TWST: What is Yamana Gold?
Mr. Marrone: The company started just before July 2003. We took a portfolio of Brazilian assets that were in a private company. It was a classic case of an assets rich but cash poor private company. We took a company called Yamana Resources and did a conventional reverse takeover, with the same effect as an IPO. We completed a reverse stock split of that company, recapitalized the company and put in new management and Directors with these assets. So the assets were acquired in July to August 2003.
We completed an initial $55.5 million financing and a number of financings have followed from there. The new management team and Board of Directors recreated the company as Yamana Gold Inc. Over the course of the last two and a half years, we have been unfolding on that business plan. When we did this public financing and offering, we undertook to take one mine, which was a producing underground mine known as Fazenda Brasileiro, and continue its mine life from the initial two and a half years of life that we bought. So we have been mining it for two and a half years and we now have another at least four years in front of us; our estimate is four to six years.
We took this underground mine in Brazil that had been mined for 12 years and had two and a half years of reserves left in it. We bought it on that basis and we have been mining it since then. Our undertaking was to increase the mine life, and we've now achieved that by increasing it by at least four to six years. We then undertook to put another mine, the Fazenda Nova Mine, into production. It was a small mine, but it had exceptional cash flow. Our production is 30,000 to 35,000 ounces per year from that mine. We declared commercial production on that project in late April, early May 2005.
We now have two mines that are in production that produce at a rate of about 120,000 to 125,000 ounces per year. We undertook that by the end of 2005, we would have completed the construction of our third mine, the Sao Francisco Mine. It is the largest of our gold mines to date. Sao Francisco started operations about a week and a half ago. In its first full year of production, we expect that between Sao Francisco and the other two mines, Fazenda Nova and Fazenda Brasileiro, we will be producing 260,000 ounces of gold although we are evaluating our production guidance now.
Our final undertaking on construction and development was our Chapada copper-gold project that is in construction. We expected to complete that mine by the first quarter of 2007. We have accelerated that program so that we expect to start operations at Chapada now in October 2006. So in its first full year of operations in 2007, together with Sao Francisco, Fazenda Brasileiro and Fazenda Nova, we will be producing more than 400,000 ounces of gold and more than 100 million pounds of copper. We have three mines that are operating today: Sao Francisco, Fazenda Brasileiro and Fazenda Nova. We have one that will be in production by October of next year, Chapada.
So by 2006, our production rate will be 260,000 ounces per year, and by 2007, 400,000 ounces per year, going to 500,000 in 2008 with more than 100 million pounds of copper production starting in 2007. Sao Francisco has a mine life of at least 10 years and Chapada has a mine life of 19 years. So these are long-life mines. Our final undertaking was exploration, and we began an aggressive exploration program in January of this year, spending roughly $13 million for 2005. By September, we advised the marketplace in our press release that we had three projects that we had taken into an advanced stage to a point where those three projects will be in the feasibility study stage. We expect to complete a feasibility study on at least two and perhaps three of these projects by the middle of next year. By 2008, we intend to have a sustainable production of at least 500,000 ounces from this internal growth taking us all the way to 2015.
So Yamana is a company that has three mines that are in production and one that will be in production at the end of next year. It has three projects that are at feasibility study or scoping study stage that collectively will take us from 260,000 ounces next year to 400,000 a year after that, 500,000 in 2008 and between 500,000 and 600,000 ounces into 2015. The final point is that we are looking to acquisitions. As we announced in the strategic vision press release in mid-October, our intension is to be at least a three quarter of a million-ounce producer by 2008. That will take us into at least 2015 at 750,000 ounces. So between internal growth and external acquisitions, that's where we intend to be.