in fair value are recorded in OCI. Ineffective changes in fair value are recorded in profit or loss. At settlement, the fair value amount settled is reclassified as interest expense.

iv. Termination of Hedge Accounting

Hedge accounting is discontinued prospectively when:

• the hedge instrument expires or is sold, terminated or exercised;

• the hedge no longer meets the criteria for hedge accounting; and

• the Company revokes the designation.

The Company considers derecognition of a cash flow hedge when the related forecast transaction is no longer expected to occur. If the Company revokes the designation, the cumulative gain or loss on the hedging instrument that has been recognized in OCI from the period when the hedge was effective remains separately in equity until the forecast transaction occurs or is no longer expected to occur. Otherwise, the cumulative gain or loss on the hedge instrument that has been recognized in OCI from the period when the hedge was effective is reclassified from equity to profit or loss.

Transaction and financing costs are incremental costs that are directly attributable to the acquisition of a financial asset or financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired the financial instrument. Transaction costs are expensed as incurred for financial instruments classified as FVTPL. For financial instruments classified as other than FVTPL, transaction costs are included with the carrying amount of the financial asset or liability on initial recognition and amortized using the effective interest method.

(g) Revenue Recognition

Revenue from the sale of precious metals, gold and silver, is recognized at the fair value of the consideration received and when all significant risks and rewards of ownership pass to the purchaser including delivery of the product, there is a fixed or determinable selling price and collectability is reasonably assured. Revenue is net of treatment and refining charges if payment of these amounts can be enforced at the time of sale.

Gold and silver revenue is recorded at the time of physical delivery and transfer of title. Sale prices are fixed at the delivery date based on the terms of the contract or at spot prices.

Concentrate revenue from smelters is recorded at the time the risks and rewards of ownership pass to the buyer. This revenue is provisionally priced at the date of sale, that is, the price is set at a specified future date after shipment based on market prices. Revenue on provisionally priced sales is recognized based on estimates of the fair value of consideration receivable predicated on forward market prices. At each reporting date, the provisionally priced metal is fair valued based on forward selling price for the remaining quotational period stipulated in the contract. For this purpose, the selling price can be measured reliably for those products, such as copper, for which there is an active and freely traded commodity market such as London Metals Exchange and the value of product sold by the Company is directly linked to the form in which it is traded on that market. Variations between

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the prices set under the smelting contracts are caused by changes in market prices and result in an embedded derivative in the accounts receivable. The embedded derivative is recorded at fair value each period until final settlement occurs, with changes in the fair value classified in revenue. The provisional sales quantities are adjusted for changes in metal quantities upon receipt of new information and assay results.

Revenues arising from the use by others of the Company's assets yielding interest, royalties and dividends are recognized when it is probable that the economic benefits associated with the transaction will flow to the Company and the amount of the revenue can be measured reliably, on the following bases:

• Interest is recognized using the effective interest method.

• Royalties are recognized on an accrual basis in accordance with the substance of the relevant agreement.

• Dividends are recognized when the shareholder's right to receive payment is established.

(h) Business Combinations

A business combination requires that the assets acquired and liabilities assumed constitute a business. A business consists of inputs and processes applied to those inputs that have the ability to create outputs. Although businesses usually have outputs, outputs are not required for an integrated set to qualify as a business as the Company considers other factors to determine whether the set of activities or assets is a business.

Business combinations are accounted for using the acquisition method whereby the identifiable assets acquired and the liabilities assumed are recorded at acquisition-date fair values; non-controlling interests in an acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation are measured at either fair value or present ownership instrument's proportionate share on the recognized amount of the acquiree's net identifiable assets.

The excess of (i) total consideration transferred by the Company, measured at fair value, including contingent consideration, and (ii) the non-controlling interests in the acquiree, over the acquisition-date fair value of the net of the assets acquired and liabilities assumed, is recorded as goodwill. If the fair value attributable to the Company's share of the identifiable net assets exceeds the cost of acquisition, the difference is recognized as a gain in the consolidated statement of operations.

Should the consideration be contingent on future events, the preliminary cost of the acquisition recorded includes management's best estimate of the fair value of the contingent amounts expected to be payable. Provisional fair values allocated at the reporting date are finalized within one year of the acquisition date with retroactive restatement to the acquisition date as required.

The information necessary to measure the fair values as at the acquisition date of assets acquired and liabilities assumed requires management to make certain judgements and estimates about future events, including but not limited to estimates of mineral reserves and mineral resources acquired, exploration potential, future operating costs and capital expenditures, future metal process and long-term foreign exchange rates. Changes to the provisional measurements of assets and liabilities acquired may be retrospectively adjusted when new information is obtained until the final measurements are determined within one year of the acquisition date.

(i) Non-controlling Interests

Non-controlling interests exist in less than wholly-owned subsidiaries of the Company and represent the outside interest's share of the carrying values of the subsidiaries. Non-controlling interests are recorded at their proportionate share of the fair value of identifiable net assets acquired as at the date of acquisition and are presented immediately after the equity section of the consolidated balance sheet. When the subsidiary company issues its own shares to outside interests and does not result in a loss of control, a dilution gain or loss arises as a result of the difference between the Company's share of the proceeds and the carrying value of the underlying equity, an equity transaction, is included in equity.

(j) Impairment of Assets and Goodwill

The Company assesses at the end of each reporting period whether there is any indication, from external and internal sources of information, that an asset or cash generating unit (“CGU”) may be impaired. Information the Company considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of mineral properties and goodwill. Internal sources of information include the manner in which property and plant and equipment are being used or are expected to be used and indications of economic performance of the assets, historical exploration and operating results. Estimates include but are not limited to estimates of the discounted future after-tax cash flows

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expected to be derived from the Company's mining properties, costs to sell the mining properties and the discount rate. Reductions in metal price forecasts, increases in estimated future costs of production, increases in estimated future capital costs, reductions in the amount of recoverable mineral reserves and mineral resources and/or adverse current economics can result in a write-down of the carrying amounts of the Company's mineral properties and/or goodwill.

If indication of impairment exists, the Company estimates the recoverable amount of the asset or CGU to determine the amount of impairment loss. For exploration and evaluation assets, indicators include but are not limited to, continuous downward trend in metal prices resulting in lower in situ market values for exploration potential, expiration of the right to explore, substantive expenditure in the specific area is neither budgeted nor planned, and if the entity has decided to discontinue exploration activity in the specific area.

The Company defines a CGU as an area of interest. An area of interest is an area of similar geology; an area of interest includes exploration tenements/licenses which are geographically close together, are managed by the same geological management group and have similar prospectivity. Areas of interest are defined by the geology/exploration team of the Company.

An area of interest may be categorized as project area of interest or exploration area of interest. A project area of interest represents an operating mine or a mine under construction and its nearby exploration properties, which are managed by the Company's operation group. An exploration area of interest represents a portfolio or pool of exploration properties which are not adjacent to an operating mine or a mine under construction; an exploration area of interest is managed by the Company's exploration group.

When an impairment review is undertaken, recoverable amount is assessed by reference to the higher of 1) value in use (being the net present value of expected future cash flows of the relevant cash generating unit) and 2) fair value less costs to sell (“fair value”). The best evidence of fair value is the value obtained from an active market or binding sale agreement. Where neither exists, fair value is based on the best information available to reflect the amount the Company could receive for the CGU in an arm's length transaction. This is often estimated using discounted cash flow techniques. Where recoverable amount is assessed using discounted cash flow techniques, the resulting estimates are based on detailed mine and/or production plans. For value in use, recent cost levels are considered, together with expected changes in costs that are compatible with the current condition of the business and which meet the requirements of IAS 36. Assumptions underlying fair value estimates are subject to significant risks and uncertainties. Where third-party pricing services are used, the valuation techniques and assumptions used by the pricing services are reviewed by the Company to ensure compliance with the accounting policies and internal control over financial reporting of the Company. The Company assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any such indication exists, the Company estimates the recoverable amount and considers the reversal of the impairment loss recognized in prior periods.

The Company tests for impairment of goodwill and indefinite-life intangibles or intangible assets not yet available for use at least on an annual basis or upon the occurrence of a triggering event or circumstance that indicates impairment. For impairment testing, goodwill is allocated to the CGU that is expected to benefit from the synergies of the combination. An impairment loss recognized for goodwill is not reversed in a subsequent period.

(k) Decommissioning, Restoration and Similar Liabilities and Other Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

Decommissioning, restoration and similar liabilities are a type of provision associated with the retirement of a long-lived asset that results from the acquisition, construction, development and/or normal operation of a long-lived asset. Reclamation obligations on the Company's mineral properties are recorded as a decommissioning, restoration and similar liabilities. These include the dismantling and demolition of infrastructure and the removal of residual materials and remediation of disturbed areas. These estimated costs are provided for in the accounting period when the obligation from related disturbance occurs, whether this occurs during the mine development or during the production phase, based on the present value of estimated future costs. The costs are estimated based on mine closure plan. The cost estimates are updated annually during the life of the operation to reflect known developments, (e.g. revisions to cost estimates and to the estimated lives of operations), and are subject to review at regular intervals. Decommissioning, restoration and similar liabilities are estimated based on the Company's interpretation of current regulatory requirements, constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures that may occur upon decommissioning, restoration and similar liabilities. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities.

16

The amortization or 'unwinding' of the discount applied in establishing the present value of decommissioning, restoration and similar liabilities and other provisions is charged to the consolidated statement of operations in each accounting period. The amortization of the discount is shown as a financing expense. The initial decommissioning, restoration and similar liabilities together with other movements in the provisions for decommissioning, restoration and similar liabilities, including those resulting from new disturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discount rates are capitalized within property, plant and equipment. The capitalized costs are amortized over the life of the mine on a unit-of-production basis.

(l) Income Taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in the statement of operations except to the extent it relates to items recognized directly in equity or in other comprehensive income, in which case the related taxes are recognized in equity or OCI.

Current income tax is the expected tax payable or receivable on the taxable income or loss for the year, which may differ from earnings reported in the statement of operations due to items of income or expenses that are not currently taxable or deductible for tax purposes, using tax rates substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred income tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of goodwill or assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent they can be controlled and that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(m) Earnings per Share

Earnings per share is based on the weighted average number of common shares of the Company outstanding during the period. The diluted earnings per share reflects the potential dilution of common share equivalents, such as outstanding share options and warrants, in the weighted average number of common shares outstanding during the period, if dilutive.

(n) Share-Based Payments

The Company's share-based compensation plans are described in Note 22.

The Company accounts for all share-based payments, including share options, restricted share units and deferred share units, to employees and non-employees using the fair value based method of accounting and recognizes compensation expense over the vesting period. The Company's share option plan includes a share appreciation feature. If and when the share options are ultimately exercised, the applicable amount in the equity reserve is transferred to share capital.

(o) Pension Plan

The Company has a defined contribution pension plan under which the Company pays fixed contributions into a separate entity and has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service.

Payments to the plan are recognized as an expense when employees have rendered service entitling them to the contributions.

(p) Segment Reporting

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An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company's other components. The Company's primary format for reporting segment information is geographical segments. The Company's chief decision maker, comprised of the senior management team, performs its planning, decision making, cash flow management and other management activities on such segment structure and relies on a management team with its members positioned in the geographical regions where the Company's key mining operations are located. In determining the Company's segment structure, consideration is given to the similar operational, currency and political risks to which the mining operations within the same business and regulatory environment are exposed. Except for the Canada and Other segments, each mine within a segment derives its revenues mainly from the sales of precious metals through specific channels and processes as coordinated and managed by the corresponding regional management group.

All operating segments' results are reviewed regularly by the Company's chief decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the Company's chief decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

The Company is organized on the basis of five segments:

• Brazil: Chapada, Jacobina, Fazenda Brasileiro, development projects in the segment

• Chile: El Peñón, Minera Florida, development projects in the segment

• Argentina: Gualcamayo, development projects in the segment

• Mexico: Mercedes, development projects in the segment

• Canada and other : Corporate office and other development projects outside of the above segments

(q) Investment in Associate

An associate is an entity over which the Company has significant influence and that is neither a subsidiary nor an interest in a joint venture. The Company is presumed to have significant influence if it holds, directly or indirectly, 20% or more of the voting power of the investee. If the Company holds less than 20% of the voting power, other relevant factors are examined by the Company to determine whether it has significant influence. The factors that may enable the exercise of significant influence include the proportion of seats on the board being assigned to the Company, nature of the business decisions that require unanimous consent of the directors, ability to influence the operating, strategic and financing decisions and the existing ownership composition vis-à-vis the Company's ability to exercise significant influence. The Company accounts for its investment in associate using the equity method. The Company accounts for its investment in Alumbrera of 12.5% using the equity method.

The equity method involves the recording of the initial investment at cost and the subsequent adjustments of the carrying value of the investment for the Company's proportionate share of the profit or loss and any other changes in the associate's net assets such as dividends.

The Company's proportionate share of the associate's profit or loss is based on its most recent financial statements. There is no difference in the associate's reporting period and that of the Company. Adjustments are made to align inconsistencies between our accounting policies and our associate's policies, if any, before applying the equity method. Adjustments are also made to account for depreciable assets based on their fair values at the acquisition date and for any impairment losses recognized by the associate.

If our share of the associate's losses equals or exceeds our investment in the associate, recognition of further losses is discontinued. After our interest is reduced to zero, additional losses will be provided for and a liability recognized, only to the extent that we have incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports profits, we resume recognizing our share of those profits only after our share of the profits equals the share of losses not recognized.

(r) Intangible Assets

Intangible assets acquired by way of an asset acquisition or business combination are recognized if the asset is separable or arises from contractual or legal rights and the fair value can be measured reliably on initial recognition.  Intangible assets must be identifiable, controlled by the Company and with future economic benefits expected to flow from the assets.  Intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. The Company reviews the useful life, depreciation method and carrying value on a regular basis. Where the

18

carrying value is estimated to exceed the estimated recoverable amount, a provision for impairment is recorded measured as the higher of fair value less costs to sell or the intangible asset's value in use.

4.     CRITICAL JUDGEMENTS AND ESTIMATION UNCERTAINTIES

The preparation of consolidated financial statements in conformity with IFRS requires the Company's management to make judgements, estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and related notes to the financial statements. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may differ from those estimates.

(a) Critical Judgements in the Application of Accounting Policies

Information about critical judgements and estimates in applying accounting policies that have most significant effect on the amounts recognized in the consolidated financial statements are as follows:

• Assets' carrying values and impairment charges

In the determination of carrying values and impairment charges, management looks at the higher of value in use and fair value less costs to sell in the case of assets and at objective evidence, significant or prolonged decline of fair value on financial assets indicating impairment. These determinations and their individual assumptions require that management make a decision based on the best available information at each reporting period. During the year, the Company recognized an unrealized, non-cash impairment loss on certain mining properties and equity investments in the amount of $682.3 million (2012 - $nil).

• Capitalization of exploration and evaluation costs

Management has determined that exploration and evaluation costs incurred during the year have future economic benefits and are economically recoverable. In making this judgement, management has assessed various sources of information including but not limited to the geologic and metallurgic information, history of conversion of mineral deposits to proven and probable mineral reserves, scoping and feasibility studies, proximity of operating facilities, operating management expertise and existing permits. During the year, the Company capitalized a total of $81.8 million (2012 - $101.3 million) of exploration and evaluation expenditures.

• Recoverable Ounces

The carrying amounts of the Company’s mining properties are depleted based on recoverable ounces contained in mineral proven and probable reserves plus a portion in mineral resources. The Company includes a portion of mineral resources where it is considered probable that those mineral resources will be economically extracted. Changes to estimates of recoverable ounces and depletable costs including changes resulting from revisions to the Company’s mine plans and changes in metal price forecasts can result in a change in future depletion rates.

• Determination of economic viability of a project

Management has determined that costs associated with projects under construction or developments have future economic benefits and are economically recoverable. In making this judgement, management has assessed various sources of information including but not limited to the geologic and metallurgic information, history of conversion of mineral deposits to proven and probable mineral reserves, scoping and feasibility studies, proximity of operating facilities, operating management expertise, existing permits and life of mine plans.

• Completion of commissioning/commencement of operating level production

During the determination of whether a mine has reached an operating level that is consistent with the use intended by management, costs incurred are capitalized as property, plant and equipment and any consideration from commissioning sales are offset against costs capitalized. The Company defines completion of commissioning as the date that a mine has achieved a sustainable level of production along with various qualitative factors including but not limited to the achievement of mechanical completion, the working effectiveness of the site refinery, whether a refining contract for the product is in place and whether the product is of sufficient quantity to be sold, whether there is a sustainable level of production input available including power, water, diesel, etc., whether the necessary permits are in place to allow continuous operations. The Company currently has three properties (Ernesto/Pau-a-pique, C1 Santa Luz and Pilar) which are in the commissioning phase and were determined to not have met the criteria for commencement of operating level production as at December 31, 2013.

• Deferral of stripping costs

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In determining whether stripping costs incurred during the production phase of a mining property relate to mineral reserves and mineral resources that will be mined in a future period and therefore should be capitalized, the Company determines whether it is probable that future economic benefit associated with the stripping activity over the life of the mineral property will flow to the Company. Changes in estimated strip ratios can result in a change to the future capitalization of stripping costs incurred. As at December 31, 2013, a cumulative total of $181.4 million (2012 - $129.0 million) of stripping costs have been capitalized.

• Determination of significant influence

Management determines its ability to exercise significant influence over an investment in shares of other companies by looking at its percentage interest and other qualitative factors including but not limited to its voting rights, representation on the board of directors, participation in policy-making processes material transactions between the Company and the associate, interchange of managerial personnel, provision of essential technical information and operating involvement.

• Determination of asset and liability fair values and allocation of purchase consideration

Business combinations require judgement and estimates to be made at the date of acquisition in relation to determining asset and liability fair values and the allocation of the purchase consideration over the fair value of the assets and liabilities. For all significant acquisitions, the Company employs third party independent valuators to assist in determining asset and liability fair values and the allocation of the purchase consideration over the fair value of the assets and liabilities. The information necessary to measure the fair values as at the acquisition date of assets acquired and liabilities assumed requires management to make certain judgements and estimates about future events, including but not limited to estimates of mineral reserves and mineral resources acquired, exploration potential, future operating costs and capital expenditures, future metal process and long-term foreign exchange rates. Changes to the provisional measurements of assets and liabilities acquired may be retrospectively adjusted when new information is obtained until the final measurements are determined within one year of the acquisition date.

• Determination of business combinations and asset acquisitions

Management determines the assets acquired and liabilities assumed constitute a business if it consists of inputs and processes applied to those inputs that have the ability to create outputs. Accordingly, the transaction is considered a business combination. The Company acquired Extorre Gold Mines Limited in August 2012 and, at which time, concluded that the transactions did not qualify as a business combination under IFRS 3, Business Combinations, as significant inputs and processes that constitute a business were not identified. 

(b) Key Sources of Estimation Uncertainty in the Application of Accounting Policies

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment are included in the following notes:

• Revenue recognition

Revenue from the sale of concentrate to independent smelters are recorded at the time the rights and rewards of ownership pass to the buyer using forward market prices on the expected date that final sales prices will be fixed. Variations between the prices set under the smelting contracts may be caused by changes in market prices and result in an embedded derivative in the trade receivables. The embedded derivative is recorded at fair value each period until final settlement occurs, with changes in the fair value classified in revenue. In a period of high price volatility, as experienced under current economic conditions, the effect of mark-to-market price adjustments related to the quantity of metal which remains to be settled with independent smelters could be significant. For changes in metal quantities upon receipt of new information and assay, the provisional sales quantities are adjusted as well.

• Mineral reserve estimates

The figures for mineral reserves and mineral resources are determined in accordance with National Instrument 43-101, “Standards of Disclosure for Mineral Projects”, issued by the Canadian Securities Administrators. There are numerous uncertainties inherent in estimating mineral reserves and mineral resources, including many factors beyond the Company's control. Such estimation is a subjective process, and the accuracy of any mineral reserve or mineral resource estimate is a function of the quantity and quality of available data and of the assumptions made and judgements used in engineering and geological interpretation. Differences between management's assumptions including economic assumptions such as metal prices and market conditions could have a material effect in the future on the Company's financial position and results of operation.

• Impairment of mineral properties and goodwill

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While assessing whether any indications of impairment exist for mineral properties and goodwill, consideration is given to both external and internal sources of information. Information the Company considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of mineral properties and goodwill. Internal sources of information include the manner in which property and plant and equipment are being used or are expected to be used and indications of economic performance of the assets, historical exploration and operating results. Estimates include but are not limited to estimates of the discounted future after-tax cash flows expected to be derived from the Company's mining properties, costs to sell the mining properties and the discount rate. Reductions in metal price forecasts, increases in estimated future costs of production, increases in estimated future capital costs, reductions in the amount of recoverable mineral reserves and mineral resources and/or adverse current economics can result in a write-down of the carrying amounts of the Company's mineral properties and/or goodwill. In testing impairment, including goodwill, the following are the key applicable assumptions: discount rate of 4.6% (2012 - 5.9%) as determined by the weighted average cost of capital, long-term gold price of $1,300 per ounce (2012 - $1,375 per ounce) and long-term copper price of $3.00 per pound (2012 - $3.00 per pound). Long-term metal prices are based on the compilation of independent industry analyst forecasts.

During the fourth quarter, the Company performed its impairment test updating its life of mine after-tax cash flow projects for updated reasonable estimates of future metal prices, production based on current estimates of recoverable mineral reserves and mineral resources, recent operating and exploration results, exploration potential, future operating costs, capital expenditures, inflation and long-term foreign exchange rates. The value-in-use in the impairment assessments in the fourth quarter were calculated assuming long-term prices of $1,300 per ounce of gold and $3.00 per pound of copper. The Company examined future cash flows, the intrinsic value of value beyond proven and probable mineral reserves, value of land holdings, as well as other factors, which are determinants of commercial viability of each and every mining property in its portfolio, and concluded that a total of $672.0 million (2012 - $nil) of impairment charges on the following mineral properties, goodwill and investment in associate should be recognized in the fourth quarter:

• Various exploration properties, Argentina and Chile - A total impairment charge $181.1 million in respect to exploration properties in Argentina and $80.9 million in respect to Amancaya in Chile for a total of $262.0 million as a result of the continuous downward trend in metal prices resulting in lower in situ market and income values for exploration potential and below-expectation exploration results.

• Ernesto/Pau-a-Pique, Brazil - Impairment charge of $175.0 million against the carrying value was recognized due to the continuous downward trend in metal prices and commissioning delays resulting in higher capital expenditures.

• Jeronimo, Chile - Impairment charge of $110.0 million against the carrying value of the project was recognized on the decision of not proceeding with construction at this time; future construction decision is subject to finding additional project enhancements.

• Alumbrera, Argentina - Impairment charge of $70.0 million is recognized against the carrying value of the Company’s 12.5% equity interest in the Alumbrera mine due to the continuous downward trend in metal prices. Additionally, Alumbrera is near the end of its mine life requiring greater waste removal to access mineable ore resulting in higher future operating costs.

• Jacobina, Brazil - Impairment of Goodwill of $55.0 million (Refer to Note 14 to the Consolidated Financial Statements) as a result of the continuous downward trend in metal prices, the mine's recent operating and exploration results and exploration potential.

In addition to the impairment charges mentioned above, an additional $10.3 million related to minor exploration properties was recognized during the year on the decision of not proceeding with further exploration and/or disposition in the prior quarters of 2013, resulting in total impairment charges against mineral properties for the year to a total of $682.3 million (2012 - $nil).

Should there be a significant decline in the pricing of our metals, the Company would undertake actions to assess the implications on life of mine plans, including the determination of mineral reserves and mineral resources and the appropriate cost structure for the CGU. The Company believes that adverse changes in metal price assumptions would impact certain other inputs in the life of mine plans which may offset, to a certain extent, the impact of these adverse metal price changes. As such, the Company has performed a sensitivity analysis to identify the impact of changes in long-term metal prices and operating costs which are key assumptions that impact the impairment calculations. The Company assumed a 10% change in the metal price assumptions taking gold price from $1,300 per ounce to $1,170 per ounce and copper price from $3.00 per pound to $2.76 per pound, and a 10% decline in certain cost inputs while holding all other assumptions constant. Based on the results of the impairment testing performed in the fourth quarter of 2013, the CGU’s that are most sensitive to changes in these key assumptions appear below. The decrease in recoverable value below represents the resulting change in recoverable value but not the amount, if any, of an impairment. Generally there

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is a direct correlation between metal prices and industry cost levels as a significant decline in metal prices will often be mitigated by a corresponding decline in industry operating input cost levels.

		(in million dollars)
Mine	Decrease in recoverable value from a 10% decrease in metal prices			Increase/decrease in recoverable value from a 10% decrease/increase in operating costs
Gualcamayo		$	160		$	90
Pilar		$	110		$	60
Jacobina		$	130		$	65
Ernesto/Pau-a-Pique		$	90		$	60
Jeronimo		$	120		$	75
Alumbrera (12.5% interest)		$	30		$	40

There are numerous factors that are taken into consideration in the impairment test including historical conversion of mineral reserves and mineral resources, historical exploration results, exploration potential and changes to expected production levels. Gualcamayo and Jacobina’s recoverable values are the least likely to be impacted solely by metal prices due to these other factors. The carrying amounts, for Gualcamayo, Pilar, Jacobina, Ernesto/Pau-a-Pique, Jeronimo and Alumbrera CGUs were approximately $750.0 million, $425.0 million, $770.0 million, $150.0 million, $145.0 million and $120.0 million, respectively.

• Estimated Recoverable Ounces

The carrying amounts of the Company’s mining properties are depleted based on recoverable ounces contained in mineral proven and probable reserves plus a portion in mineral resources. The Company includes a portion of mineral resources where it is considered probable that those mineral resources will be economically extracted. Changes to estimates of recoverable ounces and depletable costs including changes resulting from revisions to the Company’s mine plans and changes in metal price forecasts can result in a change in future depletion rates.

• Asset lives, depletion/depreciation rates for property, plant and equipment and mineral interests

Depreciation, depletion and amortization expenses are allocated based on assumed asset lives and depletion/depreciation/amortization rates. Should the asset life or depletion/depreciation rate differ from the initial estimate, an adjustment would be made in the statement of operations.

• Estimation of decommissioning and restoration costs and the timing of expenditure

The cost estimates are updated annually during the life of a mine to reflect known developments, (e.g. revisions to cost estimates and to the estimated lives of operations), and are subject to review at regular intervals. Decommissioning, restoration and similar liabilities are estimated based on the Company's interpretation of current regulatory requirements, constructive obligations and are measured at fair value. Fair value is determined based on the net present value of estimated future cash expenditures for the settlement of decommissioning, restoration or similar liabilities that may occur upon decommissioning of the mine. Such estimates are subject to change based on changes in laws and regulations and negotiations with regulatory authorities.

• Income taxes and recoverability of potential deferred tax assets

In assessing the probability of realizing income tax assets recognized, management makes estimates related to expectations of future taxable income, applicable tax planning opportunities, expected timing of reversals of existing temporary differences and the likelihood that tax positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income are based on forecasted cash flows from operating activities and the application of existing tax laws in each jurisdiction. The Company considers relevant tax planning opportunities that are within the Company's control, are feasible and within management's ability to implement. Examination by applicable tax authorities is supported based on individual facts and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes in tax laws could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized income tax assets at each reporting period.

• Inventory valuation

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Finished goods, work-in-process, heap leach ore and stockpile ore are valued at the lower of the average production costs or net realizable value. The assumptions used in the valuation of work-in process inventories include estimates of gold contained in the ore stacked on leach pads, assumptions of the amount of gold stacked that is expected to be recovered from the leach pads, the amount of gold in the mill circuits and assumption of the gold price expected to be realized when the gold is recovered. If these estimates or assumptions prove to be inaccurate, the Company could be required to write-down the recorded value of its work-in-process inventories, which would reduce the Company's earnings and working capital. During the year, inventory a total charge of $14.8 million was recorded to adjust to net realizable value (2012 - $1.2 million) included in cost of sales.

• Accounting for business combinations

The fair value of assets acquired and liabilities assumed and the resulting goodwill, if any, requires that management make estimates based on the information provided by the acquiree. Changes to the provisional values of assets acquired and liabilities assumed, deferred income taxes and resulting goodwill, if any, will be retrospectively adjusted when the final measurements are determined (within one year of acquisition date).

• Contingencies

Refer to Note 33, Contingencies to the consolidated financial statements.

5.    RECENT ACCOUNTING PRONOUNCEMENTS

Certain pronouncements were issued by the IASB or the International Financial Reporting Interpretations Committee (“IFRIC”) that are mandatory for accounting periods after December 31, 2012. Pronouncements that are not applicable to the Company have been excluded from those described below. The following new standards have been adopted effective January 1, 2013:

(i) IFRS 10 Consolidated Financial Statements - the Standard has no significant impact on the Company. The Company concluded that it continues to have control, as defined by IFRS 10, over Agua de la Falda.

(ii) IFRS 11 Joint Arrangements - the Company concluded that the current treatment of Agua Fria is consistent with IFRS 11 treatment of accounting for the underlying assets and liabilities line-by-line in relation to its 50% interest in the assets, liabilities, revenues and expenses of Agua Fria.

(iii) IFRS 12 Disclosure of Interests in Other Entities - the Standard has no significant impact on the Company.

(iv) IAS 27 Consolidated and Separate Financial Statements - the Standard has no significant impact on the Company.

(v) IAS 28 Investments in Associates and Joint Ventures - the Standard has no significant impact on the Company.

(vi) IFRS 13 Fair Value Measurement - the Standard has no significant accounting impact on the Company given the existing asset and liability mix of the Company to which fair value accounting applies.

(vii) IAS 1 Presentation of Financial Statements - the Company has revised the presentation of the Condensed Consolidated Interim Statements of Comprehensive Income to disclose items that may or may not be reclassified subsequently to profit or loss.

(viii) IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine - the Company is in compliance with the previous Canadian GAAP EIC-160 Stripping Costs Incurred in the Production Phase of a Mining Operation. The Company has assessed all the open-pit mining operations and reclassified the asset balance that resulted from stripping activity undertaken during the production phase as a part of an existing asset to which the stripping activity related. For each of asset balances, there is an identifiable component of the ore body with which the predecessor stripping asset can be associated.

The following pronouncements are mandatory for accounting periods after December 31, 2013. Pronouncements that are not applicable to the Company have been excluded from those described below.

(a) IFRIC 21 Levies - the Interpretation is effective for annual periods beginning on or after January 1, 2014. This Standard provides clarification on the accounting for a liability to pay a levy. The Company does not plan to early adopt the Standard. The Company is assessing the impact of this standard.

(b) IFRS 9 Financial Instruments - No specific effective date has been announced for this Standard. The Company is assessing the impact of this Standard.

6.    ACQUISITION OF MINERAL INTERESTS

The Company did not make any significant asset or business acquisitions in 2013.

(a) Acquisition of Extorre Gold Mines Limited

On August 21, 2012 the Company acquired all the issued and outstanding common shares of Extorre Gold Mines Limited (“Extorre”).  Extorre is a mining company with exploration and development stage precious metals projects, the most advanced of which is its Cerro Moro project, a high grade, gold and silver deposit.

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Under the terms of the Agreement, each Extorre shareholder received $4.28 per share comprised of $3.50 in cash and 0.0467 of a Yamana common share for each Extorre common share held. Total consideration paid was approximately $449.2 million comprised of 4.7 million common shares, transaction costs and issued options.  The purchase price was determined using the share price of $15.95 per share for Yamana stock as at August 21, 2012.

The acquisition has been accounted for by the Company as a purchase of assets and assumption of liabilities.  The transactions did not qualify as a business combination under IFRS 3, Business Combinations, as significant inputs and processes that together constitute a business were not identified.  The cost has been allocated to the assets acquired and liabilities assumed based upon their estimated fair value at the date of acquisition.

Total consideration paid of $449.2 million was calculated as follows:

Cash	$	363,889
Issue of Yamana common shares	74,396
Fair value of 1,155,752 stock options assumed (Note 22(a))	3,584
Transaction costs	7,312
Purchase consideration	$	449,181

The consideration has been allocated as follows:

Current assets net of current liabilities	$	12,155
Mineral properties	437,026
Net identifiable assets	$	449,181

The fair value of Yamana options has been estimated using the Black-Scholes option pricing model using the following assumptions:

Dividend yield	0.004
Expected volatility	36	%
Risk-free interest rate	1.21	%
Expected life	0.10 - 4.65 years
Forfeitures	Nil

7.     TRADE AND OTHER RECEIVABLES

As at December 31,	2013		2012
Trade receivable (i)	$	78,099	$	173,600
Other receivables	2,002		1,697
	$	80,101	$	175,297

(i) The average credit period of gold sales is less than 30 days. No interest is charged on trade receivables and they are neither impaired nor past due.

8.    INVENTORIES

As at December 31,	2013		2012
Product inventories	$	46,930	$	48,967
Metal in circuit and gold in process	43,031		41,627
Ore stockpiles	52,013		58,787
Materials and supplies	87,251		80,835
	$	229,225	$	230,216

The amount of inventories recognized as an expense during the year ended December 31, 2013, was $900.8 million (2012 - $831.8 million) and is included in cost of sales. During the year, a total charge of $14.8 million was recorded to adjust inventory to net realizable value (2012 - $1.2 million) which is included in cost of sales.

9.    OTHER FINANCIAL ASSETS

As at December 31,	2013		2012
Derivative related assets (Note 28(a))	$	51	$	4,581
Tax credits receivables (i)	44,442		—
Deferred consideration receivable (ii)	—		10,000
Other	9,274		4,626
	$	53,767	$	19,207
Current	44,493		4,516
Non-current	9,274		14,691
	$	53,767	$	19,207

(i) Tax credits receivable consist of sales taxes which are recoverable in the form of a refund from the respective jurisdictions in which the Company operates.

(ii) On February 28, 2013, the Company sold two net smelter royalties and a mining royalty to Premier Royalty Inc. for total consideration of $9.6 million. The amount paid consisted of: $8.7 million in cash, 387,096 common shares valued at $0.6 million and 500,000 common shares purchase warrants exercisable at $2.50 per share until February 28, 2016 with a value of $0.3 million.

10.    OTHER ASSETS

As at December 31,	2013		2012
Tax credits receivables (i)	$	114,563	$	209,195
Advances and deposits	77,238		60,555
Other long-term advances	26,589		7,497
Income taxes receivable	34,231		8,950
	$	252,621	$	286,197
Current	144,626		164,530
Non-current	107,995		121,667
	$	252,621	$	286,197

(i) Tax credits receivable consist of South American sales taxes which are recoverable against other taxes payable and value added tax.

24

11.    PROPERTY, PLANT AND EQUIPMENT

	Mining property costs subject to depletion (i)			Mining property costs not subject to depletion (ii) (iii) (iv) (vii)			Land, building, plant & equipment  (v)			Total
Cost, January 1, 2012	$	3,050,039		$	5,848,904		$	1,330,041		$	10,228,984
Additions	275,103			1,090,782			237,316			1,603,201
Transfers and other non-cash movements	195,442			(322,447		)	141,603			14,598
Change in decommissioning, restoration & similar liabilities	33,287			(937		)	5			32,355
Disposals	(410		)	(20,844		)	(1,122		)	(22,376		)
Cost, December 31, 2012	$	3,553,461		$	6,595,458		$	1,707,843		$	11,856,762
Additions	249,969			575,178			180,121			1,005,268
Transfers and other non-cash movements	51,105			24,022			(33,163		)	41,964
Change in decommissioning, restoration & similar liabilities	(43,538		)	—			(85		)	(43,623		)
Impairment (vi)	—			(557,273		)	—			(557,273		)
Reclassification	(49,583		)	(26,911		)	147,812			71,318
Disposals	(171		)	(62,674		)	(2,866		)	(65,711		)
Cost, December 31, 2013	$	3,761,243		$	6,547,800		$	1,999,662		$	12,308,705
Accumulated depreciation and impairment, January 1, 2012	$	800,519		$	—		$	389,035		$	1,189,554
Depreciation for the year	230,860			—			152,984			383,844
Impairment charges	200			—			7,093			7,293
Accumulated depreciation and impairment, December 31, 2012	$	1,031,579		$	—		$	549,112		$	1,580,691
Depreciation for the period	232,310			—			170,012			402,322
Reclassification	3,948			—			67,370			71,318
Disposal	—			—			(6,427		)	(6,427		)
Accumulated depreciation and impairment, December 31, 2013	$	1,267,837		$	—		$	780,067		$	2,047,904
Carrying value, December 31, 2012	$	2,521,882		$	6,595,458		$	1,158,731		$	10,276,071
Carrying value, December 31, 2013	$	2,493,406		$	6,547,800		$	1,219,595		$	10,260,801

(i) The following table shows the reconciliation of capitalized stripping costs incurred in the production phase:

As at December 31,	2013			2012
Balance, beginning of the year	$	128,988		$	94,192
Additions	59,920			38,931
Amortization	(7,558		)	(4,135		)
Balance, end of year	$	181,350		$	128,988

(ii) At the beginning of 2013, the Company changed the presentation of the Property, Plant and Equipment note in its financial statements. The two asset categories: Assets under construction and Tangible exploration & evaluation assets (as was shown in the 2012 Consolidated Annual Financial Statements) have been combined into one category called: Mining property costs not subject to depreciation. This was not a change in accounting policy nor was there any impact on the Consolidated Statement of Operations. This change was made for a more relevant presentation of the Company's property, plant and equipment and the prior year has been restated for this change.

(iii) During the year ended December 31, 2013, the Company capitalized $48.5 million (December 31, 2012 - $30.3 million) of interest costs for assets under construction. A weighted average capitalization rate of 5.4% (December 31, 2012 — 5.5%) was used to determine the amount of borrowing costs eligible for capitalization.

(iv) Assets not subject to depreciation include: capitalized reserve and exploration potential acquisition costs, capitalized exploration & evaluation costs, capitalized development costs, assets under construction, capital projects and acquired mineral resources at operating mine sites. Mineral property costs not subject to deprecation are composed of the following:

25

As at December 31,	2013		2012
Projects not in production	$	3,128,642	$	2,275,714
Exploration potential	2,586,991		3,469,324
Assets under construction	832,167		850,420
Total	$	6,547,800	$	6,595,458

(v) Included in land, building, plant and equipment is $67.5 million of land which in not subject to depreciation (2012 - $67.0 million)

(vi) In early October of 2013, after the spot price for gold returned to the $1,350 per ounce level, it started a continuous decline during the fourth quarter and dipped below $1,200 per ounce by late December. During the fourth quarter, the Company performed its impairment test updating its life of mine after-tax cash flow projects for updated reasonable estimates of future metal prices, production based on current estimates of recoverable mineral reserves and mineral resources, recent operating and exploration results, exploration potential, future operating costs, capital expenditures, inflation and long-term foreign exchange rates.  The fair values in the impairment assessment in the fourth quarter were calculated assuming long-term prices of $1,300 per ounce of gold (2012 - $1,375 per ounce of gold) and $3.00 per pound of copper (2012 - $3.00 per pound of copper). The Company examined future cash flows, the intrinsic value of value beyond proven and probable mineral reserves, value of land holdings, as well as other factors, which are determinants of commercial viability of each mining property in its portfolio, and concluded that a total of $547.0 million (2012 - $nil) of impairment charges should be recognized against property plant and equipment, which include $175.0 million impairment charge against the carrying value of the Ernesto/Pau-Pique mine, $110.0 million impairment charge against the carrying value of its Jeronimo project, $80.9 million against the carrying value of the Amancaya exploration property, $181.1 million against the carrying value of various exploration properties in Argentina. Additionally, an impairment of $10.3 million against the carrying value of an exploration project in Mexico was recorded in the second quarter of 2013.

(vii) In March 2011, the Company announced an agreement with Xstrata Queensland Limtied (“GlencoreXstrata”) and Goldcorp Inc. (“Goldcorp”) that would facilitate the integration of Agua Rica into Minera Alumbrera under which GlencoreXstrata, Goldcorp, and Yamana would continue to own a 50%, 37.5%, and 12.5% interest, respectively in Minera Alumbrera. Under the terms of the original agreement, the Company would have received a combination of payments of $110 million during the 36 months following execution of formal transaction documents, $150 million upon approval to proceed with construction, and $50 million upon achieving commercial production. In addition, the Company would receive a deferred consideration stream. At December 31, 2013, a total of $50.0 million in payments had been received. During the third quarter of 2013, the Company, GlencoreXstrata and Goldcorp agreed to an extension period of twelve months in which certain optimizations for a feasibility study would be undertaken with respect to the development of Agua Rica. One of the option payments payable by GlencoreXstrata and Goldcorp in 2013 was deferred to 2014 as part of this agreement, and in addition, the cap on the number of ounces of payable gold for the deferred consideration which is based on 65% of the payable gold production from Agua Rica, which was originally set to a maximum of 2.3 million ounces, was removed.

12.    INVESTMENT IN ASSOCIATE

The Company holds a 12.5% indirect interest in the Bajo de la Alumbrera Mine, held by Minera Alumbrera Ltd. (“Alumbrera”). Although the investment is less than 20% of the outstanding shares of Alumbrera, other relevant factors have been examined by the Company to determine whether it has significant influence. Such factors include the proportion of seats on the board being assigned to the Company, nature of the business decisions that require unanimous consent of the directors, ability to influence the operating, strategic and financing decisions and the existing ownership composition vis-à-vis the Company’s ability to exercise significant influence.

The investment in this associate is, accordingly, accounted using the equity method. Earnings of Alumbrera have been included in the earnings of the Company since acquisition. Summarized financial information is as follows:

As at December 31,	2013		2012
Current assets	$	688,060	$	886,450
Non-current assets	$	851,224	$	615,717
Total assets	$	1,539,284	$	1,502,167
Current liabilities	264,228		283,388
Non-current liabilities	399,041		144,209
Total liabilities	663,269		427,597
Net assets	$	876,015	$	1,074,570
Company’s share of net assets of associate (12.5%)	$	109,502	$	134,321

For the years ended December 31,	2013			2012
Company’s share of total revenues (12.5%) for the year	$	129,302		$	204,914
Company’s share of (losses)/earnings (12.5%) for the year	$	(3,905	)	$	50,642

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	2013			2012
Balance of investment in associate, beginning of the year	$	219,744		$	169,102
Equity in earnings	(3,905		)	50,642
Cash distributions	(27,924		)	—
Investment impairment (i)	(70,000		)	$	—
Balance, end of year	$	117,915		$	219,744

(i) An impairment charge of $70.0 million was recognized against the carrying value of the Company’s 12.5% equity interest in the Alumbrera mine, which is near the end of its mine life.

On January 23, 2013, the Company received a loan from Minera Alumbrera Ltd. for a total principal of $43.8 million (Note 16(i)).

13.    INVESTMENTS

As at December 31,			2013						2012
Available-for-sale securities	Cost		Fair Value		Cumulative gains in AOCI		Cost		Fair Value		Cumulative losses in AOCI
Total	$	8,977	$	9,122	$	145	$	20,700	$	20,480	$	(220	)

Available-for-sale (“AFS”) financial assets are reviewed quarterly for significant or prolonged decline in fair value requiring impairment and more frequently when economic or market concerns warrant such evaluation. The review includes an analysis of the fact and circumstances of the financial assets, the market price of actively traded securities and other financial assets, the severity of loss, the financial position and near-term prospects of the investment, credit risk of the counterparties, the length of time the fair value has been below costs, both positive and negative evidence that the carrying amount is recoverable within a reasonable period of time, management’s intent and ability to hold the financial assets for a period of time sufficient to allow for any anticipated recovery of fair value and management’s market view and outlook. As at December 31, 2013, after management's review and based on objective evidence, a total impairment of $16.3 million (2012 - $67.7 million), which represents the difference between the carrying value and the fair market value on certain available-for-sale securities, was recognized as other operating expenses in the consolidated statement of operations (in the prior year, the impairment was presented separately in the consolidated statement of operations).

14.     GOODWILL AND INTANGIBLES

	Goodwill (i)			Other intangibles (ii)			Total
Cost, January 1, 2012	$	55,000		$	24,136		$	79,136
Additions	$	—		$	24,459		$	24,459
Cost, December 31, 2012	$	55,000		$	48,595		$	103,595
Additions	—			24,499			24,499
Dispositions	—			(938		)	(938		)
Cost, December 31, 2013	$	55,000		$	72,156		$	127,156
Accumulated amortization and impairment, January 1, 2012	$	—		$	(3,790	)	$	(3,790	)
Amortization	—			(1,291		)	(1,291		)
Accumulated depreciation and impairment, December 31, 2012	$	—		$	(5,081	)	$	(5,081	)
Amortization	—			(1,527		)	(1,527		)
Impairment	$	(55,000	)	$	—		$	(55,000	)
Accumulated depreciation and impairment, December 31, 2013	$	(55,000	)	$	(6,608	)	$	(61,608	)
Carrying value, December 31, 2012	$	55,000		$	43,514		$	98,514
Carrying value, December 31, 2013	$	—		$	65,548		$	65,548

(i) Goodwill represents the excess of the purchase cost over the fair value of net assets acquired on a business acquisition. The Company's total goodwill of $55.0 million as at the beginning of 2013 relates to the acquisition of the gold producing Jacobina mine and related assets in Brazil in 2006. During the fourth quarter, the Company performed its impairment test updating its life of mine after-tax cash flow projects for updated reasonable estimates of future metal prices, production based on current estimates of recoverable mineral reserves and mineral resources, recent operating and exploration results, exploration potential, future operating costs, capital expenditures, inflation and long-term foreign exchange rates.  The value of each of the identified and quantified mineral interests in a cash generating unit ("CGU") was determined primarily based on the net present value of the expected life of mine after-tax future cash flows from exploiting the mineral reserves and resources. This represents the after-tax future cash flows that the CGU can be expected to generate over its remaining useful life. The Company examined future cash flows, expected metal prices, the intrinsic value of value beyond proven and probable mineral reserves, value of land holdings, as well as other factors, which are determinants of commercial viability of each and every mining property in its portfolio, and concluded that the goodwill of $55.0 million no longer represents future economic benefits arising from the Jacobina CGU and was impaired. The Company performed its impairment assessment using the Value-in-Use method.

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In testing goodwill for impairment, the following are the key applicable assumptions:

•Discount rate of 4.6% (2012 - 5.9%) as determined by the weighted average cost of capital,

•Long-term gold price of $1,300 per ounce (2012 - $1,375 per ounce),

•Long-term foreign exchange rate of 2.7 Brazilian Reais to the United States Dollar (2012 -1.8 ).

Long-term gold prices and foreign exchange rate are based on the compilation of independent industry analyst forecasts.

The model used to determine impairment is based on management's best assumptions using material and practicable data which may generate results that are not necessarily indicative of future performance. In addition, in deriving this analysis, the Company has made assumptions based on the structure and relationships of variables as at the balance sheet date which may differ due to fluctuations throughout future years with all other variables assumed to remain constant. Actual changes in one variable may contribute to changes in another variable, which may amplify or offset the individual effect of each assumption.

(ii) As of December 31, 2013, included in Other Intangibles, the Company had $11.9 million (December 31, 2012 - $13.4 million) of identifiable intangibles, representing the intellectual property and other intangibles recognized in the acquisition of Constructora Gardilcic Ltda. and Constructora TCG Ltda and $53.6 million (December 31, 2012 - $30.1 million) of capitalized system development costs.

15.     TRADE AND OTHER PAYABLES

As at December 31,	2013		2012
Trade payables (i)	$	310,874	$	305,271
Other payables	146,019		217,661
	$	456,893	$	522,932

(i) No interest is charged on the trade payables for the first 60 days from the date of invoice. The Company has financial risk management policies in place to ensure that all payables are paid within the credit terms.

16.    OTHER FINANCIAL LIABILITIES 

As at December 31,	2013		2012
Loan from Alumbrera (i)	$	44,570	$	—
Derivative related liabilities (Note 28(a))	64,060		27,284
Royalty payable (ii)	14,095		15,134
Severance accrual	24,606		25,401
Deferred Share Units liability (Note 22(b))	23,665		35,219
Current portion of long-term debt	15,000		—
Other	2,769		19,885
	$	188,765	$	122,923
Current	94,926		13,790
Non-current	93,839		109,133
	$	188,765	$	122,923

___________

(i) On January 23, 2013, the Company received an unsecured loan of $43.8 million from Minera Alumbrera Ltd. that bears interest at a rate of 2% and matures in two years. No repayments were made during 2013.

(ii) The Company has an agreement with Miramar Mining Corporation (“Miramar” acquired by Newmont Mining Corporation) for a Proceeds Interest of Cdn$15.4 million. The agreement entitles Miramar to receive payment of this interest over time calculated as the economic equivalent of a 2.5% net smelter return royalty on all production from the Company’s mining properties held at the time of Northern Orion entering into the agreement, or 50% of the net proceeds of disposition of any interest in the Agua Rica property until the Proceeds Interest of Cdn$15.4 million is paid.

17.    OTHER PROVISIONS AND LIABILITIES 

As at December 31,	2013		2012
Withholding taxes (i)	$	81,064	$	81,170
Provision for silicosis (ii)	15,791		11,502
Other liabilities	67,815		41,920
	$	164,670	$	134,592
Current	32,093		28,807
Non-current	132,577		105,785
	$	164,670	$	134,592

(i) The Company is subject to additional taxes in Chile on the repatriation of profits to its foreign shareholders.  Total taxes in the amount of $81.0 million (December 31, 2012 - $81.2 million) have been accrued on the assumption that the profits will be repatriated.

(ii) Provision for silicosis consists of amounts accrued to settle claims by former employees of Jacobina Mineração e Comércio Ltda (“JMC”), relating to silicosis. This balance represents management’s best estimate for all known and anticipated future obligations related to health claims against JMC prior to acquisition by the Company in April 2006. The amount and timing of any expected payments are uncertain as their determination is outside the control of the Company’s management. The Company estimates this contingency to be about $15.8 million as at December 31, 2013 (December 31, 2012 - $11.5 million). The increase of $4.3 million in the year relates to an increase in the expected amount of future payments as well as the impact of the foreign exchange rate of this Brazilian-Real denominated liability.

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18.    LONG-TERM DEBT

As at December 31,	2013		2012
$300 million senior debt notes (a)	$	298,088	$	—
$500 million senior debt notes (b)	496,979		496,706
$270 million senior debt notes (c)	254,440		269,206
$750 million revolving facility (d)	140,255		—
Long-term portion (i)	$	1,189,762	$	765,912
Current portion of long-term debt (Note 16)	$	15,000	$	—
Total debt	$	1,204,762	$	765,912

(i)Balances are net of transaction costs of $10.2 million net of amortization (December 31, 2012 - $4.1 million).

(a) On June 10, 2013, the Company issued senior debt notes for a total of $300.0 million. These notes are unsecured and comprised of two series of notes as follows:

• Series A - $35.0 million at a rate of 3.64% with maturity of June 10, 2018.

• Series B - $265.0 million at a rate of 4.78% with maturity of June 10, 2023.

(b) On March 23, 2012, the Company issued senior debt notes, through a private placement, for a total of $500.0 million in four series of unsecured notes as follows:

• Series A - $75.0 million at a rate of 3.89% with a maturity of March 23, 2018.

• Series B - $85.0 million at a rate of 4.36% with a maturity of March 23, 2020.

• Series C - $200.0 million at a rate of 4.76% with a maturity of March 23, 2022.

• Series D - $140.0 million at a rate of 4.91% with a maturity of March 23, 2024.

(c) On December 18, 2009, the Company issued senior debt notes for a total of $270.0 million are unsecured and comprised of three series of notes as follows:

• Series A - $15.0 million at a rate of 5.53% with a maturity of December 21, 2014.

• Series B - $73.5 million at a rate of 6.45% with a maturity of December 21, 2016.

• Series C - $181.5 million at a rate of 6.97% with a maturity of December 21, 2019.

(d) On February 28, 2013, the Company refinanced its revolving facility of $750.0 million.  The following summarizes the terms in respect to this facility as at December 31, 2013:

• The credit facility is unsecured and has a maturity date of February 28, 2018.

• Amounts drawn bear interest at a rate of LIBOR plus 1.5% to 2.75% per annum, depending upon the Company’s leverage ratio defined as the net total debt to rolling twelve months earnings before interest, taxes, depreciation and amortization.

• Undrawn amounts are subject to a commitment fee of 0.30% to 0.55% per annum depending upon the Company’s leverage ratio.

• During 2013, the Company drew down $145.0 million from the revolving facility.

The following is a schedule of long-term debt principal repayments: 

	Long-term debt
2014	$	15,000
2015	—
2016	—
2017	73,500
2018	255,000
2019 and thereafter	871,500
	1,215,000

19.     DECOMMISSIONING, RESTORATION AND SIMILAR LIABILITIES

29

As at December 31,	2013			2012
Balance, beginning of year	$	218,287		$	180,805
Unwinding of discount in the current year for operating mines	12,971			6,814
Unwinding of discount in the current year for non-operating mines	1,428			1,788
Adjustments to decommissioning, restoration and similar liabilities during the year	(29,270		)	37,764
Foreign exchange impact	(22,001		)	(5,645		)
Expenditures during the current year	(4,289		)	(3,239		)
Balance, end of year	$	177,126		$	218,287
Current	2,603			2,592
Non-current	174,523			215,695
	$	177,126		$	218,287

The Decommissioning, Restoration and Similar Liabilities are calculated as the net present value of estimated undiscounted future cash flows, which total $240.8 million (December 31, 2012 - $280.0 million) using discount rates specific to the liabilities of 3.6% to 24.6 % (December 31, 2012 - 2.4% to 16.1%). The settlement of the obligations is estimated to occur through to 2034. The Decommissioning, Restoration and Similar Liabilities of the mines and projects are incurred in Brazilian Reais, Chilean Pesos, Argentine Pesos, Mexican Pesos and United States Dollars. The liabilities, other than those denominated in United States Dollar, are thus subject to translation gains and losses from one reporting period to the next in accordance with the Company's accounting policy for foreign currency translation of monetary items. The translation gains/losses, as well as changes in the estimates related to these liabilities are reflected in Property, Plant and Equipment.

20.    SHARE CAPITAL

(a) Common Shares Issued and Outstanding

The Company is authorized to issue an unlimited number of common shares at no par value and a maximum of eight million first preference shares. There were no first preference shares issued or outstanding as at December 31, 2013 (2012: none).

As at December 31,	2013			2012
	Number of			Number of
Issued and fully paid - 753,303,613 common shares	common shares			common shares
(December 31, 2012 - 752,222,459 shares):	(000’s)	Amount		(000’s)	Amount
Balance, beginning of year	752,222	$	6,304,801	745,774	$	6,209,136
Exercise of options and share appreciation rights (i)	9	140		924	11,346
Issued on vesting of restricted share units (Note 22(c))	1,072	15,197		861	9,923
Issued on acquisition of mineral interests (Note 6)	—	—		4,663	74,396
Balance, end of year	753,303	$	6,320,138	752,222	$	6,304,801

(i) During the year ended December 31, 2013, the Company issued 9 thousand shares (December 31, 2012 - 0.9 million shares) to optionees on the exercise of their share options for cash proceeds of $nil (December 31, 2012 - $0.6 million). Previously recognized share-based payment in the amount of $0.1 million (December 31, 2012 — $10.7 million) on the options exercised was transferred to share capital with a corresponding decrease to equity reserve.

(b) Weighted Average Number of Shares Outstanding for Earnings Per Share Calculation

For the years ended December 31,	2013	2012
Weighted average number of common shares	752,697	748,095
Weighted average number of dilutive Restricted Share Units (RSU) (i)	—	957
Weighted average number of dilutive stock options (i)	—	539
Dilutive weighted average number of common shares	752,697	749,591

(i) For the year ended December 31, 2013, the RSU and stock options outstanding have not been included in the weighted average number of shares outstanding as they are anti-dilutive.

30

Total options excluded from the computation of diluted earnings per share because the exercise prices exceeded the average market value of the common shares for the year ended December 31, 2013 were 0.9 million (December 31, 2012 — 0.9 million).

(c) Dividends Paid and Declared

For the years ended December 31,	2013		2012
Dividends paid	$	196,199	$	168,244
Dividend declared in respect of the year	$	196,262	$	179,915
Dividend paid (per share)	$	0.260	$	0.225
Dividend declared in respect of the year (per share)	$	0.260	$	0.240

21.    OTHER COMPREHENSIVE INCOME AND RESERVES

(a) Other Comprehensive Income

For the years ended December 31,	2013			2012
Net change in unrealized losses on available-for-sale securities:
Change in fair value	$	(5,691	)	$	(11,916	)
Tax impact	—			—
Reclassification of losses recorded in earnings	6,056			27,652
	365			15,736
Net change in fair value of hedging instruments
Change in fair value	(44,426		)	(13,411		)
Tax impact	(7,023		)	4,852
	(51,449		)	(8,559		)
Other comprehensive (loss) income attributable to equity shareholders	$	(51,084	)	$	7,177

(b) Reserves

	2013			2012
Equity reserve
Balance, beginning of year	$	22,131		$	16,767
Exercise of stock options and share appreciation	(35		)	(2,387		)
Issue of restricted share units	17,819			14,090
Transfer of restricted share units to share capital on vesting	(15,197		)	(9,923		)
Issued on acquisition of mineral interests	—			3,584
Balance, end of year	$	24,718		$	22,131
Hedging reserve
Balance, beginning of year	$	(14,650	)	$	(6,091	)
Net change in fair value of hedging instruments (i)	(51,449		)	(8,559		)
Balance, end of year	$	(66,099	)	$	(14,650	)
Available-for-sale reserve
Balance, beginning of year	$	(220	)	$	(15,956	)
Change in fair value of available-for-sale securities	(5,691		)	(11,916		)
Reclassification of losses on available-for-sale securities to earnings	6,056			27,652
Balance, end of year	$	145		$	(220	)
Total reserve balance, end of year	$	(41,236	)	$	7,261

___________

(i)Net of tax recovery of $nil (2012 — tax recovery of $4.9 million).

The hedging reserve represents hedging gains and losses recognized on the effective portion of cash flow hedges. The cumulative deferred gain or loss on the hedge is recognized in the consolidated statement of operations when the hedged transaction impacts the consolidated statement of operations, or is recognized as an adjustment to the cost of non-financial hedged items.

31

The available-for-sale reserve represents the revaluation of available-for-sale financial assets. Where a revalued financial asset is sold or impaired, the relevant portion of the reserve is recognized in the consolidated statement of operations.

22.    SHARE-BASED PAYMENTS

The total compensation costs relating to share-based payments for the year ended December 31, 2013 were $7.7 million (2012 — $26.3 million) and is comprised of the following: 

For the years ended December 31,	2013			2012
Equity-settled plans	$	17,819		$	14,090
Cash-settled plans	(10,137		)	12,203
Total expense recognized as compensation expense	$	7,682		$	26,293

As at December 31,	2013		2012
Total carrying amount of liabilities for cash-settled arrangements (Note 16)	$	23,665	35,219

(a) Stock Options

The Company's Share Incentive Plan is designed to advance the interests of the Company by encouraging employees, officers, directors and consultants to have equity participation in the Company through the acquisition of common shares. The Share Incentive Plan is comprised of a share option component and a share bonus component. The aggregate maximum number of common shares that may be reserved for issuance under the Share Incentive Plan is 24.9 million (2012 - 24.9 million). Pursuant to the share bonus component of the Share Incentive Plan, common shares may be issued as a discretionary bonus to employees, officers, directors and consultants of the Company. Options granted under the share option component of the Share Incentive Plan vest immediately and have an exercise price of no less than the closing price of the common shares on the Toronto Stock Exchange on the trading day immediately preceding the date on which the options are granted and are exercisable for a period not to exceed ten years.

The Share Incentive Plan also provides for the granting of share appreciation rights to optionees. An optionee is entitled to elect to terminate his or her option, in whole or part, and, in lieu of receiving the common shares to which their terminated option relates, to receive that number of common shares, disregarding fractions which, when multiplied by the fair value of the common shares to which their terminated option relates, has a total value equal to the product of the number of such common shares times the difference between the fair value and the option price per share of such common shares, less any amount required to be withheld on account of income taxes.

A summary of the stock options granted to acquire common shares under the Company's Share Incentive Plan as at the period end and the changes thereof during the period are as follows:

	2013				2012
	Number of options (000’s)		Weighted average exercise price (Cdn$)		Number of options (000’s)		Weighted average exercise price (Cdn$)
Outstanding, beginning of year	1,539		$	18.53	1,532		$	9.90
Exercised	(9	)	11.68		(936	)	10.48
Expired	(135	)	16.98		(213	)	20.40
Granted	1,333		9.54		1,156		23.79
Outstanding, end of year	2,728		$	13.64	1,539		$	18.53
Exercisable, end of year	1,839		$	15.47	1,539		$	18.53

The fair value of options granted during the year ended December 31, 2013, had a fair value of $2.37 at the grant date which has been estimated using the Black-Scholes option pricing model using the following assumptions:

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	2013
Dividend yield	0.03
Expected volatility (i)	45.48	%
Risk-free interest rate	0.98% to 1.16%
Expected life	1 to 3 years
Forfeitures	10%

(i) The expected volatility is based on the historical volatility of the Company's shares.

The weighted average share price at date of exercise for the year ended December 31, 2013 was $9.84 (December 30, 2012 - $18.68).

Stock options outstanding and exercisable as at December 31, 2013 are as follows:

	Outstanding		Exercisable
Exercise price	Quantity	Weighted average remaining contractual life	Quantity	Weighted average remaining contractual life
(Cdn$)	(000’s)	(Years)	(000’s)	(Years)
$0.01-$7.99	25	0.90	25	0.90
$9.00-$12.99	1,910	4.97	1,910	4.97
$17.00-$19.99	271	0.64	271	0.64
$23.00-$26.99	521	1.28	521	1.28
Total	2,727	3.80	2,727	2.27

(b) Deferred Share Units (“DSU”)

DSU are granted to the eligible participants of the Deferred Share Unit Plan, who are non-executive directors of the Company or designated affiliates (an “eligible director”), and the Chairman or Chief Executive Officer (an “eligible officer”) of the Company. The number of DSU granted to each eligible director on each DSU issue-date has the value equal to at least one half of the director's remuneration payable in the current quarter. The Board may also grant, in its sole and absolute discretion, to an eligible officer the rights to acquire any number of DSU as a discretionary payment in consideration of past services to the Company. Each DSU entitles the holder, who ceases to be an eligible director or eligible officer, to a payment in cash without any further action on the part of the holder of the DSU on the relevant separation date. The value of a DSU is equal to the market value in Canadian dollars of a common share of the Company at the separation date.

Number of DSU (000's)	2013		2012
Outstanding and exercisable, beginning of year	2,029		1,494
Granted	631		535
Canceled	(26	)	—
Outstanding and exercisable, end of year	2,634		2,029

The value of the DSU as at December 31, 2013 was $23.7 million (2012 — $35.2 million). In the year ended December 31, 2013, the Company recorded mark-to-market gain of $17.1 million (2012 — loss of $3.4 million) which is included in other operating expenses. Expenses of $10.1 million (2012 - $8.8 million) were recognized for DSU granted during the year.

(c) Restricted Share Units (“RSU”)

RSU are granted to eligible employees and eligible contractors in order to secure for the Company the benefits inherent in the ownership of Company shares' by those eligible participants. From time to time, the Board, or as it delegates, determines the participants to whom RSU shall be granted by taking into consideration the present and potential contributions of the services rendered by the particular participant to the success of the Company. A RSU award granted to a participant will entitle the participant to receive a Canadian dollar payment in fully paid shares or, at the option of the Company, in cash on the date when the RSU award is fully vested upon the expiry of the restricted period in respect of the corresponding RSU award. Fair value of RSU is based on the market price on the day that the RSU is granted.

33

Number of RSU (000's)	2013		2012
Outstanding, beginning of year	2,283		1,965
Granted	992		1,263
Vested and converted to common shares	(1,072	)	(861	)
Forfeited	(11	)	(84	)
Outstanding, end of year	2,192		2,283

In the year ended December 31, 2013, the Company credited $15.2 million (2012 — $9.9 million) to share capital in respect of RSU that vested during the year and granted 991,982 RSU (2012 — 1,263,492 RSU) with a weighted average grant date fair value of Cdn$11.06 (2012 — Cdn$16.42). The expense for the year ended December 31, 2013 of $16.7 million (2012 — $14.1 million) is included in general and administrative expenses.  The fair value of RSU as at December 31, 2013 was $10.9 million (2012 — $20.7 million).

23.    NON-CONTROLLING INTEREST

The Company holds a 56.7% interest in Agua De La Falda (“ADLF”) project along with Corporación Nacional del Cobre de Chile (“Codelco”). The ADLF project is an exploration project which includes the Jeronimo Deposit and is located in northern Chile.

As at December 31,	2013		2012
Agua De La Falda S.A.	$	18,696	$	46,800

In early October of 2013, after the spot price for gold returned to the $1,350 per ounce level, it started a continuous decline during the fourth quarter and dipped below $1,200 per ounce by late December. During the fourth quarter, the Company performed its impairment test updating its life of mine after-tax cash flow projects for updated reasonable estimates of future metal prices, production based on current estimates of recoverable mineral reserves and mineral resources, recent operating and exploration results, exploration potential, future operating costs, capital expenditures, inflation and long-term foreign exchange rates.  The fair values in the impairment assessment in the fourth quarter were calculated assuming long-term prices of $1,300 per ounce of gold (2012 - $1,375 per ounce of gold). The Company examined future cash flows, the intrinsic value of value beyond proven and probable mineral reserves, value of land holdings, as well as other factors, which are determinants of commercial viability of each and every mining property in its portfolio, and concluded that an impairment charge of $110.0 million ($88.0 million, net of taxes) against the carrying amount of Jeronimo was appropriate. The non-controlling interest's share of impairment charge was $35.1 million ($28.1 million, net of taxes).

24.     COST OF SALES EXCLUDING DEPLETION, DEPRECIATION AND AMORTIZATION

For the years ended December 31,	2013			2012
Contractors and services	$	287,855		$	266,575
Employee compensation and benefits expenses (Note 25)	237,512			211,230
Repairs and maintenance	95,934			95,878
Royalties	5,587			8,006
Power	65,998			71,042
Consumables	257,287			220,417
Other	(453		)	4,184
Change in inventories, ore stockpiles, material and supplies	(52,351		)	(26,432		)
Impact of foreign currency derivatives contracts (Note 28(a))	3,420			(19,146		)
Cost of sales excluding depletion, depreciation and amortization	$	900,789		$	831,754

25.     EMPLOYEE COMPENSATION AND BENEFIT EXPENSES

34

For the years ended December 31,	2013			2012
Wages and salaries	$	253,671		$	239,869
Social security, pension and government-mandated programs (a)	129,802			141,614
Other benefits (b)	17,734			36,762
Total Employee compensation and benefits expenses	401,207			418,245
Less: Expensed within General and Administrative expenses	(87,433		)	(115,550		)
Less: Expensed within Exploration and evaluation expenses	(26,157		)	(32,496		)
Less: Capitalized to Property, Plant and Equipment	(50,104		)	(58,969		)
Employee compensation and benefit expenses included in Cost of sales (Note 24)	$	237,513		$	211,230

(a) Included in this item are defined contribution pension plans for all full-time qualifying employees of the Company. Contributions by the Company are based on a contribution percentage using the annual salary as the base and are made on a quarterly basis or as otherwise determined by the Company. The assets of the plans are held separately from those of the Company and are managed by independent plan administrators. The total expense recognized in the consolidated statement of operations of $10.2 million (2012 — $10.5 million) represents contributions payable to these plans by the Company at rates specified in the rules of the plans. As at December 31, 2013, contributions of $8.2 million due in respect of the 2013 reporting period (2012 — $4.4 million) had not been paid over to the plans but were paid subsequent to the end of the year.

(b) Included in Other benefits are share-based payment transactions as discussed in Note 22.

26.    FINANCE INCOME AND EXPENSE

For the years ended December 31,	2013			2012
Interest income	$	1,648		$	3,708
Unrealized gain on derivatives	—			371
Realized gain on derivatives	—			—
Net foreign exchange gain	23,438			—
Finance income	$	25,086		$	4,079
Unwinding of discounts on provisions	$	(12,971	)	$	(8,602	)
Net foreign exchange loss	—			(25,870		)
Realized loss on interest rate swaps	—			(1,350		)
Realized loss on derivatives	—			(20		)
Interest expense on long-term debt	(1,999		)	(7,921		)
Bank, financing fees and other	(16,413		)	(13,855		)
Finance expense	$	(31,383	)	$	(57,618	)
Net finance expense	$	(6,297	)	$	(53,539	)

The above finance income and finance expense include the following interest income and expense in respect of assets and liabilities not recorded at fair value:

For the years ended December 31,	2013			2012
Total interest income on financial assets	$	1,648		$	3,708
Total interest expense on financial liabilities	$	(31,383	)	$	(56,248	)

27.    CAPITAL MANAGEMENT

The Company’s objectives in managing capital are to ensure sufficient liquidity to pursue its strategy of organic growth combined with strategic acquisitions, to ensure the externally imposed capital requirements relating to its long-term debt are being met, and to provide returns to its shareholders. The Company defines capital that it manages as net worth, which is comprised of total shareholders’ equity and debt obligations (net of cash and cash equivalents).

The Company manages its capital structure and makes adjustments to it in light of general economic conditions, the risk characteristics of the underlying assets and the Company’s working capital requirements. In order to maintain or adjust its capital structure, the Company, upon approval from its Board of Directors, may issue shares, pay dividends, or undertake other activities as deemed appropriate under the specific circumstances. The Board of Directors reviews and approves any material transactions out of the ordinary course of business, including proposals on acquisitions or other major investments or divestitures, as well as

35

capital and operating budgets. The Company has not made any changes to its policies and processes for managing capital during the year.

The externally imposed financial covenants on the revolving facility (Note 18) continue to be as follows:

(a) Tangible net worth of at least $2.3 billion.

(b) Maximum net total debt (debt less cash) to tangible net worth of 0.75.

(c) Leverage ratio (net total debt/EBITDA) to be less than or equal to 3.5:1.

Not meeting these capital requirements could result in a condition of default by the Company. As at December 31, 2013, the Company has met all of the externally imposed financial covenants.

28.    FINANCIAL INSTRUMENTS

(a) Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, trade and other receivables, investments, trade and other payables, long-term debt and derivative assets (liabilities). The carrying values of cash and cash equivalents, trade and other receivables, advances and deposits, trade and other payables approximate their fair values due to the relatively short-term nature of these instruments. Adjustments recognized in the balance sheet relating to concentrate sales are fair valued based on published and observable prices. Fair values of derivatives were based on published and observable market prices for similar instruments and on market closing prices at period end.

There were no material differences between the carrying value and fair value of non-current assets and liabilities. The long-term debt has a carrying value of $1.2 billion (2012 — $765.9 million), which is comprised of a revolving facility and senior debt notes with fair values of $140.3 million and $1,049.5 million, respectively (2012 — $nil and $783.0 million). The fair value was calculated by discounting the future cash flows by a discount factor based on an interest rate of 5% which reflects the Company's own credit risk. Fair values of available-for-sale securities were calculated based on current and available market information.

The Company assesses its financial instruments and non-financial contracts on a regular basis to determine the existence of any embedded derivatives which would be required to be accounted for separately at fair value and to ensure that any embedded derivatives are accounted for in accordance with the Company’s policy. As at December 31, 2013, there were no embedded derivatives requiring separate accounting other than concentrate sales.

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In assessing the fair value of a particular contract, the market participant would consider the credit risk of the counterparty to the contract. Consequently, when it is appropriate to do so, the Company adjusts its valuation models to incorporate a measure of credit risk.

36

Fair Value Measurements at December 31, 2013		Level 1  Input		Level 2  Input		Level 3  Input		Aggregate Fair Value
Assets:
	Available-for-sale securities (Note 13(a))	$	9,122	$	—	$	—	$	9,122
	Derivative related assets (Note 9)	—		51		—		51
		$	9,122	51		$	—	$	9,173
Liabilities:
	Derivative related liabilities (Note 16)	$	—	$	64,060	$	—	$	64,060
		$	—	$	64,060	$	—	$	64,060

Fair Value Measurements at December 31, 2012		Level 1  Input		Level 2  Input		Level 3  Input		Aggregate Fair Value
Assets:
	Available-for-sale securities (Note 13(a))	$	20,480	$	—	$	—	$	20,480
	Derivative related assets (Note 9)	—		4,581		—		4,581
		$	20,480	4,581		$	—	$	25,061
Liabilities:
	Derivative related liabilities (Note 16)	$	—	$	27,284	$	—	$	27,284
		$	—	$	27,284	$	—	$	27,284

Valuation Techniques

Available-for-Sale Securities

The fair value of publicly traded available-for-sale securities is determined based on a market approach reflecting the bid price of each particular security at the balance sheet date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the particular security, and therefore available-for-sale securities are classified within Level 1 of the fair value hierarchy.

Derivative Instruments

The fair value of derivative instruments is determined using either present value techniques or option pricing models that utilize a variety of inputs that are a combination of quoted prices and market-corroborated inputs. The Company continues to monitor the potential impact of the recent instability of the financial markets, and will adjust its derivative contracts for credit risk based upon the credit default swap spread for each of the counterparties as warranted.

Gold Sales Contracts and Metal Concentrate Sales Contracts

Gold sales are made at market observable spot prices. Metal concentrate sales are based on market prices of measurement dates, which are two or three months after shipment depending on the terms of the off-take agreements. The sales are measured initially and then adjusted monthly on the basis of prices quoted on the London Metal Exchange until measurement date. Therefore, metal concentrate sales would be classified within Level 2 of the fair value hierarchy. The Company continues to monitor and, as warranted, adjust for credit risk based upon the credit default swap spread for each of the counterparties.

Fair value of derivatives

The following table summarizes the fair value of derivative related assets:

As at December 31,	2013			2012
Currency contracts
Forward contracts (Note 9)	$	51		$	4,581
Less: Current portion	(51		)	(4,516		)
Non-current portion	$	—		$	65

The following table summarizes the fair value of components of derivative related liabilities:

37

As at December 31,	2013			2012
Currency contracts
Forward contracts	$	64,060		$	27,284
Total derivative related liabilities (Note 16)	64,060			27,284
Less: Current portion	(32,979		)	(5,313		)
Non-current portion	$	31,081		$	21,971

Additionally, included in cost of sales excluding depletion, depreciation and amortization, are realized losses in the amount of $3.4 million (2012 — $19.2 million realized gains) with respect to currency derivative contracts.

During the year, the Company entered into forward contracts to hedge against the risk of declining copper prices during the quotational period for a portion of its forecast copper concentrate sales. Included in sales are realized gains in the amount of $3.1 million (2012 — $0.03 million realized gains) in respect of commodity derivative contracts.

The hedging reserve net balance as at December 31, 2013 is negative $66.1 million (2012 — negative $14.7 million), of that the Company estimates that approximately $33.0 million of net gains will be reclassified to earnings over the next twelve months and $31.1 million after twelve months. The total cash flow currency hedge losses in OCI (Note 21) for the year ended December 31, 2013is $51.4 million (2012 — loss $14.9 million).

The net financial position of the forward exchange contracts by currency are as follows:

As at December 31,	2013			2012
Forward exchange contracts
US$ to Brazilian Reais
Not later than one year	$	(32,928	)	$	(975	)
Later than one year but not more than five years	$	(31,020	)	$	(21,518	)
US$ to Mexican Peso
Not later than one year	$	—		$	178
Later than one year but not more than five years	$	(61	)	$	(388	)

(b) Currency Risk

The Company’s sales are predominantly denominated in United States Dollars. The Company is primarily exposed to currency fluctuations relative to the United States Dollar as a portion of the Company’s operating costs and capital expenditures are denominated in foreign currencies; predominately the Brazilian Real, the Argentine Peso, the Chilean Peso and the Mexican Peso. Monetary assets denominated in foreign currencies are also exposed to foreign currency fluctuations. These potential currency fluctuations could have a significant impact on production costs and thereby the profitability of the Company.

The following table summarizes the details of the currency hedging program as at December 31, 2013:

(Quantities in thousands)

	Brazilian Real				Mexican Peso
Year of  Settlement	Brazilian Real Notional Amount	Weighted Average Contract Rate	Market rate as at December 31, 2013	Year of Settlement	Mexican Peso Notional Amount	Contract Fixed Rate	Market rate as at December 31, 2013
2014	483,360	2.0677	2.3621	2014	156,000	13.3200	13.037
2015	519,048	2.2828	2.3621	2015	65,000	13.3200	13.037
	1,002,408	2.1738	2.3621		221,000	13.3200	13.037

The following table outlines the Company's exposure to currency risk and the pre-tax effects on profit or loss and equity at the end of the reporting period of a 10% change in the foreign currency for the foreign currency denominated monetary items. The sensitivity analysis includes cash and cash equivalents and trade payables.  A positive number below indicates an increase in profit or equity where the US dollar strengthens 10% against the relevant foreign currency.  For a 10% weakening of the US dollar against the relevant foreign currency, there would be a comparable negative impact on the profit or equity.

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	2013				2012
(On 10% change in United States Dollars exchange rate)	Effect on net earnings before tax		Effect on other comprehensive income, before tax		Effect on net earnings before tax		Effect on other comprehensive income, before tax
Brazilian Reais	$	591	$	36,845	$	2,442	$	60,383
Argentine Peso	$	3,469	$	—	$	2,748	$	—
Canadian Dollar	$	48	$	—	$	963	$	—
Mexican Peso	$	1,254	$	2,174	$	1,268	$	2,674
Chilean Peso	$	7,634	$	—	$	8,727	$	—

The sensitivity analyses included in the tables above should be used with caution as the results are theoretical, based on management's best assumptions using material and practicable data which may generate results that are not necessarily indicative of future performance. In addition, in deriving this analysis, the Company has made assumptions based on the structure and relationships of variables as at the balance sheet date which may differ due to fluctuations throughout the year with all other variables assumed to remain constant. Actual changes in one variable may contribute to changes in another variable, which may amplify or offset the effect on earnings.

(c) Commodity Price Risk

Gold, copper and silver prices are affected by various forces including global supply and demand, interest rates, exchange rates, inflation or deflation and the political and economic conditions of major gold, copper and silver-producing countries. The profitability of the Company is directly related to the market price of gold, copper and silver. A decline in the market prices for these precious metals could negatively impact the Company's future operations. The Company has not hedged any of its gold sales.

As the December 31, 2013, the Company's exposure to commodity price is limited to the trade receivables associated with provisional pricing of metal concentrate sales particularly copper.  A 10% change in the price of copper has a $5.2 million before tax effect on profit or loss.

(d) Interest Rate Risk

As at December 31, 2013, the majority of the Company’s long-term debt was at fixed rates, the Company does not believe that it is exposed to significant interest rate risk.

(e) Credit Risk

Credit risk is the risk that a third party might fail to discharge its obligations under the terms of a financial instrument. The Company limits credit risk by entering into business arrangements with high credit-quality counterparties, limiting the amount of exposure to each counterparty and monitoring the financial condition of counterparties whilst also establishing policies to ensure liquidity of available funds. In addition, credit risk is further mitigated in specific cases by maintaining the ability to novate contracts from lower quality credit counterparties to those with higher credit ratings.

For cash and cash equivalents, trade and other receivables, derivative related assets, restricted cash, deferred consideration receivable and long-term tax credits, credit risk is represented by the carrying amount on the balance sheet. Cash and cash equivalents are deposited in highly rated corporations and the credit risk associated with these deposits is low. The Company sells its products to large international financial institutions and other organizations with high credit ratings. Historical levels of receivable defaults and overdue balances over normal credit terms are both negligible, thus the credit risk associated with trade receivables is also considered to be negligible. Long-term tax credits have negligible credit risk as they are receivable from the governmental authorities and are carried at their estimated fair value. For derivatives, the Company assumes no credit risk when the fair value of the instruments is negative. When the fair value of the instruments is positive, this is a reasonable measure of credit risk. The Company does not have any assets pledged as collateral.

The Company's maximum credit exposure to credit risk is as follows:

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As at December 31,	2013		2012
Cash and cash equivalents	$	220,018	$	349,594
Trade and other receivables	80,101		175,297
Derivative related assets	51		4,581
Deferred consideration receivable	—		10,000
Long-term tax credits	114,563		209,195
	$	414,733	$	748,667

(f) Liquidity Risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.  Under the terms of our trading agreements, counterparties cannot require the Company to immediately settle outstanding derivatives except upon the occurrence of customary events of default. The Company mitigates liquidity risk by spreading the maturity dates of derivatives over time, managing its capital expenditures and operating cash flows and by maintaining adequate lines of credit.  In addition, the Company addresses the capital management process as described in Note 27. Contractual maturities relating to contractual commitments are included in Note 32 and relating to long-term debt is included in Note 18.

29.    INCOME TAXES

(a) Income Tax Expense

For the years ended December 31,	2013			2012
Current tax expense (recovery)
Current tax expense in respect of the current year	$	161,537		$	269,550
Adjustment for prior periods	(18,092		)	2,951
Impact of foreign exchange	(2,534		)	(7,098		)
Penalties and interest	(326		)	48
	$	140,585		$	265,451
Deferred tax expense (recovery)
Deferred tax expense recognized in the current year	$	(135,056	)	$	80,806
Adjustment for prior periods	2,416			(15,297		)
Impact of foreign exchange	71,165			42,104
	$	(61,475	)	$	107,613
Total income tax expense	$	79,110		$	373,064

The following table reconciles income taxes calculated at statutory rates with the income tax expense in the consolidated statements of operations:

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For the years ended December 31,	2013			2012
Earnings before income taxes	$	(395,241	)	$	815,128
Canadian statutory tax rate (%)	26.5		%	26.5		%
Expected income tax (recovery) expense	(104,739		)	216,009
Impact of lower (higher) foreign tax rates (i)	(12,000		)	(7,770		)
Impact of change in enacted tax rates (ii)	28,323			79,057
Interest and penalties	(309		)	48
Permanent differences	19,983			6,161
Unused tax losses and tax offsets not recognized in deferred tax assets	89,030			37,844
Unrealized foreign exchange on intercompany debt	(483		)	(2,983		)
Tax effects of translation in foreign operations	69,114			21,013
True-up of tax provisions in respect of prior years	(15,676		)	(11,993		)
Withholding taxes	9,559			13,330
Foreign exchange	(14,012		)	5,987
Mining taxes on profit	11,709			25,256
Other	(1,389		)	(8,895		)
Income tax expense	$	79,110		$	373,064
Income tax expense is represented by:
Current income tax expense	$	140,585		$	265,451
Deferred income tax expense	(61,475		)	107,613
Net income tax expense	$	79,110		$	373,064

(i) The Company operates in multiple foreign tax jurisdictions that have tax rates that differ from the Canadian statutory rate.

(ii) In December 2013, Mexico enacted the 2014 tax reform package, increasing the tax rate from 2014 onwards, which impacted the deferred income tax recognition.

(b) Deferred Income Taxes

The following is the analysis of the deferred tax assets (liabilities) presented in the consolidated balance sheets:

As at December 31,	2013			2012
The net deferred income tax assets (liabilities) are classified as follows:
Deferred income tax assets	$	121,599		$	124,843
Deferred income tax liabilities	(2,024,541		)	(2,072,741		)
	$	(1,902,942	)	$	(1,947,898	)

For the year ended December 31, 2013	Opening balance			Recognized in profit or loss			Recognized in other comprehensive income			Recognized in equity			Closing balance
Deductible temporary differences	$	7,074		$	(14,079	)	$	—		$	—		$	(7,005	)
Amounts related to tax losses	61,537			(7,281		)	—			(105		)	54,151
Financing costs	2,153			(3,187		)	—			105			(929		)
Decommissioning, restoration and similar liabilities	12,004			1,020			—			—			13,024
Derivative liability	(1,185		)	7,664			(7,022		)	—			(543		)
Property, plant and equipment	(2,029,560		)	201,275			—			—			(1,828,285		)
Unrealized foreign exchange losses	(11,799		)	(124,383		)	—			—			(136,182		)
Available-for-sale securities	11,575			—			—			—			11,575
Other	303			(9,051		)	—			—			(8,748		)
Net deferred income tax liabilities	$	(1,947,898	)	$	51,978		$	(7,022	)	$	—		$	(1,902,942	)

41

For the year ended December 31, 2012	Opening balance			Recognized in profit or loss			Recognized in other comprehensive income			Recognized in equity			Closing balance
Deductible temporary differences	$	3,869		$	3,205		$	—		$	—		$	7,074
Amounts related to tax losses	22,250			41,057			—			(1,770		)	61,537
Financing costs	383			—			—			1,770			2,153
Decommissioning, restoration and similar liabilities	5,790			6,214			—			—			12,004
Derivative liability	(2,979		)	(3,115		)	4,909			—			(1,185		)
Property, plant and equipment	(1,635,366		)	(394,194		)	—			—			(2,029,560		)
Unrealized foreign exchange losses	(258,301		)	246,502			—			—			(11,799		)
Available-for-sale securities	11,632			—			(57		)	—			11,575
Other	8,659			(8,356		)	—			—			303
Net deferred income tax liabilities	$	(1,844,063	)	$	(108,687	)	$	4,852		$	—		$	(1,947,898	)

A deferred tax asset in the amount of $52.9 million (2012 — $57.7 million) has been recorded based on future taxable profits related to tax planning strategies. Management understands that the tax planning strategies are prudent and feasible.

(c) Unrecognized Deductible Temporary Differences and Unused Tax Losses

Deferred tax assets have not been recognized in respect of the following items:

As at December 31, (in millions)	2013		2012
Deductible temporary differences (no expiry)	$	512	$	885
Tax losses	840		770
	$	1,352	$	1,655

Loss carry forwards at December 31, 2013 will expire as follows:

	Canada		U.S.		Brazil		Chile		Argentina		Other		Total
2014	$	—	$	240	$	—	$	—	$	392	$	—	$	632
2015	6,947		5,089		—		—		659		—		12,695
2016	6,628		1,634		—		—		700		—		8,962
2017	—		12,383		—		—		5,460		—		17,843
2018	—		—		—		—		7,807		190		7,997
2019 and onwards	352,810		122,157		—		—		—		105,017		579,984
Unlimited	242,394		—		224,545		57,364		—		—		524,303
	$	608,779	$	141,503	$	224,545	$	57,364	$	15,018	$	105,207	$	1,152,416

(d) Unrecognized Taxable Temporary Differences Associated with Investments and Interests in subsidiaries

As at December 31, 2013, an aggregate temporary difference of $1.6 billion (2012 — $1.6 billion) related to investments in subsidiaries was not recognized because the Company controls the reversal of the liability and it is expected that it will not reverse in the foreseeable future.

30.    SUPPLEMENTARY CASH FLOW INFORMATION

(a) Non-Cash Investing and Financing Transactions

42

For the years ended December 31,	2013		2012
Interest capitalized to assets under construction	$	48,531	$	30,328
Issue of common shares on vesting of RSU (Note 22)	$	15,197	$	9,923
Transfer of equity reserve on exercise of stock options and share purchase appreciation rights	$	35	$	2,387
Issue of common shares and deferred consideration on acquisition of mineral interests (Note 6)	$	—	$	93,888
Fair value of stock option assumed (Note 6)	$	—	$	3,584

(b) Net Change in Non-Cash Operating Working Capital

For the years ended December 31,	2013			2012
Net decrease (increase) in:
Trade and other receivables	$	114,018		$	44,449
Inventories	(44,539		)	(77,347		)
Other assets	(22,824		)	(6,226		)
Net (decrease) increase in:
Trade payable and other payables	(75,108		)	141,554
Other current liabilities	(25,660		)	16,532
Movement in above related to foreign exchange	(613		)	(5,851		)
Net change in non-cash working capital	$	(54,726	)	$	113,111

Change in non-cash working capital items are net of items related to Property, Plant and Equipment.

31.    OPERATING SEGMENTS

The Company’s primary format for reporting segment information is geographical segments, which are supplemented by information of individual mining operations. The Company performs its planning, decision making, cash flow management and other management activities on such segment structure and relies on a management team with its members positioned in the geographical regions where the Company’s key mining operations are located. In determining the Company’s segment structure, consideration is given to the similar operational, currency and political risks to which the mining operations within the same business and regulatory environment are exposed. Except for the Canada and Other segment, each mine within a segment derives its revenues mainly from the sales of precious metals through specific channels and processes as coordinated and managed by the corresponding regional management group.

Effective February 1, 2012, the Mercedes mine completed commissioning upon achieving sustainable levels of operations based on the Company’s qualitative and quantitative factors. At the completion of commissioning, all mining properties and assets under construction related to Mercedes were reclassified to mining property subject to depletion and land, building, plant and equipment, and its financial results were incorporated into the consolidated financial results. This event changed the composition of the Company’s reportable segments such that Mexico is now a reportable segment on its own. The Canada segment became “Canada and Other”.

Property, plant and equipment referred to below consist of land, buildings, equipment, mining properties subject to depletion and mining properties not subject to depletion which include assets under construction and exploration and evaluation costs.

As at December 31, 2013	Brazil		Chile		Argentina		Mexico		Canada and Other		Total
Property, plant and equipment	$	2,516,130	$	4,636,149	$	2,762,127	$	266,255	$	80,140	$	10,260,801
Goodwill and intangibles	$	5,382	$	15,576	$	1,497	$	—	$	43,093	$	65,548
Investment in associate	$	—	$	—	$	117,915	$	—	$	—	$	117,915
Non-current assets	$	2,595,600	$	4,702,089	$	2,936,992	$	266,255	$	191,318	$	10,692,254
Total assets	$	2,924,014	$	4,815,142	$	3,052,501	$	316,174	$	302,886	$	11,410,717
Total liabilities	$	599,023	$	1,300,652	$	885,850	$	67,658	$	1,399,429	$	4,252,612

43

As at December 31, 2012	Brazil		Chile		Argentina		Mexico		Canada and Other		Total
Property, plant and equipment	$	2,323,658	$	4,793,576	$	2,849,323	$	270,718	$	38,796	$	10,276,071
Goodwill and intangibles	$	60,568	$	14,413	$	—	$	—	$	23,533	$	98,514
Investment in associate	$	—	$	—	$	219,744	$	—	$	—	$	219,744
Non-current assets	$	2,485,746	$	4,824,565	$	3,131,177	$	270,718	$	163,804	$	10,876,010
Total assets	$	2,882,388	$	4,711,383	$	3,231,213	$	581,250	$	393,929	$	11,800,163
Total liabilities	$	612,628	$	1,330,384	$	922,770	$	36,333	$	1,036,170	$	3,938,285

SEGMENT OPERATING EARNINGS

For the year ended December 31, 2013	Brazil			Chile			Argentina			Mexico			Canada and Other			Total
Revenues (i)	$	598,109		$	—		$	—		$	—		$	1,244,573		$	1,842,682
Inter-segment revenue	104,534			796,113			145,681			198,245			(1,244,573		)	—
Total segment revenue	702,643			796,113			145,681			198,245			—			1,842,682
Cost of sales excluding depletion, depreciation and amortization	(415,320		)	(328,569		)	(81,904		)	(74,996		)	—			(900,789		)
Gross margin	287,323			467,544			63,777			123,249			—			941,893
Depletion, depreciation and amortization	(108,331		)	(203,094		)	(56,945		)	(32,745		)	—			(401,115		)
Mine operating earnings/(loss)	$	178,992		$	264,450		$	6,832		$	90,504		$	—		$	540,778
Equity loss	$	—		$	—		$	(3,905	)	$	—		$	—		$	(3,905	)
Earnings/(loss) before taxes (ii)	$	(36,164	)	$	32,148		$	(267,499	)	$	74,823		$	(198,549	)	$	(395,241	)
Income tax (expense)/recovery	(94,660		)	(29,656		)	83,012			(35,245		)	(2,561		)	(79,110		)
Net (loss)/earnings	$	(130,824	)	$	2,492		$	(184,487	)	$	39,578		$	(201,110	)	$	(474,351	)
Capital expenditures	$	536,696		$	217,572		$	201,009		$	51,258		$	40,991		$	1,047,526

(i) Revenues are derived from sales of gold of $1.3 billion (2012 - $1.6 billion) and to a lesser extent silver of $196.1 million (2012 - $273.5 million) and copper of $357.5 million (2012 - $473.3 million).

(ii) During the fourth quarter of 2013, the Company recognized impairment charges on mineral properties and goodwill (Notes 4, 11, 12 and 14) in Brazil totaling $230.0 million (including $55.0 goodwill), Chile $190.9 million, and Argentina $251.0 million. During the second quarter of 2013, a $10.3 million impairment charge was recognized in Mexico.

For the year ended December 31, 2012	Brazil			Chile			Argentina			Mexico			Canada and Other			Total
Revenues	$	787,041		$	—		$	—		$	—		$	1,549,721		$	2,336,762
Inter-segment revenue	192,830			924,295			233,576			199,020			(1,549,721		)	—
Total segment revenue	979,871			924,295			233,576			199,020			—			2,336,762
Cost of sales excluding depletion, depreciation and amortization	(410,534		)	(285,371		)	(74,588		)	(61,261		)	—			(831,754		)
Gross margin	569,337			638,924			158,988			137,759			—			1,505,008
Depletion, depreciation and amortization	(104,716		)	(204,448		)	(52,644		)	(21,930		)	—			(383,738		)
Mine operating earnings	$	464,621		$	434,476		$	106,344		$	115,829		$	—		$	1,121,270
Equity earnings	$	—		$	—		$	50,642		$	—		$	—		$	50,642
Earnings before taxes	$	384,470		$	385,904		$	139,429		$	66,703		$	(161,378	)	$	815,128
Income tax expense	(144,964		)	(168,311		)	(44,579		)	(25,018		)	9,808			(373,064		)
Net earnings/(loss)	$	239,506		$	217,593		$	94,850		$	41,685		$	(151,570	)	$	442,064
Capital expenditures	$	636,398		$	262,816		$	532,408		$	59,576		$	46,796		$	1,537,994

44

32.    CONTRACTUAL COMMITMENTS

Construction and Service Contracts

As at December 31,	2013		2012
Within 1 year	$	577,886	$	370,664
Between 1 to 3 years	390,258		323,468
Between 3 to 5 years	139,756		63,560
After 5 years	6,934		8,823
	$	1,114,834	$	766,515

Operating Leases

The aggregate amount of minimum lease payments under non-cancellable operating leases are as follows:

As at December 31,	2013		2012
Within 1 year	$	6,103	$	6,005
Between 1 to 3 years	6,997		7,358
Between 3 to 5 years	2,365		3,603
After 5 years	302		947
	$	15,767	$	17,913

33.    CONTINGENCIES

Due to the size, complexity and nature of the Company’s operations, various legal and tax matters arise in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated.  In the opinion of management, these matters will not have a material effect on the Consolidated Financial Statements of the Company.

In 2004, a former director of Northern Orion commenced proceedings in Argentina against Northern Orion claiming damages in the amount of $177.0 million for alleged breaches of agreements entered into with the plaintiff. The plaintiff alleged that the agreements entitled him to a pre-emption right to participate in acquisitions by Northern Orion in Argentina and claimed damages in connection with the acquisition by Northern Orion of its 12.5% equity interest in the Alumbrera project. On August 22, 2008, the National Commercial Court No. 13 of the City of Buenos Aires issued a first-instance judgment rejecting the claim. The plaintiff appealed this judgment to the National Commercial Appeals Court. On May 22, 2013, the appellate court overturned the first-instance decision. The appellate court determined that the plaintiff was entitled to make 50% of Northern Orion’s investment in the Alumbrera acquisition, although weighted the chance of the plaintiff's 50% participation at 15%. The matter was remanded to the first instance court to determine the value. On June 12, 2013, Northern Orion filed an extraordinary recourse with the appellate court in order to bring the matter before the Supreme Court for considering the National Commercial Appeals Court’s decision to be arbitrary. The extraordinary recourse was denied by the appellate court and this decision was notified to Northern Orion on December 20, 2013. Based on this decision, Northern Orion filed an appeal directly with the Supreme Court of Argentina on February 3, 2014. Pending the decision of the Supreme Court, Northern Orion will make submissions to the first instance court to address value. The outcome of this case is uncertain and cannot be reasonably estimated.

The Company has received assessments from the Brazilian federal tax authorities disallowing certain deductions relating to debentures for the periods 2007-2010. The Company believes these debentures were issued on commercial terms permitted under applicable laws and is challenging these assessments. As such, the Company does not believe it is probable that any amounts will be paid with respect to these assessments with the Brazilian authorities and the amount and timing of any assessments cannot be reasonably estimated.

34.     RELATED PARTIES

(a) Parent and Significant Subsidiaries

The consolidated financial statements include the financial statements of Yamana Gold Inc. (Parent) and the following significant subsidiaries:

45

		Equity interest
	Country of incorporation	2013	2012
Minera Meridian Ltda.	Chile	100%	100%
Minera Florida Ltda.	Chile	100%	100%
Minas Argentinas SA	Argentina	100%	100%
Minera Meridian Minerales SRLCV	Mexico	100%	100%
Jacobina Mineração e Comércio Ltda.	Brazil	100%	100%
Mineração Maracá Industria e Comércio S.A.	Brazil	100%	100%
Mineração Fazenda Brasileiro S.A.	Brazil	100%	100%

(b) Compensation of Key Management Personnel

The Company considers key management personnel to be those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly.

For the years ended December 31,	2013		2012
Salaries	$	18,257	$	22,110
Share-based payments (i)	19,772		19,168
Other benefits	3,668		4,123
	$	41,697	$	45,401

(i)Refer to Note 22 for further disclosures on share-based payments.

*************

46

EX-99.4

Exhibit 99.4

CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Peter Marrone, certify that:

1. I have reviewed this annual report on Form 40-F of Yamana Gold Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a)     designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

(a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

(b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date:      March 28, 2014

/s/ Peter Marrone

Peter Marrone

Chairman and Chief Executive Officer

EX-99.5

Exhibit 99.5

CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Charles Main, certify that:

1. I have reviewed this annual report on Form 40-F of Yamana Gold Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4. The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a)     designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)     designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

(a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

(b)     any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date:      March 28, 2014

/s/ Charles Main

Charles Main

Executive Vice President, Finance and

Chief Financial Officer

EX-99.6

Exhibit 99.6

CERTIFICATION PURSUANT TO  18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

Yamana Gold Inc. (the “Company”) is filing with the U.S. Securities and Exchange Commission on the date hereof, its annual report on Form 40-F for the fiscal year ended December 31, 2013 (the “Report”).

I, Peter Marrone, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as enacted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that:

(i) the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:      March 28, 2014

/s/ Peter Marrone

Peter Marrone

Chairman and Chief Executive Officer

EX-99.7

Exhibit 99.7

CERTIFICATION PURSUANT TO  18 U.S.C. SECTION 1350,

AS ENACTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

Yamana Gold Inc. (the “Company”) is filing with the U.S. Securities and Exchange Commission on the date hereof, its annual report on Form 40-F for the fiscal year ended December 31, 2013 (the “Report”).

I, Charles Main, Executive Vice President, Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as enacted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that:

(i) the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:      March 28, 2014

/s/ Charles Main

Charles Main

Executive Vice President, Finance and

Chief Financial Officer

EX-99.8

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-145300, 333-148048, and 333-159047 on Form S-8; and to the use of our reports dated February 18, 2014 relating to the consolidated financial statements of Yamana Gold Inc. and subsidiaries (“Yamana”) and the effectiveness of Yamana’s internal control over financial reporting appearing in this Annual Report on Form 40-F of Yamana for the year ended December 31, 2013.

/s/ Deloitte LLP

Chartered Accountants

Vancouver, Canada

March 28, 2014

EX-99.9

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Renato Petter, P. Eng., hereby consent to the use of my name in connection with the reference to the report entitled “Technical Report for Gualcamayo Project, San Juan, Argentina, Report for NI 43-101 pursuant to National Instrument 43-101 of the Canadian Securities Administrators” dated March 25, 2011 (the “Report”) and to the inclusion of references to and summaries of the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

By:	/s/ Renato Petter
Name:	Renato Petter
Title:	P. Eng.

March 28, 2014

EX-99.10

CONSENT OFEXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Evandro Cintra, Ph. D., P. Geo., Vice President, Operational Planning and Support of Yamana, hereby consent to the use of my name in connection with the reference to the mineral resource estimate for the Agua Rica Project as at December 31, 2013 (the “Estimate”) and to the inclusion of references to and summaries of the Estimate (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Evandro Cintra
Name:	Evandro Cintra, Ph.D., Professional Geologist
Title:	Vice President, Operational Planning and Support

March 28, 2014

EX-99.11

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Marco Antonio Alfaro Sironvalle, P.Eng., Ph.D. Eng., MAusIMM, Registered Member of the Chilean Mining Commission, hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Pilar Project (for Jordino) as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

By:	/s/ Marco Antonio Alfaro Sironvalle
Name:	Marco Antonio Alfaro Sironvalle, P.Eng., Ph.D. Eng., MAusIMM,
Title:	Registered Member of the Chilean Mining Commission

March 28, 2014

EX-99.12

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Chester M. Moore, P. Eng., of Roscoe Postle Associates Inc. (formerly known as Scott Wilson Roscoe Postle Associates Inc.), hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Amancaya Project, the Jacobina Project, the La Pepa Project and the Mercedes Project as at December 31, 2013 (the “Estimates”) and to the reports entitled “Technical Report on the Jacobina Mine Complex, Bahia State, Brazil” dated February 28, 2014, “Technical Report on the El Peñón Mine, Northern Chile” dated December 7, 2010, “Technical Report on the Alhué Mine of Minera Florida Limitada, Central Chile, prepared for Yamana Gold Inc., Report for NI 43-101” dated March 22, 2010 and “Technical Report on the Mercedes Gold-Silver Mine, Sonora State, Mexico” dated February 25, 2014 (the “Reports”) and to the inclusion of references to and summaries of the Estimates and the Reports (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

ROSCOE POSTLE ASSOCIATES INC.
By:	/s/ Chester M. Moore
Name:	Chester M. Moore, P. Eng.
Title:	Principal Geologist

March 28, 2014

EX-99.13

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Emerson Ricardo Re, M.Sc., MAusIMM, Registered Member of the Chilean Mining Commission, Corporate Manager, Reserves and Resources of Yamana hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the C1 Santa Luz Project, the Ernesto/Pau a Pique Project (for Lavrinha and Ernesto Pit 1), the Fazenda Brasileiro Project and the Pilar Project (for the Jordino Extension) as at December 31, 2013 and the mineral resource estimates for the Arco Sul Project, the C1 Santa Luz Project, the Ernesto/Pau a Pique Project (for Pau a Pique and Lavrinha), the Fazenda Brasileiro Project and the Pilar Project (for Jordino Down Dip, Tres Buracos, HG and Ogo Extension and Maria Lazara) as at December 31, 2013 (collectively, the “Estimates”) and to the report entitled “Technical Report for Gualcamayo Project, San Juan, Argentina, Report for NI 43-101 pursuant to National Instrument 43-101 of the Canadian Securities Administrators” dated March 25, 2011 (the “Report”) and to the inclusion of references to and summaries of the Estimates and the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Emerson Ricardo Re
Name:	Emerson Ricardo Re, M.Sc., MAusIMM, Registered Member of the Chilean Mining Commission
Title:	Corporate Manager, Reserves and Resources

March 28, 2014

EX-99.14

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Stuart E. Collins, P. E., of Roscoe Postle Associates Inc. (formerly known as Scott Wilson Roscoe Postle Associates Inc.), hereby consent to the use of my name in connection with the reports entitled “Technical Report on the El Peñón Mine, Northern Chile” dated December 7, 2010, and “Technical Report on the Alhué Mine of Minera Florida Limitada, Central Chile, prepared for Yamana Gold Inc., Report for NI 43-101” dated March 22, 2010 (the “Reports”) and to the inclusion of references to and summaries of the Reports (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

ROSCOE POSTLE ASSOCIATES INC.
By:	/s/ Stuart E. Collins
Name:	Stuart E. Collins, P.E.
Title:	Principal Mining Engineer

March 28, 2014

EX-99.15

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Wayne Valliant, P.Geo., of Roscoe Postle Associates Inc. (formerly known as Scott Wilson Roscoe Postle Associates Inc.), hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Chapada Mine as at December 31, 2013 (the “Estimates”) and the reference to the report entitled “Technical Report on the Chapada Mine, Brazil” dated March 7, 2014 (the “Report”) and to the inclusion of references to and summaries of the Estimates and the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

ROSCOE POSTLE ASSOCIATES INC.
By:	/s/ Wayne W. Valliant
Name:	Wayne W. Valliant, P.Geo.
Title:	Principal Geologist

March 28, 2014

EX-99.16

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Robert Michaud, P. Eng., of Roscoe Postle Associates Inc. (formerly known as Scott Wilson Roscoe Postle Associates Inc.), hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the Chapada Mine as at December 31, 2013 (the “Estimates”) and the reference to the report entitled “Technical Report on the Chapada Mine, Brazil” dated March 7, 2014 (the “Report”) and to the inclusion of references to and summaries of the Estimates and the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

ROSCOE POSTLE ASSOCIATES INC.
By:	/s/ Robert Michaud
Name:	Robert Michaud, P. Eng.
Title:	Associate Principal Mining Engineer

March 28, 2014

EX-99.17

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc., we hereby consent to the use of our name in connection with the reference to the mineral resource estimate for the Suyai Project as at December 31, 2013 (the “Estimate”) and to the inclusion of references to and summaries of the Estimate in the Annual Report on Form 40-F.

We also consent to the incorporation by reference of the above mentioned Annual Report on Form 40-F in the Registration Statements Nos. 333-145300, 333-148048 and 333-159047 on Form S-8.

WESTERN SERVICES ENGINEERING INC.
By:	/s/ Robin J. Young
Name:	Robin J. Young
Title:	P. Geo.

March 28, 2014

EX-99.18

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Javier Suazo Guzmán, P.Geo., Registered Member of the Chilean Mining Commission, Resources Geologist of Yamana Gold Inc., hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Minera Florida Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Javier Suazo Guzmán
Name:	Javier Suazo Guzmán, P.Geo., Registered Member of the Chilean Mining Commission
Title:	Resources Geologist

March 28, 2014

EX-99.19

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Guillermo Bagioli Arce, MAusIMM, Registered Member of the Chilean Mining Commission, of Metalica Consultores S.A., hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the Pilar Project (for Jordino) and the Jeronimo Project as at December 31, 2013 (the “Estimates”) and the report entitled “Technical Report for Gualcamayo Project, San Juan, Argentina, Report for NI 43-101 pursuant to National Instrument 43-101 of the Canadian Securities Administrators” dated March 25, 2011 (the “Report”) and to the inclusion of references to and summaries of the Estimates and the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

METALICA CONSULTORES S.A.
By:	/s/ Guillermo Bagioli Arce
Name:	Guillermo Bagioli Arce
Title:	MAusIMM, Registered Member of the Chilean Mining Commission

March 28, 2014

EX-99.20

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Normand L. Lecuyer, P. Eng. of Roscoe Postle Associates Inc. (formerly known as Scott Wilson Roscoe Postle Associates Inc.), hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the Jacobina Project as at December 31, 2013 (the “Estimates”) and to the report entitled “Technical Report on the Jacobina Mine Complex, Bahia State, Brazil” dated February 28, 2014 (the “Report”) and to the inclusion of references to and summaries of the Estimates and the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

ROSCOE POSTLE ASSOCIATES INC.
By:	/s/ Normand L. Lecuyer
Name:	Normand L. Lecuyer, P. Eng.
Title:	Principal Mining Engineer

March 28, 2014

EX-99.21

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Kevin C. Scott, P. Eng., hereby consent to the use of my name in connection with the reference to the report entitled “Technical Report on the El Peñón Mine, Northern Chile” dated December 7, 2010 (the “Report”) and to the inclusion of references to and summaries of the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

By:	/s/ Kevin C. Scott
Name:	Kevin C. Scott
Title:	P. Eng.

March 28, 2014

EX-99.22

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Dominique François-Bongarçon, Ph.D, FAusIMM, of Agoratek International, hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Jeronimo Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

AGORATEK INTERNATIONAL
By:	/s/ Dominique François-Bongarçon
Name:	Dominique François-Bongarçon, Ph.D, FAusIMM
Title:	President

March 28, 2014

EX-99.23

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Marcos Valencia A., P. Geo., Corporate Manager R&R, Andes/Mexico of Yamana, hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Cerro Moro Project and the Gualcamayo Project as at December 31, 2013 (the “Estimates”) and the report entitled “Technical Report for Gualcamayo Project, San Juan, Argentina, Report for NI 43-101 pursuant to National Instrument 43-101 of the Canadian Securities Administrators” dated March 25, 2011 (the “Report”) and to the inclusion of references to and summaries of the Estimates and the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Marcos Valencia A.
Name:	Marcos Valencia A., P. Geo.
Title:	Corporate Manager R&R, Andes/Mexico

March 28, 2014

EX-99.24

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Marcelo Trujillo, hereby consent to the use of my name in connection with the reference to the report entitled “Technical Report for Gualcamayo Project, San Juan, Argentina, Report for NI 43-101 pursuant to National Instrument 43-101 of the Canadian Securities Administrators” dated March 25, 2011 (the “Report”) and to the inclusion of references to and summaries of the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

By:	/s/ Marcelo Trujillo
Name:	Marcelo Trujillo

March 28, 2014

EX-99.25

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Alvaro Vergara, MAusIMM, hereby consent to the use of my name in connection with the reference to the report entitled “Technical Report for Gualcamayo Project, San Juan, Argentina, Report for NI 43-101 pursuant to National Instrument 43-101 of the Canadian Securities Administrators” dated March 25, 2011 (the “Report”) and to the inclusion of references to and summaries of the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

By:	/s/ Alvaro Vergara
Name:	Alvaro Vergara
Title:	MAusIMM

March 28, 2014

EX-99.26

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, David Coupland, BSc, DipGeoSc, CFSG, ASIA, MAusIMM (CP), MMICA, Director, Geological Consulting, Principal Geostatistician, Cube Consulting Pty Ltd., hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Cerro Moro Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

CUBE CONSULTING PTY LTD.
By:	/s/ David Coupland
Name:	David Coupland, BSc, DipGeoSc, CFSG, ASIA, MAusIMM (CP), MMICA
Title:	Director, Geological Consulting, Principal Geostatistician

Mach 28, 2014

EX-99.27

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Marcelo Antonio Batelochi, P.Geo., MAusIMM (CP), Geologist Consultant, hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the Ernesto/Pau a Pique Project (for Satellites (Nosde, Japones and Pombinhas)) and the mineral resource estimates for the Ernesto/Pau a Pique Project (for Satellites (Nosde, Japones and Pombinhas)) and the Lavra Velha Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

By:	/s/ Marcelo Antonio Batelochi
Name:	Marcelo Antonio Batelochi, P.Geo., MAusIMM (CP)
Title:	Geologist Consultant

March 28, 2014

EX-99.28

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Julio Bruna Novillo, AusIMM, Member of CIM, Independent Consulting Geologist, hereby consent to the use of my name in connection with the reference to the mineral reserve and mineral resource estimates for the Alumbrera Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

By:	/s/ Julio Bruna Novillo
Name:	Julio Bruna Novillo, AusIMM, Member of CIM
Title:	Independent Consulting Geologist

March 28, 2014

EX-99.29

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Carlos Guzman, Mining Eng., Registered Member of the Chilean Mining Commission, FAusIMM, Principal and Project Director, NCL Ingenieria y Construccion SpA, hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the Cerro Moro Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

NCL INGENIERIA Y CONSTRUCCION SPA
By:	/s/ Carlos Guzman
Name:	Carlos Guzman, Mining Eng., Registered Member of the Chilean Mining Commission, FAusIMM
Title:	Principal and Project Director

March 28, 2014

EX-99.30

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Carlos Bottinelli Otárola, P. Eng., Registered Member of the Chilean Mining Commission, Development Manager, Yamana Gold Inc., hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the El Peñón Mine and the Minera Florida Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Carlos Bottinelli Otárola
Name:	Carlos Bottinelli Otárola, P. Eng., Registered Member of the Chilean Mining Commission
Title:	Development Manager

March 28, 2014

EX-99.31

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Max Iribarren Parra, P. Geo., Registered Member of the Chilean Mining Commission, hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the El Peñón Mine as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

By:	/s/ Max Iribarren Parra
Name:	Max Iribarren Parra
Title:	P. Geo., Registered Member of the Chilean Mining Commission

March 28, 2014

EX-99.32

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Sebastián Ramírez Cuadra, P. Geo., Registered Member of the Chilean Mining Commission, Resources Geologist, Yamana Gold Inc., hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the El Peñón Mine as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Sebastián Ramírez Cuadra
Name:	Sebastián Ramírez Cuadra, P. Geo., Registered Member of the Chilean Mining Commission
Title:	Resources Geologist

March 28, 2014

EX-99.33

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Ricardo Miranda Díaz, P.Eng., Registered Member of the Chilean Mining Commission, Corporate Technical Manager, Yamana Gold Inc., hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the Ernesto/Pau a Pique Project (for Pau a Pique) and the Gualcamayo Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Ricardo Miranda Díaz
Name:	Ricardo Miranda Díaz, P.Eng., Registered Member of the Chilean Mining Commission
Title:	Corporate Technical Manager

March 28, 2014

EX-99.34

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Peter Mokos, B. Eng. (Mining), Dip. Eng. (Mining), MAusIMM (CP), RPEQ, Principal Mining Engineer, AMC Consultants Pty Ltd., hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the Ernesto/Pau a Pique Project (for Ernesto Pit 2) as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

AMC CONSULTANTS PTY LTD.
By:	/s/ Peter Mokos
Name:	Peter Mokos, B. Eng. (Mining), Dip. Eng. (Mining), MAusIMM (CP), RPEQ
Title:	Principal Mining Engineer

March 28, 2014

EX-99.35

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Rodney Webster, B.Sc. (Applied Geology), MAusIMM, MAIG, Principal Geologist, AMC Consultants Pty Ltd., hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Ernesto/Pau a Pique Project (for Ernesto (Pits 1 and 2)) as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

AMC CONSULTANTS PTY LTD.
By:	/s/ Rodney Webster
Name:	Rodney Webster, B.Sc. (Applied Geology), MAusIMM, MAIG
Title:	Principal Geologist

March 28, 2014

EX-99.36

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Dennis Bergen, P.Eng., of Roscoe Postle Associates Inc. (formerly known as Scott Wilson Roscoe Postle Associates Inc.), hereby consent to the use of my name in connection with the reference to the mineral reserve estimates for the Mercedes Project as at December 31, 2013 (the “Estimates”) and to the report entitled “Technical Report on the Mercedes Gold-Silver Mine, Sonora State, Mexico” dated February 25, 2014 (the “Report”) and to the inclusion of references to and summaries of the Estimates and the Report (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

ROSCOE POSTLE ASSOCIATES INC.
By:	/s/ Dennis Bergen
Name:	Dennis Bergen, P.Eng.
Title:	Associate Principal Mining Engineer

March 28, 2014

EX-99.37

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Dafne Herreros Van Norden, P.Geo., Registered Member of Chilean Mining Commission, Resources Geologist, Yamana Gold Inc., hereby consent to the use of my name in connection with the reference to the mineral resource estimates for the Minera Florida Project as at December 31, 2013 (the “Estimates”) and to the inclusion of references to and summaries of the Estimates (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Dafne Herreros Van Norden
Name:	Dafne Herreros Van Norden, P.Geo., Registered Member of Chilean Mining Commission
Title:	Resources Geologist

March 28, 2014

EX-99.38

CONSENT OF EXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, William Wulftange, P.Geo., Senior Vice President, Exploration of Yamana, hereby consent to the use of my name in connection with the reference to the disclosure contained under the headings “Description of the Business–Material Mineral Properties–Chapada Mine–Current Exploration and Development”, “Description of the Business–Material Mineral Properties–El Peñón Mine–Current Exploration and Development”, “Description of the Business–Material Mineral Properties–Mercedes Mine–Current Exploration and Development”, “Description of the Busines–Material Mineral Properties–Gualcamayo Mine–Current Exploration and Development”, “Description of the Business–Material Mineral Properties–Jacobina Mining Complex–Current Exploration and Development” (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ William Wulftange
Name:	William Wulftange, P.Geo.
Title:	Senior Vice President, Exploration

March 28, 2014

EX-99.39

CONSENT OFEXPERT

In connection with the Annual Report on Form 40-F of Yamana Gold Inc. (“Yamana”) for the year ended December 31, 2013 (the “Form 40-F”), I, Enrique Munoz Gonzalez, MAusIMM, Registered Member of Chilean Mining Commission, hereby consent to the use of my name in connection with the reference to the mineral reserve estimate for the Agua Rica Project as at December 31, 2013 (the “Estimate”) and to the inclusion of references to and summaries of the Estimate (collectively, the “Incorporated Information”) in the Annual Information Form filed as an exhibit to the Form 40-F.

I do also hereby consent to the use of my name and the incorporation by reference of the Incorporated Information in Yamana's Registration Statements on Form S-8 (File Nos. 333-148048; 333-145300; 333-159047).

YAMANA GOLD INC.
By:	/s/ Enrique Munoz Gonzalez
Name:	Enrique Munoz Gonzalez
Title:	MAusIMM, Registered Member of Chilean Mining Commission

Mach 28, 2014