Stock Alert for Yamana Gold Inc. ($AUY)

Yamana Gold Inc. (NYSE: $AUY)

Yamana Gold Inc. (AUY) is an explorer, developer and miner of gold, silver and copper.  The Company engages in gold exploration, development and production in Brazil, Chile, Argentina, Mexico and Columbia.

Founded in 2003, the Company is headquartered in Toronto, Canada.

Share Statistics (27-Apr-10)			FY 2008	FY 2009	% Chg	Q4 2008	Q4 2009	% Chg
Symbol	AUY	Revenue, $Mn	949.4	11,183.3	1.1k%	87.8	399.8	355%
Current price	$10.43	Gross marg.	37.7%	4.2%	30.6%	-65.8%	46.1%	-419%
52wk Range:	$7.77-14.37	Oper. margin	27.7%	3.1%	30.0%	-91.5%	33.6%	-267%
Avg Vol (3m):	12,218,700	Net margin	45.8%	1.7%	-56%	204%	9.1%	-80%
Market Cap.	7.72B
Dil. Shares Outst.	735.07M	EPS, $	0.683	0.288	-58%	0.313	0.073	-77%

Source: Reuters.com, SEC Filings.

Financial Summary

Financial Strength (27-Apr-2010)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	1.49	2.45	0.59	0.75
Current Ratio (MRQ)	1.81	3.09	0.83	0.9
Long-Term Debt to Equity (MRQ)	7.85	24.87	24.18	144.49
Total Debt to Equity (MRQ)	7.85	33.33	36.88	206.92

Source: Reuters.com, SEC Filings.

Analyst Consensus

The mean of 23 analysts rate shares of AUY an “Outperform.”

Analyst Recommendations and Revisions

1-5 Linear Scale	Current	1 Month Ago	2 Month Ago	3 Month Ago
(1) BUY	6	7	7	7
(2) OUTPERFORM	10	11	12	13
(3) HOLD	4	4	3	3
(4) UNDERPERFORM	3	3	3	2
(5) SELL	0	0	0	0
No Opinion	0	0	0	0
Mean Rating	2.17	2.12	2.08	2.00

Source: Reuters.com, SEC Filings.

Investment Highlights

Today’s Gold Market

In 2008, world gold production output reached 76 million ounces, falling each year since peaking in 2001 at 83 million ounces.  Most recent statistics confirm that production levels may not increase for some years.  Talk of peak resources, once centered on oil, now include gold and other precious metals.

Once dominated by South Africa for many years, 2008 gold production statistics show China at 12.2% of total global production is now the largest producer of gold in the world, followed by the United States at 9.9%, South Africa at 9.8 %, Australia at 9.6%, Peru at 7.4% and Russia at 7.0%.

Market demand is driven by three factors, including jewelry (mostly from India), investment and industrial demand.  Investment demand remains as the primary factor for record prices, both in nominal terms and real terms.  During times of monetary inflation and central bank balance sheet expansion, investment demand increases and becomes the most important source of demand for ever higher prices in a gold bull market.

Since the popping of the NASDAQ equities bubble of 2000, central banks, worldwide, increased money supply at rates not matched since the decade of the 70s, as central banks fight to protect consumer spending and economic growth.   As a result of easy monetary policies, investors, money managers, sovereign wealth funds and, just recently, central banks, have been purchasing gold as an inflation and currency hedge against further declines in the U.S. dollar and other currencies loosely pegged to the Dollar.

At its peak in 2008, money supply grew by double-digit rates in almost all significant currencies of the world.  Today, preservation of wealth has become an important strategy against further financial system failures and debasements of fiat currencies, not just in the U.S. dollar, but currencies worldwide.

Trading partners not wishing to experience the headwinds of a strong currency against the dollar have debased their countries’ currencies as well.  For the first time in history, almost all central banks have embarked on a currency debasement policy in response to the U.S. Federal Reserve’s policy of “quantitative easing,” or money printing—the prelude to future inflation.  Gold remains as the ultimate hedge to higher commodities prices, taxes and declining purchasing power parity with other nations.

After the “deflationary scare” of the first quarter of 2009, which continued into the entire second quarter—brought on by the liquidity crisis following major financial institution failures—investment capital has now moved back into the commodities market, especially the markets traditionally attractive to currency debasement havens such as gold, silver, oil and other commodities.  For more than 5,000 years, gold always takes on its intrinsic role as real money, and is the only store of value with no counter-party risk.

Company News

Earlier this month AUY reaffirmed its 2010 guidance. The Company previously noted that production would sequentially increase, and cash costs would sequentially decrease, quarter-over-quarter throughout the year. In the first quarter of 2010, gold equivalent production is expected to be approximately 240,000 GEO and cash costs are expected to be below $200 per GEO on a by-product basis. This is consistent with internal forecasts. Minera Florida produced less than anticipated due to the earthquake, which occurred on February 27 and is now fully operational.

The Company also guided that copper production is expected to be 150 million-160 million pounds in 2010 and, similar to the case for gold production, AUY expects production to increase quarter-over-quarter throughout the year. Copper production in the first quarter of 2010 is expected to be 29 million to 30 million pounds.

AUY provides guidance on certain of its projected operating parameters including production levels and cash costs. The Company is not in the position to endorse consensus estimates with the respect to earnings and cash flow per share as it has no way to accurately monitor the underlying assumptions and projections going into these calculations.

With 1,025,677 GEO produced in 2009, adjusted earnings were US$0.47 per share in 2009. The Company notes that the lower end of its production guidance for 2010 is consistent with actual production achieved in 2009 and cash costs would be comparable. Cash costs in the first quarter of 2010 are expected to exceed cash costs in the first quarter of 2009, which were at all time lows as a result, in part, of significant depreciation in local currencies after the financial crisis of late 2008.

Technical Analysis

Source: http://stockcharts.com/h-sc/ui?s=AUY

AUY trades above its 13-day moving average. This bullish sign is less significant because the 13-day moving average is flat.

The MACD for AUY currently indicates a bullish signal.  The MACD is above the signal line, a 9-day moving average of the MACD.  The MACD is above the critical level of 0, which implies the past price action has been positive.  Overall, the chart is modestly bullish.

Comparative Analysis

Company Name	Ticker	Price/	Mrkt. Cap.	P/E		P/S
Apr-27-2010	symbol	Share, $	$ Mn	2009	2010	2009	2010
AngloGold Ashanti Ltd.	AU	40.44	14,800	n/a	18.81	3.6	n/a
Goldcorp Inc.	GG	41.01	30,100	125.4	24.85	11.05	n/a
Kinross Gold Corp.	KGC	18.37	12,800	41.28	24.49	5.31	n/a
Gold Median				49.9	n/a	6.50	n/a
Yamana Gold Inc.	AUY	10.43	7,720	39.81	14.49	6.53	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	n/a
Sales	n/a	n/a
Net Shares Purchased (Sold)	n/a	n/a
Total Insider Shares Held	n/a	n/a
% Net Shares Purchased (Sold)	n/a	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	n/a
% Change in Institutional Shares Held	n/a

Source: Yahoo Finance

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.