Fitch Affirms Yamana Gold at 'BBB-'; Outlook Stable

(The following statement was released by the rating agency)

CHICAGO, June 28 (Fitch) Fitch Ratings has affirmed Yamana Gold Inc.'s (Yamana;
TSE:YRI, NYSE:AUY) Long-Term Issuer Default Rating (IDR) and senior unsecured
debt at 'BBB-'. Roughly $2.6 billion in principal amount of debt and commitments
is affected by this action. A complete list of ratings follows at the end of
this release.

The Rating Outlook is Stable.

Yamana's ratings reflect its sizeable reserves, low cash-cost position, low
geopolitical risk, longer average mine life, and potential for solid future
growth combined with Yamana's commitment to maintain a conservative capital
structure given its exposure to gold prices. Offsetting factors include high but
declining financial leverage compared to peers in a period with elevated capex,
and execution risk associated with development-stage mines at Cerro Moro and
improvement efforts at other sites. In weak gold markets, the company has the
ability to defer some development and exploration to focus on preservation of
its capital structure.

The Stable Outlook reflects Fitch's expectation that total debt/EBITDA will not
exceed 3.0x on a sustained basis, and will generally trend at around 2.0x.
Should internal cash generation fall behind expectations, we expect the company
to preserve and generate liquidity via credit-neutral actions, including cost
management, capital expenditure deferrals, non-core asset sales and potentially
new equity issuances.

Yamana operates in Brazil (31% of 2016E production), Chile (27%), Canada (22%),
Argentina (13%), and Mexico (7%).

KEY RATING DRIVERS

FAVORABLE PRODUCTION PROFILE

The company has a high percentage of production from core, low-cost operating
mines, low capital requirements, and solid long-term growth prospects. Fitch
calculates Yamana has a weighted average mine life based on estimated 2016
production of over 11 years, on the higher end of peers based on currently
producing assets. For its size, production by mine is fairly diversified, with
the Cerro Moro project as the only foreseeable large risk from new mine
construction cost overruns or delays, while Brio Gold assets have shown recent
improvements. First production at Cerro Moro is expected in early 2018 and it is
expected to add additional low-cost production of gold and silver over its
initial six-year mine life. Assuming current estimates are accurate, we view the
construction of the mine as a positive, as it contains high-grade gold and
silver deposits, with cash costs that are expected to be very low, at under $400
per ounce of gold. Recent political and business improvements in Argentina such
as reduced import restrictions, exchange controls and taxes have been positive
to mining in the region as well.

In the first quarter of 2016 (1Q16), Yamana's calculated by-product cash cost of
gold was $590/oz., compared to a peer range of approximately $600-$700/oz.
Incorporating the impact of all by-products, Fitch estimates Yamana's cash cost
to produce gold for the latest 12 months (LTM) period ended March 31, 2016, was
$449 per gold ounce of production. All-in sustaining costs (AISC) were $842/oz.
in 2015, and are estimated to be in the lowest quartile of peers at $805/oz. for
gold in 2016. The high concentration of by-products also increases Yamana's
revenue diversification relative to peers, with roughly 80% of estimated
revenues attributable to gold sales, allowing the company to benefit from
strengthening global copper demand, but also leaving it more sensitive to large
declines in by-product prices.

COMMODITY PRICE EXPOSURE

Yamana's earnings are sensitive to gold prices. Fitch expects Yamana to be free
cash flow (FCF) positive in a scenario where realized prices are greater than
approximately $1,100, and should still be able to generate positive FCF in a
$1,100-$1,000/oz. gold price environment, depending on capital expenditure
timing from 2016-2018, due to Yamana's lower overall cost structure and low
development spending requirements.

BRIO RESTRUCTURING

After falling short of expectations on expansion projects at some producing
non-core mines in 2015, the company placed certain development-stage assets and
non-core mines (Fazenda Brasiliero, Pilar, and C1 Santa Luz) into wholly-owned
subsidiary, Brio Gold, Inc. Despite signs of improvement and a new dedicated
management team, the company was unable to find a suitable avenue for
monetization that management felt reflected the fair valuation of the Brio
division. At the end of 2015, the company suspended efforts to divest, which is
expected to add to cash flow in 2016 assuming cost reduction efforts continue,
but a monetization of the previously higher-cost Brio assets and subsequent debt
repayment with proceeds would have likely been positive for the credit at the
time.

With the strategy shifted, Yamana continues work to improve the Brio assets as a
part of the Yamana portfolio. Though C1 Santa Luz was put on care and
maintenance, cash costs have declined from $778/oz in 2014 to $708/oz. in 2015
for Pilar, and from $804/oz. to $702/oz. for Fazenda Brasileiro. Management has
guided to further reductions in cash costs at both assets, to $560/oz. of gold
for Pilar and $610/oz. for Fazenda Brasileiro, with 1Q16 performance in line
with those estimates. Also on 1Q16, Yamana, through Brio, acquired Carpathian
Gold's Riacho dos Machados (RDM) mine for $55 million. Fitch expects RDM's
forecasted 100,000 ounces of annual gold production at an average AISC of under
$800/oz. over seven years to be a positive addition to the Brio platform given
the mine's potential production profile compared to the minimal capital outlay.

KEY ASSUMPTIONS

--Production at management guidance of ~1.3 million oz. in 2016;

--Long-term gold price of $1,100 per oz.;

--No material debt-funded acquisitions;

--Capital expenditures within guidance range;

--Cerro Moro project constructed and starts production on schedule;

--Brio Gold not monetized in current forecast;

--$300 million of net debt reduction in 2016 and 2017 combined.

RATING SENSITIVITIES

Negative: Future developments that may, individually or collectively, lead to
negative rating action include:

-- Deterioration in gold prices and internally generated cash flow without an
equal management response in the form of lowered costs, reduced spending,
dividend cut, assets sales or the raising of equity;

--Expectations that total debt/operating EBITDA will be greater than
approximately 2.8-3.0x on a sustained basis;

--Failure to reduce debt within management's guidance of at least $300 million
by 2018;

--Debt-funded shareholder-friendly activity;

--Material disruptions or delays at major mine sites;

--Expected period of sustained negative free cash flow after dividends.

Positive: Not anticipated given the company's exposure to volatile precious
metal, commodity and foreign exchange prices and size of operations, but future
developments that may, individually or collectively, lead to positive rating
action include:

--Material debt reduction leading to total debt/EBITDA sustained below roughly
1.0x-1.3x;

--Expectations of sustained positive free cash flow generation over $500 million
annually.

LIQUIDITY

SUFFICIENT LIQUIDITY, DEBT REDUCTION

The company has approximately $125 million in cash on the balance sheet and a $1
billion committed revolving credit facility, of which about $760 million is
available as of March 31, 2016. The revolver has a maximum net leverage covenant
of 3.5x. Fitch expects the company to continue to generate FCF on average in the
base case, depending on the timing of growth capex. Fitch expects cash on hand
plus cash flow generation to remain adequate to support Yamana's capital
spending through the forecast period and fund its target of at least $300
million of net debt reduction between 2016 and 2017. In the base case, Fitch
projects total debt/EBITDA of approximately 2.5x-2.8x through 2016, decreasing
to 2.0x-2.5 by the end of 2017.

Scheduled maturities of Yamana debt, including debt assumed from the 50%
interest in Canadian Malartic, as of March 31, 2016 are $97 million in 2016, $17
million in 2017, $111 million in 2018, $183 million in 2019, and $1.4 billion
thereafter.

FULL LIST OF RATING ACTIONS

Fitch has affirmed the ratings for Yamana as follows:

--LT IDR at 'BBB-';

--Revolving credit facility at 'BBB-';

--Senior unsecured notes at 'BBB-'.

The Outlook is Stable.

Contact:

Primary Analyst

Gregory M. Fodell

Associate Director

+1-312-368-3117

Fitch Ratings, Inc.

70 W. Madison Street

Chicago, IL 60602

Secondary Analyst

Monica M. Bonar

Senior Director

+1-212-908-0579

Committee Chairperson

Robert Curran

Managing Director

+1-212-908-0515

Media Relations: Alyssa Castelli, New York, Tel: +1 (212) 908 0540, Email:
alyssa.castelli@fitchratings.com.

Summary of Financial Statement Adjustments: -

--No material adjustments have been made that have not been disclosed in public
filings of this issuer.

Additional information is available on www.fitchratings.com

Applicable Criteria

Corporate Rating Methodology - Including Short-Term Ratings and Parent and
Subsidiary Linkage (pub. 17 Aug 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869362

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