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Monday, February 2, 2009

Gold | Yamana Gold - Fulfill Promise in 2009?

With the price of gold assured to go up in 2009, many investors are giving a close look at gold mining companies as a significant part of their investment portfolio. To that end, Yamana Gold is being reconsidered again for 2009, after disappointing investors in 2008.

Many thought Yamana Gold was the darkhorse of the sector, and had tremendous upside potential in 2008. Conseqently it plunged in value to under $4 a share, as gold was under pressure from forced liquidation and copper prices plunged as well.

That's probably the chief challenge in 2009 for the company, as they look at cutting their exposure to copper resources to 19 percent, down from the 36 percent of the company exposure to copper in 2008.

As far as its commercial gold equivalent ounce goes, Yamana Gold is looking to increase by 36 percent to 1.35 M oz GEO in 2009. A number of investors believe this year could be a solid one for the precious metals company, looking for prices to almost double for the year. That could definitely happen for the gold company, considering the real possibility that gold prices could rocket up this year.

Yamana Gold stock should move along with that gold price increase, assuming managing their exposure to copper is successfully implemented.

Another key factor for all mining companies has been the lowering of operational costs as energy prices have fallen to levels not seen for some time. If those costs continue to stay down, it could help all mining companies, including Yamana.

One thing that will bear watching will be the commissioning risk the company is exposed to at its mining site in Gualcamayo in Argentina, along with its Sao Vincente mining site in Brazil. Silver production and prices will also be a major contributor to the success of the company in 2009. If gold prices go tremendously high, it could not only bring up the price of silver with it, but override it altogether through its successful surge, whether silver performs well or not.

I expect that silver prices could by percentage even outperform gold in 2009, and so will rather be a positive impact on the company rather than a negative. Hopefully they'll produce enough to make a big difference.

With a number of the long-term pipelines shut down or scaled back, the acquisition by AngloGold Ashanti of a 33.33 percent stake in the Boddington Mine joint venture could put pressure on Yamana and other gold mining companies to go into consolidation mode to shore up the losses connected to their gold pipeline reductions.

Gold stocks overall should be up for 2009, and Yamana Gold will participate successfully in the upwards move.

Again, as operational costs for gold mining companies decrease while the price of gold increases, this should be one of the better years for the gold industry in some time. Gold investors should enjoy a lot of positive perks and success too.

So with gold and metals extraction costs declining, and gold companies pretty much operating at lean levels, 2009 will be a banner year for the quality gold companies.

Yamana Gold is positioned to take full advantage of theis climate, and lessoning their exposure to copper while keeping operating costs low, should lead them to a great year.

Many people thought last year was going to be a breakout year for Yamana, but forces like forced liquidation and deleveraging kept them - like most gold mining companies and gold futures - from advancing in the way they should have.

This year is much more predictable as forced liquidation seems to be unwound to a large degree in a way that hedge funds should increase investment in gold and gold-related companies and products as gold futures once again become the place of safety investors looking for a financial haven expect.

What was expected by many of Yamana Gold in 2008, should be experienced by gold investors in 2009.

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