TORONTO (miningweekly.com) – Toronto-based Yamana Gold expects to add around 500 000 gold-equivalent ounces to its annual production in the next four years or so, as it builds new mines and expands output at others.

Yamana, which bought rival Meridian Gold and the smaller Northern Orion Resources in October 2007, agreed in June this year to sell three noncore operating mines - San Andres, in Honduras, and the Sao Francisco and Sao Vicente mines in Brazil, to Canadian junior Aura Minerals.

“As we continue to focus on core mines, we also have a robust portfolio of development-stage and exploration projects, which will further drive our growth,” CEO Peter Marrone said on Wednesday.

The company will put its efforts behind internal growth, and is not looking at merger and acquisition activity, he indicated.

Although it has abandoned its target of 2,2-million ounces by 2012, as a result of the Aura transaction, output is still expected to increase over the three or four years, as the firm moves its pipeline of projects through to development.

The company is taking a “disciplined and conservative” approach to development, Marrone told analysts and investors on a conference call.

Last month, Yamana approved construction of its Mercedes gold/silver project, in Mexico, the C1 Santa Luz mine, in Brazil, and a tailings-recovery project at its Minera Florida operation, in Chile.

The three projects, which will all begin contributing production in 2012, represent an initial annualised output increase of 290 000 oz in 2012, Marrone said.

It does not stop there, however, as Yamana is also working on feasibility studies for the Pilar and Ernesto/Pau-a-pique projects, both in Brazil.

Altogether, and assuming the last two get the go-ahead, the company expects a total of 490 000 new gold-equivalent ounces from its development-stage projects, said COO Ludovico Costa.

This figure also does not include potential production from the third orebody, QDD Lower West, at its new Gualcamayo mine, in Argentina, or the newly acquired Caimar concessions, located next to the Pilar asset, he said.

Yamana is also updating components of the feasibility study on its Agua Rica project, in Argentina, and continues to evaluate opportunities to bring on a strategic partner, Costa said.

Permitting also continues for Agua Rica.

Costa said Yamana is also evaluating its options for increasing throughput at its Chapada mine, in Brazil.

The company has substantially completed a $50-million expansion at Chapada to 20-million tons a year, and had considered a further expansion, either to 24-million or 32-million tons.

The latter is pretty much off the table until reserves at the operation are increased enough to merit a 32-million ton a year operation, without threatening the life of mine, Costa said.

However, the company is also toying with the idea of increasing the capacity of the current plant to 22-million tons a year, through debottlenecking and increasing efficiencies, rather than the more expensive expansion to 24-million tons, which would require significantly higher capital.

Yamana produced 289 574 gold-equivalent (includes silver) ounces in the second quarter.

The company declared commercial production at Gualcamayo last month, and expects the operation to contribute 75 000 oz in the second half of the year.

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